The main objective of the study is to identify the borrower characteristics that discriminate them into defaulters and non- defaulters and examine the determinants of loan repayment and their credit worthiness in Microfinance institutions in Vavuniya district in Sri Lanka. In line with above general objective, this study has the following specific objectives:
To identify the borrower characters those classify them into defaulters and non-defaulters in the study area.
To evaluate the impact of major demographic characters such as age, gender, levels of education, civil status and family members of the borrowers that impact on their repayment performance and credit worthiness.
To investigate how the farming characters like income, farm size, ownership of land, farming experience and availability of non-farm income as well as farmers' attributes such as purposes of loan, crop failure, weather conditions and knowledge about loans affect loan repayment and discriminate the borrowers into two groups in the study area.
Financial institutions and banks have major role in financial sector as well as rural sector of an economy in terms of providing loans to the rural community in developing countries like Sri Lanka. The borrowers especially, farmers are able to get the loans from the microfinance institutions to improve their living standard through agricultural activities and generate their income. Even the borrowers have chances to receive the loans, the microfinance institutions and banks are facing the problems to recover the loans from the borrowers. Thus, default rate among the borrowers has been increasing over time which is the difficult task to manage the banks and financial institutions. There are a number of many factors particularly demographic and farming characters that affect the loan repayment rates. There has not been any empirical research conducted regarding to repayment performance among the borrowers who get the loans from SANASA Thrift, Credit and Cooperative Society (TCCS) banks in Vavuniya district. Therefore, this study tries to provide the relevant information for a better understanding on the determinants of loan repayment performance of the borrowers and the information will be useful for policy makers, other lending institutions and stakeholders for their future decision making on granting the loans for their clients.
Inhaltsverzeichnis (Table of Contents)
- Abstract
- 1.0 Introduction
- 1.1 Overview of SANASA Thrift, Credit and Cooperative Society (TCCS) banks
- 1.2 Literature Review
- 1.2.1 Repayment performance and its determinants: Binary logistic model
- 1.2.2 Repayment performance and its determinants: Linear discriminant function model
- 1.3 Research questions
- 1.4 Objectives of the study
- 1.5 Significance of the study
- 1.6 Methodology
- 1.6.1 Measurement of the variables
- 1.6.2 Analytical tools
- 1.7 Results and discussion
- 1.8 Conclusions and recommendations
- References
Zielsetzung und Themenschwerpunkte (Objectives and Key Themes)
This research investigates the factors that influence loan repayment behavior among microfinance borrowers in the Vavuniya district of Sri Lanka. The study aims to identify the characteristics that distinguish borrowers who default on loans from those who do not, analyzing demographic, farming, and attribute-related factors. The study employs a combination of discriminant and logistic models to assess these relationships.
- Repayment performance of microfinance borrowers in Sri Lanka
- Factors influencing loan repayment behavior
- Demographic characteristics and their impact on repayment
- Farming characteristics and their influence on loan repayment
- Attributes of borrowers and their contribution to creditworthiness
Zusammenfassung der Kapitel (Chapter Summaries)
- 1.0 Introduction: This chapter provides an overview of the agricultural sector in Sri Lanka, highlighting its significance for rural development. It introduces the concept of microfinance and its role in supporting smallholder farmers. The chapter also presents SANASA Thrift, Credit, and Cooperative Society (TCCS) banks, which are the focus of the study, and describes their services and operations.
- 1.1 Overview of SANASA Thrift, Credit and Cooperative Society (TCCS) banks: This section delves deeper into SANASA TCCS banks, outlining their history, purpose, and operating model. It discusses the types of loans offered by the bank and their outreach to rural farmers.
- 1.2 Literature Review: This chapter examines existing research on the determinants of loan repayment performance. It specifically focuses on two methods: binary logistic models and linear discriminant function models. The review presents examples of studies conducted in other countries that have investigated these factors.
- 1.3 Research questions: This section outlines the research questions guiding the study, which are related to identifying the factors that influence loan repayment behavior among SANASA TCCS borrowers and how these factors contribute to distinguishing defaulters from non-defaulters.
- 1.4 Objectives of the study: The objectives of the study are stated, aiming to identify the determinants of repayment performance, classify borrowers into defaulters and non-defaulters, and explore the relationship between demographic, farming, and attribute-related characteristics and repayment behavior.
- 1.5 Significance of the study: The importance of the study is highlighted, emphasizing its contribution to understanding loan repayment behavior in the Sri Lankan context and providing valuable insights for improving microfinance practices and mitigating financial risk.
- 1.6 Methodology: This chapter details the research methodology employed in the study, including the data collection methods, sampling technique, and analytical tools used. It discusses the variables measured and the statistical models applied for data analysis.
- 1.7 Results and discussion: This section, which is not included in this preview, would present the results of the statistical analyses conducted in the study and interpret their significance. It would likely discuss the findings related to the factors influencing loan repayment and the characteristics that distinguish defaulters from non-defaulters.
Schlüsselwörter (Keywords)
This study explores the factors impacting loan repayment behavior among microfinance borrowers in Sri Lanka, particularly focusing on demographic and farming characteristics. The research uses discriminant and logistic models to analyze the repayment performance of borrowers, distinguishing defaulters from non-defaulters. Key concepts investigated include creditworthiness, loan repayment performance, and the influence of various borrower attributes on their ability to repay loans.
- Quote paper
- Aruppillai Thayaparan (Author), B. Sivatharshika (Author), 2019, Borrowers' characteristics and their impact on repayment behaviour in Sri Lanka. An application of discriminant and logistic models, Munich, GRIN Verlag, https://www.grin.com/document/511724
