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Credit management techniques and effect on agricultural loan repayment performance: The case of prospect microfinance bank, Akwa- Ibom State, Nigeria
Abstract
The study assessed the effect of credit management techniques on agricultural loan repayment in Akwa Ibom State Nigeria using the Prospect Microfinance Bank (PMB) as a case study. The specific objectives were to examine the socio-economic characteristic of the farmer borrowers; examine the credit management techniques as used by the bank; the extent to which the customers divert loans and their loan repayment performance in terms of default and ascertain the determinants of loan repayment performance of the bank. Descriptive statistics, loan diversion and repayment indices as well as the ordinary least squares (OLS) regression techniques were used in the data analysis. The results of the analysis showed that; the mean age of the PMB customers was 43.5 years, about 51% of the loan beneficiaries were females while 49 were males. Again, 57% of them had a household size of 5 persons, with an average of 5 years in their businesses. The average amount of loan collected was N246, 750, out of which N53, 736.73 was used for unintended purpose representing about 22% approximately as loan diversion index. Rate of repayment and default were34% and 64% respectively while level of education and loan duration has positive significant effects on the loan rate of repayment. The result of OLS indicated that age, and interest rate had significant negative effect on the loan repayment at 5% probability level. The study recommended that, PMB should ensure that loan recipients should provide adequate sureties and guarantors to minimize default rate and the recipients should use the facility for the intended economic purposes to ensure repayment.
Keywords: Credit management techniques, and repayment performance
