Determinants of Repayment of Loan Beneficiaries of Micro Finance Institutions in Southeast States of Nigeria

The study investigated the loan repayment, its determinantsand socio-economic characteristics of microfinance loanbeneficiaries in the Southeast states of Nigeria. It was carriedout in three states of the five southeast states. Using a multistagesampling technique, a total of 144 loan beneficiaries in thethree segments of MFIs, namely; formal (commercial and developmentbanks); semi-formal (NGOs-MFIs) and informal(ROSCAS, “Isusu” and co-operative societies) were randomlyselected and interviewed in the three states. An ordinary leastsquare (OLS) multiple regression analysis was carried out toisolate and examine the determinants of loan repayment fromthe respondents’ perspective. Results showed that beneficiarieshad low level of education, operated enterprises at a relativelysmall scale, had large family size and were of middle age.Further, it was found out that the majority of the respondentswere involved in farming enterprise (crop and poultry) eventhough trading was the most prominent single non-farmingenterprise (trading, processing and artisanship). The result affirmedthat the informal sector respondents recorded the bestrepayment rate, followed by the respondents of semi-formaland the banks brought the rear. Outstanding among the determinantsof loan repayments from the respondents’ perspectivewere; loan size, level of education, experience, profitabilityand portfolio diversity. These, therefore deserve special attentionin loan administration of MFIs.