Factors Affecting Loan Repayment Performance of Small Scale Enterprises Financed by Micro Finance Institutions: Study on Private Borrowers around Wolaita and Dawuro Zone

Abstract

Micro finance involves the provision of micro-credit savings and other services to the poor that are excluded by the commercial banks for collateral and other reasons Microfinance is relatively new to Ethiopia and came to existence during 1994-95 Out of which Wolaita zone Micro Finance Institution WZMFI is one among 31 Micro Finance Institutions MFIs to serve needy people in Ethiopia Based on this researchers intended to study major socio- economic factors and loan related factors that determines loan repayment performance of borrowers in WZMFI In fact the identifying and analyzing such determining factors of loan repayment rate is vital in the achievement of profitability and sustainability of MFIs In this connection researchers collected data from primary and secondary resources and analyzed by using two limit Tobit model is used Through the study 15 determinants are selected for evaluation out of which 6 variables are significant and remaining insignificant are found