Determinants of Loan Repayment Performance of Omo Microfinance Institution: In the Case of Mizan Aman Town, Southwest Ethiopia

Subject area The case is suitable for undergraduate and MBA courses: strategic management, social entrepreneurship. Study level/applicability Masters, Bachelors. Case overview In Fortaleza, January 2008, an urban microfinance manager and the planning committee of Crediamigo, Brazil's largest microfinance institution need to devise an entry strategy to Rio de Janeiro's microfinance market. A part of the Banco do Nordeste, and a regional development bank for ten years, Crediamigo has 400,000 clients in the Northeast of Brazil. Its objective is to double its clients base for 2011; Rio de Janeiro's market was the next priority. Crediamigo has two options. The first consists of partnering with VivaCred, a small experienced microcredit non-governmental organization (NGO) which operates in Rio de Janeiro's slums. VivaCred was a microfinance NGO with relatively low organizational capabilities and with a low performance in terms of loan repayment. Its lending methodologies were different from Crediamigo's experience. The second option was to set up a new branch of Crediamigo in Rio and to shape it in Crediamigo's image. The committee was aware that this, “far away from home”, would be a costly and slow venture. Expected learning outcomes After using this case, students will: have been exposed to the strategic, managerial and operational challenges of microfinance expansion in an emerging country; understand better the market entry strategy (acquisition/integration of an organization vs green field) in such a context; have discussed the conditions related to the replication of microcredit methodologies (individual, group and village lending methodologies) in their contexts of operations. Supplementary materials Teaching notes are available for educators only. Please contact your library to gain login details or email [email protected] to request teaching notes.

Download Full-text

Factors Affecting Loan Repayment Performance of Microfinance Institution Borrowers

International Journal of Applied Behavioral Economics ◽

10.4018/ijabe.2019040103 ◽

2019 ◽

Vol 8 (2) ◽

pp. 27-43

Author(s):

Akalewold Fedilu Mohammed ◽

Mesfin Hirpato Wobe

Keyword(s):

Random Sampling ◽

Quantitative Methods ◽

Secondary Data ◽

Sampling Technique ◽

Loan Repayment ◽

Factors Affecting ◽

Qualitative And Quantitative ◽

Qualitative And Quantitative Methods ◽

Microfinance Institution ◽

Major Factors

This study investigated the factors that affect the loan repayment performance of Omo Microfinance Institution borrowers at Wondo Genet Woreda, Ethiopia. Both primary and secondary data were used in the study. The required data were collected from 225 borrowers of Omo Microfinance. Respondents were selected by a stratified random sampling technique. Both qualitative and quantitative methods of analysis were used. The findings of the study revealed that 44.9% of borrowers in the study area did not repay the amount of money they borrowed as per credit schedules. The major factors that affect the loan repayment performance of borrowers were their sex, educational level, family size, borrowing experience, timelines of loan, repayment period and advisory visit.

Download Full-text

ENTREPRENEURIAL AND BUSINESS SKILLS AND LOAN REPAYMENT RATES OF MICROFINANCE CLIENTS IN GHANA

Journal of Developmental Entrepreneurship ◽

10.1142/s1084946716500242 ◽

2016 ◽

Vol 21 (04) ◽

pp. 1650024

Author(s):

DANIEL AGBEKO ◽

VINCENT BLOK ◽

SWF OMTA ◽

G VAN DER VELDE

Keyword(s):

Empirical Evidence ◽

Loan Repayment ◽

Business Skills ◽

Self Evaluation ◽

Business Experience ◽

Microfinance Institution ◽

Better Than

Entrepreneurial and business skills are generally considered key to microbusiness success, hence to Microfinance Institution (MFI) clients’ loan repayment as well. However, empirical evidence is largely lacking, and where present, it is inconclusive on the importance of these skills for microfinance success. The present paper uses objective MFI loan repayment data to empirically test whether loan repayment rates positively correlate with self-evaluations on entrepreneurial and business skills of loan clients. A survey was conducted among 235 loan clients of uniCredit — an MFI in Ghana. We establish that MFI clients’ self-evaluation of their entrepreneurial and business skills are not related to their loan repayment rates. However, we observe that women repay their loans better than do male microbusiness entrepreneurs, and loan repayment was also better for those entrepreneurs with more than 15 years of business experience.

Download Full-text

An Investigation into the Impact of COVID-19 on the Performance of a Non-profit Microfinance Institution

Asian Journal of Agricultural Extension Economics & Sociology ◽

10.9734/ajaees/2021/v39i1130739 ◽

2021 ◽

pp. 175-181

Author(s):

B. Zaneta Prarthana ◽

K. R. Ashok ◽

K. Mahendran ◽

Srivara Buddhi Bhuvaneswari

Keyword(s):

Tamil Nadu ◽

Ground Level ◽

Microfinance Institutions ◽

Loan Repayment ◽

Non Profit ◽

Before And After ◽

Microfinance Institution ◽

The Government ◽

Negative Impacts ◽

The Impact

This article deals with the effect of the COVID-19 pandemic on the performance of a non-profit microfinance institution operating in the Nilgiris and Perambalur districts of Tamil Nadu in India. The primary focus of the paper is on the microfinance institute’s financial performance in terms of outreach and portfolio quality before and after the coronavirus outbreak. The most worrisome factors that were encountered in due course of the study include a decline in loan portfolio and clientele, and an increasing trend in portfolio at risk (PAR) percentage due to a surge in client overdues, outstanding loan amount and rise in number of delinquent clients. These negative impacts on performance were further investigated by establishing a connection to the clients’ repayment ability. A survey was conducted among the women clients of the microfinance institution by enlisting 120 respondents, 60 from each district to identify the various constraints faced by them in loan repayment as a result of the government-imposed lockdown that affected their livelihood and curbed their source of income. Therefore, an attempt has been made to bring out the ground level realities that played an important role in disrupting the normal functioning of the microfinance institution during the pandemic outbreak. This will prove useful in setting guidelines for future crises of like nature to enable microfinance institutions to keep functioning efficiently without any drastic changes to their performance.

Download Full-text

Rekonstruksi Kelembagaan Ekonomi dengan Mengoptimalkan Peran Pedagang Desa

MIMBAR Jurnal Sosial dan Pembangunan ◽

10.29313/mimbar.v32i1.1743 ◽

2016 ◽

Vol 32 (1) ◽

pp. 65

Author(s):

Jajat Sudrajat ◽

Norasari Arani

Keyword(s):

Economic Development ◽

Qualitative Method ◽

Loan Repayment ◽

Credit Guarantee ◽

Rural Economic Development ◽

Positive Side ◽

The Social ◽

Microfinance Institution ◽

Economic Development Model

This study is aimed to analize the role of middlemen in rural economic institution and formulate the economic development model through optimalization the role of middlemen. This study was done by conducting literature research. Data were analized by using qualitative method. The results of study conclude that middlemen have strategic positions in rural economic development although their role has negative and positive side. In evolving the positive side, there must be other institution which has capability to substitute part of middlemen role. That is microfinance institution (MFIs) which also play the role as an empowerment institution. In loan mechanism, the middlemen can be functioned as a credit guarantee institution. Credit guarantee from middlemen is not only as a contract in agriculture product marketing, but also as the supervision way to create obedience in loan repayment by farmers. The implementation of this pattern is purposed to nurture the social capital in rural economic system.

Download Full-text