Determinants of Loan Repayment of Micro and Small Enterprises in Jimma Town, Ethiopia

x ABSTRACT The main objective of this study was to examine the determinants of loan repayment of Micro and Small Enterprises (MSEs) in Jimma town, Ethiopia. This study examined the effect of Individual characteristics, loan characteristics and firm characteristics on loan repayment of micro and smallenterprises in Jimma town only. The study used descriptive researchdesign. Primary data was collected through self administered questionnaire and it was collected from random samples of 341 Micro and SmallEnterprises (MSEs) by stratifying into Five group. Secondary data were also collected frombooks, journals and internet. Once the relevant data was gathered, the collected data was analyzed through descriptive and inferential statistics as well as econometric model known as binarylogistic regression model was used in order to examine determinants that impedingMicro and smallenterprise’s loan repayment by distinguishing characteristics of MSEs.The descriptive result of analyzed data revealed that individual characteristics, loan characteristicsand firm characteristics influenced loan repayment of enterprisesin the study area. In addition,the result of binary logistic regression model indicated that Sex of respondents and Experience positively and significantly affect loan repayment. Theinconvenience of loan payback period, Lack of financial skill and planning negatively and significantly affected loan repayment of enterprises. Lack of Marketing Skills, Follow up and supervision positively and significantly influenced loan repayment of micro and small enterprises. This study recommends thatthe involvement of women in ownership and management of MSE’sshould be improved, the town MSEs bureau should be setting suitable payback periods by communicating and integrating with the federal government and other concerned body, Experience sharing activities on Marketing Skills should be set by bureau of MSEs with supporting institutions to acquire better knowledge and experiences from each other, Financial skill and planningshould be also improved by eliminate traditional work routine by replacing qualified personnel, banks and micro finance institutions should develop means of support , take close control, continuous follow up and supervision. Keywords: - Micro and small enterprises, Lack of loan repayment, Individual characteristics, Loan characteristics, Firm characteristics, Jimma town