Loan delinquency and the performance of microfinance institutions. case study: capital microfinance
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Date
2014-12
Authors
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Journal ISSN
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Publisher
Kampala International University, College of Economics and Management
Abstract
The study aimed at establishing the relationship between loan delinquency and performance of micro finance institutions basing on the following objectives; to identify the causes of delinquency, examine the indicators of loan delinquency and examine the impact of loan delinquency to Capital microfinance. Both qualitative and quantitative research designs were used. The sample size was selected using a purposive method and sample size of 30 respondents was considered and they were employees of the Capital microfinance institution, they comprised of cashiers, accountants loan officers, ledger keepers and field officers. Examples of the user department samples included finance and administration, Human resource, ICT department as well as the welfare department. Data was collected by the use questionnaires given by the respondents and analyzed using means, rank and graphical data analysis. Findings indicated that loan delinquency is mainly composed of causes, indicators and impact which constitute average mean of 3.86, 2.87 and 2.83 respectively. The causes of loan delinquency 3.86 constituted the highest value with impact 2.83 constituting the least value. This implies that Capital micro finance concentrates more on the causes of loan delinquency and less on its impact, but the overall loan delinquency was high at an average mean of 3.19. Recommendations included, the general conduct of the research saw a number of loopholes around delinquency and its eventual effect. Therefore the researcher felt there should be improvements in the following areas. Repayment commitments to be sufficiently strong to discourage borrowers from defaulting, Staff to contact the borrower to communicate the message that late payment is unacceptable, Micro finance institutions to review credit policies and operations to ensure they comply with basic principles and methodology and Micro Finance Institutions to set up a control system to measure refinancing requests.
Description
A research report submitted to the College of Economics and Management in partial fulfillment for the Award of a Bachelors Degree in Business Administration of Kampala International University
Keywords
Loan delinquency, Microfinance institutions, Capital microfinance