Abstract:
The main objective of this study was to examine major determinants of loan repayment performance in ACSI Jawi branch. To successfully achieve the objectives, relevant primary data were collected from 168 sample borrowers (84 defaulters and 84 non defaulters) using questionnaire. Substantial primary data were also collected from Manager and loan officers of ACSI Jawi branch using interview. Moreover some secondary relevant data were collected through reviewing documents. For the data analysis, descriptive statistics including mean, frequency, and percentage were used to describe borrowers’ socio-economic, business and loan related characteristics. To examine the variation on some selected socio-economic, business and loan related factors between defaulters and non- defaulter borrowers, t-test and chi-square analyses were also employed. Moreover, a binary logistic regression analysis/Logit model was used to analyze the socio-economic, business and loan related factors that influence loan repayment performance. The findings showed that all the socio-economic independent variables included in this study (borrowers’ gender, age, place of residence, marital status, educational level, family size, source of income from activities not financed by the received loan, and monthly income level earned from activities financed by loan) significantly determine loan repayment performance. The findings also revealed that business related factors like having saving account experience, accounting/financial records experience, business experience, and business information significantly determine loan repayment performance, but conducting market study before starting business has no significant influence on loan repayment performance of borrowers. Among loan related independent variables included in this study, the analysis portrayed that except training conducted before taking loans, the remaining variables (suitability of loan repayment period, time lines of loan release, adequacy of supervision of loan utilization and loan repayment, applying the received loans on the purposes specified in the agreement and adequacy of loan) significantly determine loan repayment performance of borrowers. ACSI Jawi branch has a number of challenges and difficulties like Shortage of loan able cashes, Lack of adequate infrastructure (like internet, electricity), Tough competition faced from conventional financial institutions/banks, Lack of adequate highly skilled man power, Poor documentation ,High turnover of employees, Loaners’ loan diversio
