Analysis of loan default/delinquency to microfinance activities
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This research was carried out in order to find out the impacts and causes of loan default to MFIs activities using MFIs in Mash Central as a case study. This study explicitly focused on unearthing the impacts of loan default on MFIs activities, investigating the extent in which loan supervision, monitoring and control affects loan repayment, classifying whether multiple borrowing by clients leads to loan default, finding out whether the use of funds by clients for unintended purpose contribute to loan default. A descriptive survey research design was adopted for this research. The sample size consisted of 150 MFIs clients or borrowers and 75 MFIs loan officers including managers and supervisors drawn from various microfinance institutions was selected by stratified random sampling technique. Self-administered questionnaires and unstructured interviews were the research instruments adopted for data collection. Tables, pie charts and bar graphs were used for data presentation. The Statistical Package for Social Sciences (SPSS) and Microsoft Excel were used for data analysis. The research results discovered that interest rates charged on loans, misuse of funds from its planned use, multiple borrowing has an undeviating effect on repayment. The study also exposed some of the causes that imparted to the default by some clients such as lack of collateral and high interest rates. It was also recommended that further studies be executed at a wider scale, using other statistical models to improve the external validity of these findings.