Econometric Analysis of Rural Credit Utilization and Repayment Status among Rural Women: A Case of Southern Ethiopia

Natarajan Kolandavel


Delivering productive credit to the rural women has been a key in rural development undertaking. Providing low-cost, efficient credit services and recovering the loans granted are fundamental functions in rural finance. Low repayment performance discourages the lender to extend further credit. Investigation of credit utilization and repayment is of great importance both for policy makers and the lending institutions. The major objective of this study was to identify the major socio-economic, demographic, psychological and institutional factors that affect credit utilization and repayment performance of women members of RuSACCOs of Kindo Koysha Woreda in Wolaita Zone of SNNPR State. In the course of this study, primary data were collected from 96 sample women households and secondary data collected from respective organizations in the study area. The analysis was done using econometric analysis using Binary logit model. Binary Logit Model was used to identify the factors influencing credit utilization and repayment performance of women microcredit borrowers from rural saving and credit cooperatives. 12 continuous explanatory variables and three dummy variables were included in the logit mode. The binary logit model for credit utilization and repayment tested 15 explanatory variables. Out of which, five variables were significant and the rest were insignificant to explain the dependent variables. The loan repayment was significantly influenced by market access, transport road access, prior business engagement of women before the loan and economic motivation. Similarly, Credit utilization was significantly affected by four variables which were age of women, prior business engagement of women before the loan, transport road access and economic motivation. Thus, the findings identified need to be reckoned and suitable strategy to be introduced by RuSACCO management and policy makers to improve the loan utilization and repayment performance of women.

Keywords: RuSACCO, loan Repayment performance, Microcredit utilization, micro-finance

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