Loan Repayment Determinant The Case Of Development Bank Of Ethiopia

Development Bank of Ethiopia plays vital role in supporting the national development agenda byrnproviding loan to viable projects. The study assessed Development Bank of Ethiopia borrower’srnloan repayment determinants in the project financing scheme. The study employed explanatoryrnresearch design and quantitative research approach. Both primary and secondary data wasrncollected from 131 projects financed from January 2012 G.C to June 2018 G.C. Primary datarnwas collected from respective contact officers through questionnaires while secondary datarncollected from each individual files and from data base of the bank. The total population wasrn131, of which 95 (73%) were non-defaulters and 36(27%) were defaulters borrowers. Thernvariables considered in the study were loan amount, number of project follow-up( per year), loanrnrepayment period, educational level of borrowers/general manager, business experience ofrnborrowers/general manager, accessibility of market for product, grace period, technologicalrnadoption, keeping of book of records and interest rate. In the study, Logit regression model wasrnemployed to assess factors of loan repayment determinants of borrower’s. The study exposedrnthat loan amount, borrower’s educational level and its business experience, loan repaymentrnperiod, market accessibility, grace period and number of project follow-up are statisticallyrnsignificant factors of loan repayment determinants of Development Bank of Ethiopia borrower’srnin the project financing scheme. Thus, it is recommended the bank needs to focus on seriouslyrnevaluating loan request of the client and evaluate the purpose of the loan, made seriousrnappraisal study and make sure the loan amount is enough for the project establishment, requitesrnand gives priority for those educated and experienced customer , conduct continues and regularrnfollow up, grant longer repayment period for its borrower to lessen the periodic repayment,rnprovide longer grace period to start production and marketing of its borrower , and studyrnmarket destination of its borrower’s product before signed a loan contract agreement.

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