Factors influencing formal loan repayment performance of urban women in Tigray, A case study of Dedebit credit and saving institution, Adwa town woreda

This study was conducted with the aim of analyzing factors that influence formal loan repayment of urban women in Tigray and evaluating the loan rationing mechanism using primary data collected through structured questionnaire from 169sample women borrowers of DECSI. The estimation results of the descriptive statistics and the logit model show that level of education, income, loan size, number of times borrowed are important and significant factors that enhance the loan repayment performance. Regarding the loan rationing, borrowers who are aged, have an access of another loan, number of times borrowed and health expenditure, were disfavored; while those who are with high level of education, number of dependents, apply for larger loan amounts, celebrating social ceremonies, perceive supervision as adequate, high income and loan diversion were favored. There were some serious problems observed in the rationing mechanism the institution employed, i.e., borrowers who are good payers (like those who are literate) were rationed more while those who contribute to the default problem (like those who have high medical expenses) were rationed less. The institution is particularly recommended to improve these problems observed in its rationing mechanism.