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Scientific monographs

Small Farmers’ Agricultural Loan Repayment Performance in Southern Ethiopia: monograph

DOI
https://doi.org/10.36074/sfalrpise-monograph.2022
Опубліковано
2022-11-12

Анотація

Rural farmers often look for credit facilities during the agricultural seasons and other constructive activities. However, most developing countries face the severe challenges of getting enough financial support through proper means. Providing low-cost, efficient credit services and recovering a high percentage of loans granted are the ideal aims in rural finance. On the other hand, low repayment performance discourages the lender from promoting and extending credit. Therefore, thoroughly investigating the various aspects of loan defaults is vital for policymakers and lending institutions. Therefore, this thesis was concerned with analyzing factors affecting the agriculture loan repayment performance of borrowers of agricultural lending institutions of the study area and the effect of credit risk on lending institutions’ financial performance. The study was based on secondary data from the District and Zonal Microfinance Institutions and Marketing and Cooperative development departments. Primary data were collected from 140 smallholder agriculture credit borrower farmers. The data were used to describe the respondents' socio-economic, demographic and attitudinal characteristics and institutional factors. T-test and chi-square were used to measure the potential power of continuous and discrete variables in differentiating non-defaulters and defaulters. The logit model was also used to identify variables that determine loan repayment performance. Of 16 explanatory variables, only five: household income, business development services made by the lending institutions, loan disbursement time (suitability of loan disbursement time), loan diversion status of borrowers and celebration of social ceremonies were statistically significant factors affecting repayment performance of agriculture loan of lending institutions. The partial marginal effect analysis shows that borrowers' loan diversion status is the most critical factor among the other five variables. Based on the findings, policy implications were drawn for improving loan repayment performance and sustainability of credit services and institutions in the study areas.

Institutional email ID drsenapathy@wsu.edu.et 

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TABLE OF CONTENTS:

PREFACE
FOREWORD
ABOUT THE AUTHORS
ACKNOWLEDGMENTS
LIST OF ABBREVIATIONS
LIST OF TABLES
LIST OF FIGURES
LIST OF APPENDICES
ABSTRACT

1. INTRODUCTION
1.1. Background of the study
1.2. Statement of the Problem
1.3. Objectives of the Study
   1.3.1. The General Objective of the Study
   1.3.2. The Specific Objectives of the Study
1.4. Research Questions
1.5. Significance of the Study
1.6. Scope and Limitations of the Study
1.7. Organization of the study

2. REVIEW OF PERTINENT LITERATURE
2.1. Definition and Concept
   2.1.1. Credit
2.2. Theoretical literature
   2.2.1. The functioning of credit market in developing countries
   2.2.2. Causes and possible solutions of default
2.3. Empirical studies on loan repayment performance
   2.3.1. Studies in Ethiopia
   2.3.2. Studies in other countries
2.4. Conceptual Framework of the study

3. METHODOLOGY
3.1. Description of the Study Area
3.2. Sampling Design
3.3. Data Type and Source
   3.3.1. Data Collection Tools
   3.3.2. Method of Data Collection
3.4. Methods of Data Analysis
   3.4.1. Empirical Models
   3.4.2. Specification of the Logit Model
   3.4.3. Sensitivity Analysis
   3.4.4. Parameter Estimation
   3.4.5. Testing Hypotheses about the Coefficients
   3.4.6. Interpretation of Parameter Estimates
3.5. Financial Performance Measurement
   3.5.1. Liquidity
   3.5.2. Solvency
   3.5.3. Indebtedness
   3.5.4. Return on Investment (Asset)
3.6. Working Hypotheses and Definitions of Variables

4. DATA ANALYSIS AND RESULTS
4.1. Financial performance measurement
   4.1.1. Liquidity
   4.1.2. Solvency
   4.1.3. Indebtedness
   4.1.4. Return on investment (asset)
   4.1.5. Loan Recovery Performance
4.2. Descriptive Analysis
   4.2.1. Demographic characteristics
   4.2.2. Socio - economic characteristics of the household
   4.2.3. Institutional Factors Affecting Loan Repayment Performance
   4.2.4. Attitudinal Factors Affecting Loan Repayment Performance
4.3. Econometric Results
   4.3.1. Determinants of Agriculture loan repayment performance
   4.3.2. Discussion of the Significant Explanatory Variables
   4.3.3. Marginal effect of significant variable

5. CONCLUSION AND RECOMMENDATIONS
5.1. Conclusion
5.2. Policy Recommendations

6. REFERENCES
7. APPENDICES
8. ETHIOPIA - KEY TECHNICAL TERMS
9. GLOSSARY
10. SUBJECT INDEX

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Year of publication: 2022
Language: English
Authors: Nadew M., Senapathy M.
Translation: No
Translator: -

Type: E-book
Number of pages: 168
Format: PDF (9,2 MB)
ISBN: 979-8-88831-309-1
UDC: -

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