an analysis of causes of loan delinquency in government microfinance programs in kenya: a case study of the youth enterprise development fund in nairobi county

Description

The purpose of the study was to carry out an analysis of the causes of loan delinquency in Government Microfinance Program in Kenya (A case study of the Youth Enterprise Development Fund in Nairobi County). The study was guided by the following research questions: What effects do institution related causes have on loan delinquency? What influence does credit staff have on the growing volume of loan delinquency? To what extend do client related causes influence loan delinquency? The study adopted a partly descriptive research design which allowed the description of the causes affecting loan delinquency while ranking the causes themselves to determine their degree of influence. The population of the study included 36 staff members currently working for YEDF at Nairobi Regional Office. The whole population of 36 respondents was used in the study and semi-structured questionnaires were administered to the respondents for data collection. Tables, graphs, charts and figures were used in data presentation. Regression analysis and Pearson Correlation were used in data analysis. According to the study findings; on the institution related causes, 90% of the respondents agreed that lack of a well-defined credit policy manual and clear laid down procedures negatively influence loan delinquency while the least number of respondents at 23% chose gender biasness in loan disbursements as a cause of loan delinquency. On the Credit staff related causes, 87% of the respondents highlighted untrained staff as a major contributor of loan delinquency while the least number of respondents at 47% picked excessive pressure on loan officers. On the client related causes, 90% of the respondents agreed that unplanned borrowing greatly contribute to loan delinquency while the least number of respondents at 40% chose employed clientele. On the research findings on regression analysis between independent variables (predictors) and dependent variable (loan delinquency), it is indicated that the strength of association between the variables is very high (r=0.981) and that 93.8% (r Square) change in dependent variable is caused by independent variables while 6.2% is caused by other factors.