Effect of Loan Default on Financial Performance of Microfinance Insitutjons in Embu County: A Case Study of Bimas Limited- Embu County
Loading...
Date
2019
Authors
Journal Title
Journal ISSN
Volume Title
Publisher
University of Embu
Abstract
This study ought to assess the effects of loan default on financial performance of microfinance
institutions in Embu. The study attempts to provide means by which microfinance institutions in
Embu County such as BIMAS will reduce loan default andimprove financial performance. The
study has three objectives which are to identify causes of 1'oan de1;tult by MFls' clients, identify
ways loan officers can use to ensure loan repayment is done on time. Give recommendations
microfinance institutions could use to ensure loan repayment as scheduled and finally identify
the costs of loan default on financial performance of microfinance institutions. Objectives were
achieved through data collected from BIMAS by use of questionnaire for both Loan Officers and
clients. The data collected was analyzed using SPSS version 22. :The findings from the study
indicated that diversion of funds to unintended purpose, inability to' generate enough profits from
business, high interest rates and clients having multiple loans affect' the ability to repay loans on
time. Microfinance institutions to have proper loan appraisal, adequate monitoring of loans, use
of third-party guarantors and have appropriate lending procedures' to minimize loan default. In
conclusion, loan default had negative effect on fina;1cial performance of microfinance
institutions (Birnas Limited) and their sustainability.
Description
Keywords
Citation
University of Embu, Undergraduate Projects 2019