Determinants of loan repayment performance in ACSI

The main problem of the poor performance of financial institutions in many developing countries is high rate of non-repayment of loan (Fikirte, 2011). This study was intended to identify the determinants of loan repayment performance of ACSI. Hence, depending on theoretical, empirical works and institution specific contexts, the study incorporated different variables which simultaneously affect loan repayment performance of clients of ACSI. On the other hand, in order to identify the factors affecting loan repayment performance descriptive statistics and multinomial logit model were employed. Accordingly, out of fourteen variables hypothesised to affect loan repayment performance of borrowers, eight variables were found to be statistically significant. The maximum likelihood estimates of multinomial logit model showed that sex, age, education level, loan size, interest rate, loan tenure, training and monthly sale were factors affecting loan repayment performance of borrowers of ACSI.