Determinants of Loan Repayment Performance of Smallholder Farmers in Horro and Abay Choman Woredas of Horoguduru- Wollega Zone, Oromia Region, Ethiopia
Journal of Agricultural Economics and Rural Development Vol. 5(3), pp. 648-655, December, 2019. © www.premierpublishers.org, ISSN: 2167-0477 Research Article Determinants of Loan Repayment Performance of Smallholder Farmers in Horro and Abay Choman woredas of Horoguduru- Wollega Zone, Oromia Region, Ethiopia *1Amsalu File, 2Oliyad Sori 1Wollega University, The Campus’s Finance Head, P.O. Box 38, Ethiopia 2Wollega University, Department of Agricultural Economics, P.O. Box 38, Ethiopia Credit repayment is one of the dominant importance for viable financial institutions. This study was aimed to identify determinants of loan repayment capacity of smallholder farmers in Horro and Abay-Chomen Woredas. The study used primary data from a sample of formal credit borrower farmers in the two woredas through structured questionnaire. A total of 120 farm households were interviewed during data collection and secondary data were collected from different organizations. The logit model results indicated that a total of fourteen explanatory variables were included in the model of which six variables were found to be significant.; among these variables, family size and expenditure in social ceremonies negatively while, credit experience, livestock, extension contact and income from off-farm activities positively influenced the loan repayment performance of smallholder farmers in the study areas. Based on the result, the study recommended that the lending institution should give attention on loan supervision and management while the borrowers should give attention on generating alternative source of income to pay the loans which is vital as it provides information that would enable to undertake effective measures with the aim of improving loan repayment in the study area.
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