Determinants of Loan Repayment of Small and Microfinance Institution, in Case of Gambella City, Gambella Regional State

The primary objective of this study was to find out the factors affecting micro and small enterprises loan repayment in Gambella regional city, Ethiopia. This study examined factors determining loan repayment, loan features that affect MSEs' ability to repay loans, and firm characteristics that affect loan repayment for micro and small enterprises in gambella regional city only. The study used both descriptive statistical analysis and econometric analysis. Therefore, the primary data was collected through both ended and closed-ended interview schedules from random samples of 141 micro and small enterprises by stratifying into five groups. When the appropriate data was collected, the collected data was analyzed through a descriptive and econometric model known as the logistic regression model, which was employed to analyze determinants and factors that affect micro and small enterprises loan repayment by distinguishing the characteristics of MSEs. Therefore, Logistic regression result eight variables that were found to be significant in relationship to loan repayment. The dependent size, experience, marital status, education, training, income, loan size, and business sector. Based on the finding obtained from econometrics analysis of the study the following recommendations are derived. Microfinance and other institutions concerned need to determine an appropriate loan size that is sufficient for the purpose of business. Therefore, microfinance institutions have to find a way in which uneducated members of the community can better benefit from the services rendered by the institution. Experience should be considered by microfinance before loan disbursement, and they should also include experience in their loan criteria. A financial institution should provide orientation and training to enhance the financial management, saving, and bookkeeping skills to the borrowers. Microfinance should be given special support to those enterprise that are engaged in the Service, petty-trade, followed by the construction sector, Agriculture, in order to achieve the objective of micro- and small-scale enterprise development.