Factors Affecting loan repayment performance of micro finance clients

Currently, poverty becomes a major problem in many developing countries. In these countries poverty is sever which has left millions of people out of basic needs for survival. In Ethiopia, there are many poor people living in rural and urban areas. The availability of financial services plays an important role in creating self-employment opportunities for the majority of low income population. The main problem of the poor performance of financial institutions in many developing countries is high rate of non-repayment of loan or default. Financial service provision program will be successful if the loan disbursed is healthy and repaid on time. The study conducted and compiled in this book may assist in guiding financial institutions or loan facilitating organizations to set appropriate criteria and standard procedures of loan disbursement. Loan repayment performance is affected by a number of socioeconomic and institutional factors. While some of the factors positively influence the loan repayment, the other factors are negatively affecting the loan repayment.