DETERMINANTS OF LOAN REPAYMENT PERFORMANCE: A STUDY OF MICRO FINANCIAL INSTITUTIONS IN NAGPUR DISTRICT
Keywords:
Microfinance, loan repayment, borrower behavior, experience, training.Abstract
This study examines the factors influencing loan repayment performance among microfinance
groups in Nagpur District. The analysis reveals that experience, training time, and sanctions
significantly impact repayment behavior. Longer participation in the microfinance program
strengthens relationships and stabilizes business operations, leading to better repayment
outcomes. Adequate training in financial and business management improves clients' ability to
manage their loans. The presence of sanctions also positively influences repayment, as the threat
of enforcement encourages borrowers to fulfill their obligations. However, larger group sizes
were linked to lower repayment performance, possibly due to challenges in monitoring and
enforcing repayment. Surprisingly, factors such as the gender of the group leader, education
level, homogeneity, and MFI type did not significantly affect repayment behavior. The
unexpected insignificance of gender challenges the assumption that women are inherently more
reliable borrowers, suggesting that the financial burden of multiple loans may be a contributing
factor. The study emphasizes the need for further research on gender dynamics and other factors
affecting loan repayment.
