Determinants of Client Dropout in the Case of Amhara Credit and Saving Institution in North Gondar Zone Office

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.