Bank Specific Factors and Loan Repayments Culture of Credit Takers of Microfinance Banks in Kwara State
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Date
2024
Journal Title
Journal ISSN
Volume Title
Publisher
Bayero University Journal of Finance
Abstract
The loan repayment culture in instrumental to the sustainability and effectiveness of the
microfinance banks but overtime, the microfinance banks in Nigeria have been recording high
default rates and over-indebtedness from the loans disbursed to credit takers at various categories.
Hence, this study investigates the effect of bank specific factors on the loan repayment culture of
the credit takers of microfinance banks in Kwara State. Primary data was collected from the loan
officers, account officers and marketers of the 33 microfinance banks in Kwara State as at 2023
and multi-stage sampling technique was utilized in selecting appropriate sample size of 160 staff
of microfinance banks across all the 3 senatorial districts in Kwara State. OLS regression model
was used to analyze the model and the study found that bank specific factors such as funding
adequacy, interest rate, credit appraisal process and loan tenure do not impact on the repayment
culture of the credit takers of microfinance banks in Kwara State. However, the distance to MFBs
appears to be significant indicating the credit takers feel less committed to the repayment of loan
due to the distance of the MFBs. This study recommends that microfinance banks should ensure
proximity to the credit takers for effective monitoring and loan utilization.