A survey of factors influencing loan defaults of small micro micro-enterprises financed by co-op bank

Abstract

the purpose of this study was to determine the factors influencing loan defaults of Small Micro Enterprises financed by Co-operative Bank Loan default has lead to heavy losses to banks and other financial organisations, Over the years banks have been a victim of loan defaults. The borrowers also have over the past been affected by the high interest charged by banks. The study will focus on certain factors which are likely considered cause of the loan defaults. These includes loan appraisal and follow up by the Bank, Economic factors, Business Failures, Interest rates ,Loan repayment schedules among others. The study will be of importance to banks in dealing with loan defaults, Bankers in Understanding their cIientale,The Government in formulating Policies dealing with loans ,Youth and SME,Credit firms and MFIs,The general public in understanding Good credit management ,Policy makers like CBK in dealing with rates charged by Banks, Donor bodies such as USAID,DANIDA and future researchers. The research adopted a descriptive research design and a population size of 150 which was the total population of customers in selected areas In N.C.B.D Ngara ,Park road areas and are customers with loans at Co-op Bnak.A sample size of 10% was drawn from the population. A systematic sampling technique to select the respondents where every 5th customer was picked from the list was employed. Data was collected by use of both closed and open ended questionnaire method. Data was analyzed using descriptive statistics including frequency distribution means, mode and standard deviation. Data presentation was inform of pie charts ,tables and bar graphs. At the end of the study the researcher was able to answer the research questions on Factors Influencing Loan defaults In Small Medium enterprises Financed by Co-op Bank.