Determinants of Loan Repayment: A Study of Rural Women Fish Traders in Akwa Ibom State, Nigeria

Abstract

The paper estimated the loan repayment index and examined the determinants of loan repayment from a sample of 80 rural women fish traders obtained through a multi-stage sampling in four selected markets in Akwa Ibom State, Nigeria. Data were collected in May, 2013 and analyzed using descriptive and inferential statistics. Findings revealed that informal sources of loan were popular among the fish traders. The result of the probit analysis revealed that educational level, interest rate charged, spouse income, marketing experience, personal income of traders, non fish marketing income and household size were the major determinants of loan repayment in the study area. The reasons for loan default in order of importance were; family commitment, untimely loan disbursement, high interest rate charged as well as unforeseen circumstances. The study further revealed that only 63 percent of the total loan accessed by respondents was repaid. The paper recommended the evolution of a more proactive loan monitoring procedure by lenders such as verification of the loan worthiness and previous loan repayment history of borrowers before granting loans, encouraging the patronage of formal credit sources, pursuing policies that would reduce household sizes as well as the setting - up of loan delinquent court to prosecute defaulters as the way out.