Examining the Critical Factors Affecting the Repayment of Microcredit Provided by Amanah Ikhtiar Malaysia

Wahab, Sazali Abdul; Malarvizhi, C. A.; Mariapun, S.

doi:10.2139/ssrn.1943925

Cited by 12 publications

(14 citation statements)

References 10 publications

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“…The findings from Table 1 also show that the SACCOS lent to only 5 groups which was 1% of the loan portfolio. The findings are contrary to various scholars who recommended the group lending for effective loan portfolio management in MFIs (Crabb and Keller 2006;Simtowe and Zeller 2006;Al-Mamun et al 2011). The findings further revealed that groups also defaulted their loans like individuals.…”

Section: Individual and Group Loanscontrasting

confidence: 78%

“…Crabb and Keller (2006) found that group lending methodologies reduce the loans portfolio risk compared to individual loans lending. The same results were confirmed by Gómez and Santor (2008) for MFIs in Nova Scotia Canada, Diagne and Zeller (2001) and Simtowe and Zeller (2006) in Malawi, Ofuoku and Urang (2009) in Nigeria, Satgar (2003) for Grameen bank in Bangladesh and Al-Mamun et al (2011) in Malaysia. Similarly, Nawai and Shariff (2010) revealed that the group lending is effective loan portfolio management in their paper which reviewed the literatures describing the determinants of repayment performance in microcredit programs.…”

Section: Characteristics Of Effective Loan Portfolio Managementsupporting

confidence: 62%

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Effectiveness of Loan Portfolio Management in Rural SACCOS: Evidence from Tanzania

Magali

2014

Business and Economic Research

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This article uses 496 loans from ABC rural SACCOS located in the Northern zone of Tanzania to describe the effectiveness of loan's portfolio management. The data analysis is done by using the multivariate regression, descriptive and qualitative methods. The data for this study was collected at the end of May 2013. The findings reveal that women constituted 52.6% of the loan portfolio. Also the doubtful and bad loans were 51 and 31 million TZS which was more than 10% of the loan portfolio. The findings show loans were aged into 4 classes and the loans aging was not very effective because loans of different ages were classified in a single class. The results from the regression analysis reveal that the quality of loan portfolio was positively influenced by the loan size while the influence of gender and location of the borrowers were not significant. Moreover, ABC rural SACCOS used portfolio diversification, collateral, guarantors, letter from the village/ward government offices and the affidavit from the lawyer as credits risk mitigation techniques. The findings also revealed that fluctuation of the price of agricultural produce threatened the quality of loan portfolio. This article recommends that ABC rural SACCOS should seek the effective insurance services, use the effective software for loan portfolio management, search the market for agriculture produce, write off non repaid loans, enhance the repayment of overdue loans and revise the loan classes and maturity in order to improve the quality of the loan portfolio in the SACCOS.

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Section: Individual and Group Loanscontrasting

confidence: 78%

Section: Characteristics Of Effective Loan Portfolio Managementsupporting

confidence: 62%

Effectiveness of Loan Portfolio Management in Rural SACCOS: Evidence from Tanzania

Magali

2014

Business and Economic Research

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“…According to Schultz (1993), human capital is a process of training that enhances an individual's knowledge, skills, and abilities to reduce the level of economic vulnerability. Many studies highlighted that the importance of micro-credit programs on income generation among low-income households (Samer et al 2015;Terano et al 2015;Omar et al 2012;Al-Mamun et al 2011;Saad and Duasa 2011). Thus, micro-credit and training programs can be provided for households to improve their income in order to minimize the level of economic vulnerability.…”

Section: Theoretical Foundationmentioning

confidence: 99%

“…Micro-credit programs are expected to uplift the low-income households by providing them a small amount of working capital (Rosenberg 2010). Thus, these micro-credit and training programs are to make sure that those 2.4 billion people who spend less than US$1.90 a day can receive working capital and reliable financial services (Al-Mamun et al 2011;Daley-Harris and Laegreid 2006). In Micro-Credit Summit Campaign, when there are five persons in a household, providing working capital to 2.4 billion households would affect 875 million households.…”

Section: Impact Of Development Initiativesmentioning

confidence: 99%

“…Generally, instead of focusing on the hardcore and extreme poor cohort, some micro-credit programs only focused on benefiting the cohort of poor (Altay 2006;Copestake et al 2001;Rahman and Razzaque 2000) by assisting in utilizing their money (Rutherford 1996). In addition, the majority of these studies were conducted in one geographical area (Omar et al 2012;Saad and Duasa 2011), within an organization (Mahmood and Rosli 2013;Al-Mamun et al 2011;Nawai and Bashir 2009), using small sample size (Ganle et al 2015;Omar et al 2012), and limited control variables (Hashemi et al 1996).…”

Section: Introductionmentioning

confidence: 99%

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Economic Impact of Development Initiatives on Low-Income Households in Kelantan, Malaysia

2018

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Abstract:To improve the socio-economic condition of low-income households, underlying organizations offer a variety of products and services such as access to working capital and training programs. This study examined the impact of access to working capital and training programs on household income and economic vulnerability among participants of AIM, TEKUN, and LKIM in Kelantan, Malaysia. Adopting a cross-sectional design, data were collected randomly from 450 micro-entrepreneurs living in seven districts in Kelantan. The finding revealed that the total amount of economic loan received, length of the programs participation, and number of hours spent on training programs had a positive effect on household income in order to decrease the level of economic vulnerability. The finding provided useful information for policies development that prioritizes poverty eradication among low-income households who were vulnerable to weak economic situation.

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Determinants of Loan Repayment by Borrowers from Micro-Financial Institutions in Nakuru County Kenya

Wamalwa¹

2016

JIM

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Many financial institutions in developing countries provide financial services such as saving and Credit to aid several smallholder enterprises including farmers. This is an effort in line with the Millennium development goals which seeks to reduce poverty by 50% by the year 2015. However, the sustainability and continuity of the financial institutions to increase the volume of credit to stimulate the poverty reduction goal depends on the repayment rates. However many of the financial institutions have not been able to carry out these services effectively perhaps because of loan defaults of previous advances. The study used descriptive type of design. This is the design whose purpose is to provide a description of affairs as they are. The main objective of the research was to identify the determinant of loan repayment by borrowers in micro financial institutions in Nakuru County. Specific objectives were to determine the significance of level of education, level of income and age of borrowers as a determinant of loan repayment in Micro Financial Institutions in Nakuru County. The target population comprised a total of 590 loan borrowers and employees of Micro Financial institutions out of which a sample of 10%was picked using stratified random sampling on each stratum out of which a simple random was done to pick the respondent from the list of borrowers and employees, which enable every member of the population have an equal and independent chance of being selected as respondents and also simplest, most convenient and bias free selection method. The cross sectional data was collected by use of questionnaire. The data was analyzed using linear multiple regression model which quantified the determinants while the descriptive statistics was analyzed by use of frequency tables and percentages pie charts. The results showed that education level, income level and age negative were significant determinants of loan repayment. The study recommends that borrowers with low levels of income and education should be encouraged to take up loan since they are associated with loan repayment than their counterparts respectively. The study from the sample also recommends that youths should be taken serious because they are also associated with loan repayment. Nevertheless Most MFLs were going concern.

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Examining the Critical Factors Affecting the Repayment of Microcredit Provided by Amanah Ikhtiar Malaysia

Cited by 12 publications

References 10 publications

Effectiveness of Loan Portfolio Management in Rural SACCOS: Evidence from Tanzania

Effectiveness of Loan Portfolio Management in Rural SACCOS: Evidence from Tanzania

Economic Impact of Development Initiatives on Low-Income Households in Kelantan, Malaysia

Determinants of Loan Repayment by Borrowers from Micro-Financial Institutions in Nakuru County Kenya

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