The objective of this study is to investigate the determinants of microenterprise loan repaymentrnand efficacy of screening (lending) techniques in Ethiopia using data collected from tworntowns, Awasa and Bahirdar, which are among the many towns in the country hostingrnborrowers that benefitted from a credit program initiated by the Government of Ethiopia andrnthe International Development Association in early 1989. According to the findings, numberrnof workers employed, age and weekly repayment period are found to be positively related tornrepaying loall in fuli in a loan period of one year in Awasa. Loan diversion has a negativernrelation. The predicted probability of full loan repayment is 53% for the town. Bahir Darrngives evidence that expectation of getting another loan and number of workers employed arernpositively related to full loan repayment while loan diversion and availability of other sourcesrnof credit are negatively related. The predicted probability of full loan repayment is 78 %. Asrnregards efficacy of screening techniques, there is the problem of separating creditworthyrnborrowers from non-creditworthy borrowers in both towns. There are problems of incorrectrnrationing of creditworthy borrowers, and incorrect financing of non-creditworthy borrowers.rnThere is no gainsaying that there are some good techniques of correctly identifyingrncreditworthy and non-creditworthy borrowers in both towns. However, the problems seemrnmore serious in the case of Awasa than in the case of Bahir Dar.