Journal of Investment and Management

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Determinants of Loan Repayment by Borrowers from Micro-Financial Institutions in Nakuru County Kenya

Received: 08 September 2016    Accepted: 19 September 2016    Published: 29 September 2016
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Abstract

Many financial institutions in developing countries provide financial services such as saving and Credit to aid several smallholder enterprises including farmers. This is an effort in line with the Millennium development goals which seeks to reduce poverty by 50% by the year 2015. However, the sustainability and continuity of the financial institutions to increase the volume of credit to stimulate the poverty reduction goal depends on the repayment rates. However many of the financial institutions have not been able to carry out these services effectively perhaps because of loan defaults of previous advances. The study used descriptive type of design. This is the design whose purpose is to provide a description of affairs as they are. The main objective of the research was to identify the determinant of loan repayment by borrowers in micro financial institutions in Nakuru County. Specific objectives were to determine the significance of level of education, level of income and age of borrowers as a determinant of loan repayment in Micro Financial Institutions in Nakuru County. The target population comprised a total of 590 loan borrowers and employees of Micro Financial institutions out of which a sample of 10%was picked using stratified random sampling on each stratum out of which a simple random was done to pick the respondent from the list of borrowers and employees, which enable every member of the population have an equal and independent chance of being selected as respondents and also simplest, most convenient and bias free selection method. The cross sectional data was collected by use of questionnaire. The data was analyzed using linear multiple regression model which quantified the determinants while the descriptive statistics was analyzed by use of frequency tables and percentages pie charts. The results showed that education level, income level and age negative were significant determinants of loan repayment. The study recommends that borrowers with low levels of income and education should be encouraged to take up loan since they are associated with loan repayment than their counterparts respectively. The study from the sample also recommends that youths should be taken serious because they are also associated with loan repayment. Nevertheless Most MFLs were going concern.

DOI 10.11648/j.jim.20160505.14
Published in Journal of Investment and Management (Volume 5, Issue 5, October 2016)
Page(s) 64-69
Creative Commons

This is an Open Access article, distributed under the terms of the Creative Commons Attribution 4.0 International License (http://creativecommons.org/licenses/by/4.0/), which permits unrestricted use, distribution and reproduction in any medium or format, provided the original work is properly cited.

Copyright

Copyright © The Author(s), 2024. Published by Science Publishing Group

Keywords

Loan Repayment, Micro Financial Institutions, Nakuru County Kenya

References
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Author Information
  • School of Business, Kenyatta University, Nairobi, Kenya

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    Wafula Nathan Wamalwa. (2016). Determinants of Loan Repayment by Borrowers from Micro-Financial Institutions in Nakuru County Kenya. Journal of Investment and Management, 5(5), 64-69. https://doi.org/10.11648/j.jim.20160505.14

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    Wafula Nathan Wamalwa. Determinants of Loan Repayment by Borrowers from Micro-Financial Institutions in Nakuru County Kenya. J. Invest. Manag. 2016, 5(5), 64-69. doi: 10.11648/j.jim.20160505.14

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    Wafula Nathan Wamalwa. Determinants of Loan Repayment by Borrowers from Micro-Financial Institutions in Nakuru County Kenya. J Invest Manag. 2016;5(5):64-69. doi: 10.11648/j.jim.20160505.14

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  • @article{10.11648/j.jim.20160505.14,
      author = {Wafula Nathan Wamalwa},
      title = {Determinants of Loan Repayment by Borrowers from Micro-Financial Institutions in Nakuru County Kenya},
      journal = {Journal of Investment and Management},
      volume = {5},
      number = {5},
      pages = {64-69},
      doi = {10.11648/j.jim.20160505.14},
      url = {https://doi.org/10.11648/j.jim.20160505.14},
      eprint = {https://download.sciencepg.com/pdf/10.11648.j.jim.20160505.14},
      abstract = {Many financial institutions in developing countries provide financial services such as saving and Credit to aid several smallholder enterprises including farmers. This is an effort in line with the Millennium development goals which seeks to reduce poverty by 50% by the year 2015. However, the sustainability and continuity of the financial institutions to increase the volume of credit to stimulate the poverty reduction goal depends on the repayment rates. However many of the financial institutions have not been able to carry out these services effectively perhaps because of loan defaults of previous advances. The study used descriptive type of design. This is the design whose purpose is to provide a description of affairs as they are. The main objective of the research was to identify the determinant of loan repayment by borrowers in micro financial institutions in Nakuru County. Specific objectives were to determine the significance of level of education, level of income and age of borrowers as a determinant of loan repayment in Micro Financial Institutions in Nakuru County. The target population comprised a total of 590 loan borrowers and employees of Micro Financial institutions out of which a sample of 10%was picked using stratified random sampling on each stratum out of which a simple random was done to pick the respondent from the list of borrowers and employees, which enable every member of the population have an equal and independent chance of being selected as respondents and also simplest, most convenient and bias free selection method. The cross sectional data was collected by use of questionnaire. The data was analyzed using linear multiple regression model which quantified the determinants while the descriptive statistics was analyzed by use of frequency tables and percentages pie charts. The results showed that education level, income level and age negative were significant determinants of loan repayment. The study recommends that borrowers with low levels of income and education should be encouraged to take up loan since they are associated with loan repayment than their counterparts respectively. The study from the sample also recommends that youths should be taken serious because they are also associated with loan repayment. Nevertheless Most MFLs were going concern.},
     year = {2016}
    }
    

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    T1  - Determinants of Loan Repayment by Borrowers from Micro-Financial Institutions in Nakuru County Kenya
    AU  - Wafula Nathan Wamalwa
    Y1  - 2016/09/29
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    AB  - Many financial institutions in developing countries provide financial services such as saving and Credit to aid several smallholder enterprises including farmers. This is an effort in line with the Millennium development goals which seeks to reduce poverty by 50% by the year 2015. However, the sustainability and continuity of the financial institutions to increase the volume of credit to stimulate the poverty reduction goal depends on the repayment rates. However many of the financial institutions have not been able to carry out these services effectively perhaps because of loan defaults of previous advances. The study used descriptive type of design. This is the design whose purpose is to provide a description of affairs as they are. The main objective of the research was to identify the determinant of loan repayment by borrowers in micro financial institutions in Nakuru County. Specific objectives were to determine the significance of level of education, level of income and age of borrowers as a determinant of loan repayment in Micro Financial Institutions in Nakuru County. The target population comprised a total of 590 loan borrowers and employees of Micro Financial institutions out of which a sample of 10%was picked using stratified random sampling on each stratum out of which a simple random was done to pick the respondent from the list of borrowers and employees, which enable every member of the population have an equal and independent chance of being selected as respondents and also simplest, most convenient and bias free selection method. The cross sectional data was collected by use of questionnaire. The data was analyzed using linear multiple regression model which quantified the determinants while the descriptive statistics was analyzed by use of frequency tables and percentages pie charts. The results showed that education level, income level and age negative were significant determinants of loan repayment. The study recommends that borrowers with low levels of income and education should be encouraged to take up loan since they are associated with loan repayment than their counterparts respectively. The study from the sample also recommends that youths should be taken serious because they are also associated with loan repayment. Nevertheless Most MFLs were going concern.
    VL  - 5
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