Abstract:
Microfinance is small scale financial services - primarily credit and saving services provided to
people who operate small enterprises. Microfinance has dual mission that is to improve the lives
of its customers and at same time achieve operational and financial sustainability. In the course
of realizing its mission both challenges and opportunities are to be countered. One challenge is
dropout of clients. This research aimed to figure out the nature and level of determinant factors of
drop out from the Amhara credit and saving institute- North Gondar zone office.
A base line descriptive study conducted in 9 selected branches of the zone credit and saving
institutions. Simple random sampling technique was applied to select 350 resigned clients from
selected branches. And 18 senior customer relation officers selected using available sampling
method from 9 selected branches.
Both primary and secondary data were collected used in the study. Primary data obtained from
sample of ex- clients and customers relation officers using structured and semi-structured
interview. The interview items were adopted from previous studies.
The collected data analyzed and descriptive statistics like cross tabulation, frequency and
percentage distribution employed to display the results and correlation, regression of the study
variables, and Analysis of variance was made to identify significant variables associated with
dropout.
The results of correlation analysis indicated the association independent variables of factors like
demand, supply, socioeconomic or demographic and environmental factors with the magnitude of
dropout observed at each branch. But the regression analysis identified the magnitude &
predictability of supply factors especially group related problems followed by environmental
factors to have significant contribution (29.2%) to the variance of magnitude of dropout.
Finally it was recommended that microfinance institutions should consider group related
problems and environmental factors so that to maintain the existing and attract the ex-clients.
