Credit terms, Managerial Competences and loan repayment performance among microfinance Insitutions in Kampala District.
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Date
2024-10-31
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Makerere University Business School
Abstract
The purpose of this study was to ascertain how Kampala's Micro Finance Institutions (MFIs)'
lending terms, managerial competences, and loan repayment performance related to one another.
A cross-sectional research design was adopted for this study. In order to minimize bias and provide
all institutions with equal chances of being included in the study, the researcher used simple
random sampling to choose an MFI, choosing 42 out of 47. Given the nature of the research
questions and objectives, multiple regression was used to assess each independent variable's
predictive power in explaining loan repayment performance of MFIs in the Kampala District,
while Pearson correlation was used to test their associations. The results show that among
Kampala's microfinance institutions, credit terms and managerial competencies had a positive and
substantial link with loan payback performance.
The analysis shows a statistically significant correlation between the loan repayment performance
of Micro Finance Institutions in Kampala District and managerial competences as well as credit
terms. These results highlight the significance of taking these aspects into account and optimizing
them in order to increase the probability of successful loan repayment performance. Lastly, the
regression results show that managerial competency and credit terms account for 43.9% (Adjusted
R, Square=.439) of the variability in loan repayment performance, suggesting that other factors
not included in this study account for the remaining 56.1%.
The study recommends that MFIs should always critically review their Credit terms including
collateral, interest rates, credit period and credit history in order to improve their loan recovery
rates. There is equally a need to train the owners/managers and their subordinates by MFIs. This
will develop their skills, help increase their knowledge and managerial abilities thus increasing the
loan repayment performance. A Combination of both competent managers and critical review of
credit terms is crucial for the increase in loan repayment performance.
Description
A dissertation submitted to Makerere University Business School (faculty of graduate studies and research) in partial fulfillment of the award of Master of Business Administration of Makerere University.
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Citation
Jacent,N. (2025). Credit terms, Managerial Competences and loan repayment performance among microfinance Insitutions in Kampala District.