Factors Affecting Loan Repayment Performance of Small Scale Enterprises Financed by Micro Finance Institutions: Study on Private Borrowers around Wolaita and Dawuro Zone
Micro finance involves the provision of micro-credit, savings, and other services to the poor that are excluded by the commercial banks for collateral and other reasons. Microfinance is relatively new to Ethiopia and came to existence during 1994-95. Out of which Wolaita zone Micro Finance Institution (WZMFI) is one among 31 Micro Finance Institutions (MFIs) to serve needy people in Ethiopia. Based on this researchers’ intended to study major socio- economic factors and loan related factors that determines loan repayment performance of borrowers in WZMFI. In fact, the identifying and analyzing such determining factors of loan repayment rate is vital in the achievement of profitability and sustainability of MFIs. In this connection, researchers’ collected data from primary and secondary resources and analyzed by using two limit Tobit model is used. Through the study 15 determinants’ are selected for evaluation, out of which 6 variables are significant and remaining insignificant are found.
