Determinants of loan repayment in rural areas: a study of Lyamujjungu Cooperative Bank, Kabale District
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Date
2009-08
Authors
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Publisher
Kampala International University, College of Humanities and social sciences.
Abstract
The study examined the factors affecting loan repayment in Maziba Sub-county_ Ndorwa County-Kabale district. The objectives of the study were to examine social, economic and managerial factors affecting loan repayment in loan repayment in
Lyamujungu Cooperative Bank. Empirical data was collected by the use of
questionnaires, interview guide and documentary review and analyzed using thematic
and content analysis. The findings show that loan repayment increased if the group had
initial savings or if group members could repay the loan in case of default and when the
group has written rules and regulations. The economic factors included the borrowers
financial status, the homogeneity of the group members in terms of their economic
background and the pooling ability to repay the loan. The findings further show that
most respondents most of those borrowers who diverted the money for other uses other
than specified in the loan application forms failed to pay back. Managerial related
reasons in failure to follow up is one of the causes of none payment as well as the
repayment period, high interest rates, poor attitude of the respondents in repaying the
loan, and failure to acquire the money in time. These combined to have an impact on
the ability of the borrowers to repay the loan. The researcher concludes that there is a
significant relationship between the financial status and loan repayment and a
significant relationship between managerial factors and loan repayment. The researcher
recommends that lending institutions must emphasize collateral and improve loan
management strategies as a means of improving loan recovery.
Description
A thesis submitted to the school of postgraduate studies in partial fulfillment of the requirements for the award of the degree of master of arts in human resource management of Kampala International University
Keywords
Loan repayment, Rural areas, Lyamujjungu Cooperative Bank, Cooperative banks