Jagongo, AmbroseAberi, Aming’a Vincent2020-01-292020-01-292018Aberi, A. V. & Jagongo, A. (2018). Loan default and performance of youth enterprise development fund in Dagoretti South Constituency, Nairobi County, Kenya. International Academic Journal of Economics and Finance, 3(2), 1-202518-2366http://ir-library.ku.ac.ke/handle/123456789/20115Research articleCredit which is channeled into productive use yield good returns whereas the performance of the lender is gauged on the amount of loans disbursed, performing loans and non-performing loans. A majority of the beneficiaries of government initiated credits have had a bad history in loan repayment in that they deem the credit as a grant that should not be repaid. Government institutions (YEDF included) offering credit facilities have had a poor loan performance in that the process of obtaining the credit is tedious making the rate of loan up take to be low, the amount of loan offered is substantially low and while those who have managed to access the loan funds have decided to default. This study sought to determine the relationship between credit default among the youth beneficiaries of the youth enterprise development fund and the performance of the fund in Dagoretti constituency. The main objective of the study was to establish the effect of credit default on the performance of the Youth Enterprise Development Fund in Dagoretti constituency. Business development services like trainings to youth groups, diversion of loaned funds to other projects against the intended proposed projects, borrowers’ characteristics and business failure constituted the independent variables the study concentrated on while the dependent variable was the performance of the Youth Enterprise Development Fund in Dagoretti Constituency, Kenya. Loan performance was measured by investigating the rate of loan repayment, amount repaid and the rate of defaulted the loans. The research methodology that was be employed was of descriptive survey design and the population of the study was selected through random sampling from 124 youth groups that have benefited from the fund and the 2 YEDF officers in Dagoretti Constituency. Data was collected through oral face to face interviews and using questionnaires with both open ended and closed questions. The questionnaires adopted a five point Likert scale which ranges from strongly agree to strongly disagree. Data then was edited for accuracy, uniformity, consistency, completeness and arranged to enable coding and tabulation for final analysis. The study adopted multiple linear regressions to analyze the data. The study established that there was a significant relationship between study variables. Poor business performance, domestic problems and illiteracy were the main factors that led to diversion of the borrowed funds by the youths. This led to loan defaults and business failure. The study concluded that there is need to train the beneficiaries on how well to utilize the funds and also thorough vetting to be done to the applicants before loan disbursement. The need sensitize youths on own savings and financial management skills might mitigate the risk of failure to repay loans.enLoan default and performanceYouth enterprise development fundDagoretti South ConstituencyNairobi CountyKenyaArticle