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Determinants of loan repayment among agricultural microcredit finance group members in Delta state, Nigeria

Author

Listed:
  • Solomon Enimu

    (University of Calabar)

  • Emmanuel O. Eyo

    (University of Calabar)

  • Eucharia A. Ajah

Abstract

Background This study examined the determinants of loan repayment among microcredit finance group members in Delta State, Nigeria. Methods To capture the determinants of loan repayment in the study area, a total of 48 microcredit groups and 300 microcredit group members were randomly selected through a multi-stage random sampling technique. The study data was collected by questionnaire. Statistical tools such as simple descriptive statistics (table, frequency, percentage and mean) and a multiple regression analysis were used to examine the data. Results The results indicate that females form a greater proportion of the study area microcredit group members at 70%, moreover 73% of the respondents have a household size of between 6 to 10 persons. These findings revealed that the groups had a mean 8 years of existence with a mean membership size of 13 persons. Further, an average interest rate of 40 percent per annum was charged on loans, with mean loan duration of 6 months. The regression’s result demonstrated that the determinants of the group member’s loan repayment included the group member’s age, household size, house income, and educational level, the amount of credit received, length of stay in their locality, distance to the credit source, supervision and disbursement lag. Conclusion Therefore it was suggested that the various agricultural microcredit finance groups should carefully examine the significant determinants of loan repayment for the approach’s viability and sustainability and for optimum repayment performance.

Suggested Citation

  • Solomon Enimu & Emmanuel O. Eyo & Eucharia A. Ajah, 2017. "Determinants of loan repayment among agricultural microcredit finance group members in Delta state, Nigeria," Financial Innovation, Springer;Southwestern University of Finance and Economics, vol. 3(1), pages 1-12, December.
    • Handle: RePEc:spr:fininn:v:3:y:2017:i:1:d:10.1186_s40854-017-0072-y
    DOI: 10.1186/s40854-017-0072-y
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    References listed on IDEAS

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    3. Sharma, Manohar & Zeller, Manfred, 1997. "Repayment performance in group-based credit programs in Bangladesh: An empirical analysis," World Development, Elsevier, vol. 25(10), pages 1731-1742, October.
    4. Geetha Nagarajan & Richard Meyer & Douglas Graham, 1999. "Does Membership Homogeneity Matter for Group‐based Financial Services? Evidence from the Gambia," African Development Review, African Development Bank, vol. 11(1), pages 87-102.
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    Cited by:

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    3. Andualem Kassegn & Ebrahim Endris, 2022. "Factors affecting loan repayment rate among smallholder farmers got loans from the Amhara Credit and Saving Institution: In the case of Habru District, Amhara Regional State, Ethiopia," International Area Studies Review, Center for International Area Studies, Hankuk University of Foreign Studies, vol. 25(1), pages 73-96, March.
    4. Martinson Ankrah Twumasi & Abbas Ali Chandio & Ghulam Raza Sargani & Isaac Asare & Huaquan Zhang, 2022. "Off-Farm Employment and Agricultural Credit Fungibility Nexus in Rural Ghana," Sustainability, MDPI, vol. 14(15), pages 1-15, July.
    5. Jisha, K K & Palakkeel, Prashobhan, 2023. "Availability of agricultural credit: determinants, marginal effect, and predicted probability," Agricultural and Resource Economics: International Scientific E-Journal, Agricultural and Resource Economics: International Scientific E-Journal, vol. 9(4), December.
    6. Francis Lwesya & Adam Beni Swebe Mwakalobo, 2023. "Frontiers in microfinance research for small and medium enterprises (SMEs) and microfinance institutions (MFIs): a bibliometric analysis," Future Business Journal, Springer, vol. 9(1), pages 1-18, December.
    7. Abbas Ali Chandio & Yuansheng Jiang & Abdul Rehman, 2018. "Credit margin of investment in the agricultural sector and credit fungibility: the case of smallholders of district Shikarpur, Sindh, Pakistan," Financial Innovation, Springer;Southwestern University of Finance and Economics, vol. 4(1), pages 1-10, December.
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    9. Terfa W. Abraham, 2018. "Estimating the effects of financial access on poor farmers in rural northern Nigeria," Financial Innovation, Springer;Southwestern University of Finance and Economics, vol. 4(1), pages 1-20, December.

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