An assessment of loan repayment performance of microenterprise in Addis credit and saving institution

Abstract

The purpose of the study is to look in to microenterprise loan repayment in Addis Ababa particularly to Arada Sub-city. Loan repayment has paramount importance for most developing countries, because lack of financial resources is usually regarded as a major obstacle to the development of such countries. In Addition good repayment performance is an important measure for the success of microfinance institution and micro enterprises. Hence, it is advisable to credit schemes initiatives to make more attention to investigate factors that affect loan repayment performance which enables the problem to reach millions of poor. According to the findings, educational level, supervision, available of other source of credit and monthly repayment period are found to be positively related to repaying loan in full in a loan period of one year. Loan diversion and loan size has a negative relation. Hence, factors that enhance and hinder loan repayment performance should be considered by Arada Sub-city and Credit and Saving Office in designing a more effective loan repayment mechanism for its borrowers.