Loan Appraisal Protocol for Effective Microfinance Portfolio in Tanzania

Danstun NGONYANİ; Halil SERBES

doi:https://doi.org/10.30927/ijpf.733207

Article Details

Loan Appraisal Protocol for Effective Microfinance Portfolio in Tanzania

Authors:

Danstun NGONYANİ | Halil SERBES

Publisher:

Adnan GERÇEK

Main Topics:

Economics and Finance

Journal:

International Journal of Public Finance 2020 Vol.5 Issue 2, pp.193-210

Document Type:

Article

Publication Date:

12/2020

Document Language:

English

Document ID (Org No.):

2000470208

Frequency:

Bi-Annual

eISSN:

2548-0499

DOI:

https://doi.org/10.30927/ijpf.733207

Abstract:

 

The aim of this article is to provide a comprehensive analysis on loan application appraisal protocol for effective microfinance portfolio in Tanzania. This study utilizes random sampling method and ordinary least square regression model on 219 microfinance institutions collected from Dar es Salaam, Morogoro and Dodoma regions. The results show that borrower business income, capital of borrower, membership duration of borrower and social collateral of borrowers have negative and significant impact on portfolio at risk of microfinance institutions. The findings therefore indicate that portfolio at risk of microfinance institutions can be reduced by (i) microfinance institutions to consider sound cash flow of the main business of microfinance client to enhance repayments; (ii) microfinance institutions must provide credit facilities to borrowers with relatively high capital in their business; (iii) microfinance institutions should extend credits to borrowers who are frequently willing to access credit facilities to enhance regular repayments; (iv) microfinance institutions should encourage borrowers to use group lending when accessing credits for effective repayments and diminish the risk of microfinance loan portfolio.

 

The aim of this article is to provide a comprehensive analysis on loan application appraisal protocol for effective microfinance portfolio in Tanzania. This study utilizes random sampling method and ordinary least square regression model on 219 microfinance institutions collected from Dar es Salaam, Morogoro and Dodoma regions. The results show that borrower business income, capital of borrower, membership duration of borrower and social collateral of borrowers have negative and significant impact on portfolio at risk of microfinance institutions. The findings therefore indicate that portfolio at risk of microfinance institutions can be reduced by (i) microfinance institutions to consider sound cash flow of the main business of microfinance client to enhance repayments; (ii) microfinance institutions must provide credit facilities to borrowers with relatively high capital in their business; (iii) microfinance institutions should extend credits to borrowers who are frequently willing to access credit facilities to enhance regular repayments; (iv) microfinance institutions should encourage borrowers to use group lending when accessing credits for effective repayments and diminish the risk of microfinance loan portfolio.

Article Details

Loan Appraisal Protocol for Effective Microfinance Portfolio in Tanzania

Authors: Danstun NGONYANİ | Halil SERBES

Publisher: Adnan GERÇEK

Main Topics: Economics and Finance

Journal: International Journal of Public Finance 2020 Vol.5 Issue 2, pp.193-210

Document Type: Article

Publication Date: 12/2020

Document Language: English

Document ID (Org No.): 2000470208

Frequency: Bi-Annual

eISSN: 2548-0499

DOI: https://doi.org/10.30927/ijpf.733207

Issues

Authors:

Danstun NGONYANİ | Halil SERBES

Publisher:

Adnan GERÇEK

Main Topics:

Economics and Finance

Journal:

International Journal of Public Finance 2020 Vol.5 Issue 2, pp.193-210

Document Type:

Article

Publication Date:

12/2020

Document Language:

English

Document ID (Org No.):

2000470208

Frequency:

Bi-Annual

eISSN:

2548-0499

DOI:

https://doi.org/10.30927/ijpf.733207