Abstract:
Development Bank of Ethiopia is one of the state-owned financial institutions which supports
economic growth & development in Ethiopia by providing short-term, medium term and long term loans to investment projects prioritize by the government. This study was focus on the
determinant of successful loan repayment performance of customers in case of DBE, Gondar
district. Descriptive and inferential statistics and also explanatory type research designs was
employed. The study used both primary and secondary data sources. The primary source was
collected by using questionnaires and interviews whereas secondary source was gathered from
published and unpublished documents. Concerning on the sample size, 150 borrowers were used
as a whole by using census study. To this end close ended questionnaires distributed to the 150
borrowers and structure interview prepared to manager and team managers of Gondar district
.Data was analyzed and interpreted by using descriptive and inferential statics and also with the
help of Stata version 14.0 and used qualitative analysis like interview and document analysis.
The statistical significance between dependent variable (successful loan repayment
performance) and independent variable (borrower related factors, bank related factors and
other related factors) were tested by using chi-square test and the causal relation was
determined logistic regression (binary Logit Model). The finding of the study showed that KYC,
credit appraisal, collateral and market arrangement are positive and significant determinate to
loan repayment performance. While, poor credit management, political influence, and natural
hazard have negative effect and significant on loan repayment performance. Moreover, loan
diversion has negatively associated to loan repayment performance and its effect is statistically
insignificant.
Finally, based on the inferential statistics and econometric model analysis, the researcher has
recommend the customer to adopt good record keeping and controlling system and the bank also
conduct proper due diligence assessment, good appraisal and embrace full-fledged collateral to
the loan.
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