Factors Affecting Loan Repayment Performance of Borrowers from Cooperative Bank of Oromia

The case of Hawassa District, Ethiopia

Abstract

This study investigates the factors that affect the Loan Repayment Performance in Cooperative Bank of Oromia: The case of Hawassa District. Both primary and secondary data sources were used in the study. The study used a systematic random sampling technique to draw 219 borrowers. Both qualitative and quantitative methods were used. The data collected through questionnaire were analyzed using Stata software version 15. Descriptive statistics such as frequency and percentage were applied. Furthermore, inferential statistics like Chi-square and binary logistic regression were used to identify major factors that affect the loan repayment performance. In addition, the data collected through interview were analyzed qualitatively using narrative for triangulation. The findings of the study show that 44.7% of borrowers in the study area did not repay the amount of money they borrowed as per credit schedules. The major factors that affect the loan repayment performance were sex of the borrower, educational level, family size, borrowing experience, timelines of loan, repayment period and advisory visit. The study, therefore, recommends that the Cooperative Bank of Oromia shouldprovide short and long-term awareness creation training for illiterate borrowers and motivate educated people because it is easy to provide training.