Factors Influencing Loan Repayment Default in Micro-Finance Institutions: The Experience of Imenti North District, Kenya

Nguta, Munene H.; Huka, S. Huka
March 2013
International Journal of Applied Science & Technology;Mar2013, Vol. 3 Issue 3, p80
Academic Journal
Microfinance institutions in Kenya have suffered significant loan repayment default resulting into subsequently decreased employment levels and cash flow problems in microfinance institutions. This study was carried out in order to establish the causes of such repayment defaults in Imenti North District, Kenya. Using a descriptive survey design individual microfinance loan beneficiaries and microfinance institution officials were studied. A representative random sample of 400 respondents was selected from the study population using census and cluster sampling procedures for micro finance institutions officers and loan beneficiaries respectively. Data collected using both structured and unstructured questionnaires were analyzed using descriptive and inferential statistics. The findings of the study revealed that there was significant relationship between the type of business (p=0.000<0.05), age of the business (p=0.000<0.05), number of employees (p=0.011<0.05), business profits (p=0.000<0.05) and loan repayment default. The study further indicates a strong link between technical training for loan beneficiaries and the performance of entrepreneurial businesses among the remote communities. The study therefore recommends that the stakeholders in the microfinance sector should ensure that the loan borrowers have access to adequate relevant technical training in entrepreneurial microfinance businesses.


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