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

Medi Ochogi Lero

doi:doi:10.11648/j.ebm.20251106.13

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

Medi Ochogi Lero^*

Published in European Business & Management (Volume 11, Issue 6)

Received: 19 August 2025 Accepted: 21 October 2025 Published: 19 December 2025

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Abstract

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.

Published in	European Business & Management (Volume 11, Issue 6)
DOI	10.11648/j.ebm.20251106.13
Page(s)	213-225
Creative Commons	This is an Open Access article, distributed under the terms of the Creative Commons Attribution 4.0 International License (http://creativecommons.org/licenses/by/4.0/), which permits unrestricted use, distribution and reproduction in any medium or format, provided the original work is properly cited.
Copyright	Copyright © The Author(s), 2025. Published by Science Publishing Group

Keywords

Loan Repayment, Micro and Small Enterprise, Logistic Regression, Gambella Town

References

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[2]	Zemenu, A., & Mohammed, M. (2014). Determinants of Growth of Micro and Small Enterprises in Ethiopia: A Case of MSEs in Mekelle City, Tigray. International Journal of Advance Research in Computer Science and Management Studies, 2(6), 149-157.
[3]	Sisay (2008): Determinants of Recent Inflation in Ethiopia.
[4]	Majumdar et al., 2020, Majumdar et al., 2022). ... Majumdar et al., 2021.
[5]	Asiama, J., & Osei, V. (2007). A Note on Microfinance in Ghana (p. 2015).
[6]	Gujarati, porter, gunaseker, 2009. Basic econometrics Fifth Edition.
[7]	Jemal Abafita (2003) Microfinance and Loan Repayment Performance: A Case Study of The Oromia Credit and Savings Share Company (Ocssco) In Kuyu, Msc Thesis, Addis Ababa University, Addis Ababa.
[8]	Million, S., Nyikal, R., & Wangia, S. (2012). Factors Affecting Loan Repayment Performance of Smallholder Farmers in Eastern Hararghe, Ethiopia. Journal of Developing Country Studies, 11, 205-213.
[9]	Mohammad. R. 2009. Factors Affecting on Loan Repayment Performance of Farmers in Khorasan-Razavi Province of Iran. A paper presented to the Conference on International Research on Food Security, National Resource Management and rural Development, Mashhad, Iran.
[10]	Okorie. A. 2004. Major Determinants of Agricultural Smallholder Loan Repayment in a Developing Economy: African Review of Money Finance and Banking Empirical Evidence from Ondo State, Nigeria. on access to finance in Addis Ababa. Addis Ababa University, Department of Accounting, Addis Ababa.
[11]	Siyum, M. (2015). The Role of Micro and Small Scale Business Enterprises in Urban Small Holder Farmers in East Hararge, Ethiopia. The International Institute for Science, technology and Education (IISTE), Article, 11(2).
[12]	Solomon, A., & Addisu, B. (2013). Determinants of Rural Households Loan Repayment Performance. Oromia National Regional State: The Case of Dodota Woreda. International Journal of Research in Computer Application and Management, 3, 7-19.
[13]	Yamane, Taro. 1967. Statics an introductory analysis 2^ndedition, Nework part I and row.
[14]	Kibrom, T. (2010). Determinants of successful loan repayment performance of private borrowers in Development bank of Ethiopia, North region. Mekelle University, Management. Mekelle: Mekelle University.
[15]	Tolosa, N., & Pasha, S. A. M. (2014). Performance of Loan Repayment Determinants in Ethiopian Micro Finance An Analysis. Eurasian Journal of Business and Economics, 7, 29-49. University of Missouri – St. Louis, Center for Social Development. New York: Oxford University Press. University, Department of Management.
[16]	Azeb, 2018 assessing land use and land cover change and agricultural farming expansion in gambella region, Ethiopia using Landsat 5 and sentinel 2a multispectral data.

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Lero, M. O. (2025). Determinants of Loan Repayment of Small and Microfinance Institution, in Case of Gambella City, Gambella Regional State. European Business & Management, 11(6), 213-225. https://doi.org/10.11648/j.ebm.20251106.13

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Lero, M. O. Determinants of Loan Repayment of Small and Microfinance Institution, in Case of Gambella City, Gambella Regional State. Eur. Bus. Manag. 2025, 11(6), 213-225. doi: 10.11648/j.ebm.20251106.13

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Lero MO. Determinants of Loan Repayment of Small and Microfinance Institution, in Case of Gambella City, Gambella Regional State. Eur Bus Manag. 2025;11(6):213-225. doi: 10.11648/j.ebm.20251106.13

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@article{10.11648/j.ebm.20251106.13,
  author = {Medi Ochogi Lero},
  title = {Determinants of Loan Repayment of Small and Microfinance Institution, in Case of Gambella City, Gambella Regional State},
  journal = {European Business & Management},
  volume = {11},
  number = {6},
  pages = {213-225},
  doi = {10.11648/j.ebm.20251106.13},
  url = {https://doi.org/10.11648/j.ebm.20251106.13},
  eprint = {https://article.sciencepublishinggroup.com/pdf/10.11648.j.ebm.20251106.13},
  abstract = {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.},
 year = {2025}
}

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TY  - JOUR
T1  - Determinants of Loan Repayment of Small and Microfinance Institution, in Case of Gambella City, Gambella Regional State
AU  - Medi Ochogi Lero
Y1  - 2025/12/19
PY  - 2025
N1  - https://doi.org/10.11648/j.ebm.20251106.13
DO  - 10.11648/j.ebm.20251106.13
T2  - European Business & Management
JF  - European Business & Management
JO  - European Business & Management
SP  - 213
EP  - 225
PB  - Science Publishing Group
SN  - 2575-5811
UR  - https://doi.org/10.11648/j.ebm.20251106.13
AB  - 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.
VL  - 11
IS  - 6
ER  -

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Medi Ochogi Lero

Department of Business Administrations, Gambella University, Gambella, Ethiopia

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APA Style

Lero, M. O. (2025). Determinants of Loan Repayment of Small and Microfinance Institution, in Case of Gambella City, Gambella Regional State. European Business & Management, 11(6), 213-225. https://doi.org/10.11648/j.ebm.20251106.13

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ACS Style

Lero, M. O. Determinants of Loan Repayment of Small and Microfinance Institution, in Case of Gambella City, Gambella Regional State. Eur. Bus. Manag. 2025, 11(6), 213-225. doi: 10.11648/j.ebm.20251106.13

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AMA Style

Lero MO. Determinants of Loan Repayment of Small and Microfinance Institution, in Case of Gambella City, Gambella Regional State. Eur Bus Manag. 2025;11(6):213-225. doi: 10.11648/j.ebm.20251106.13

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@article{10.11648/j.ebm.20251106.13,
  author = {Medi Ochogi Lero},
  title = {Determinants of Loan Repayment of Small and Microfinance Institution, in Case of Gambella City, Gambella Regional State},
  journal = {European Business & Management},
  volume = {11},
  number = {6},
  pages = {213-225},
  doi = {10.11648/j.ebm.20251106.13},
  url = {https://doi.org/10.11648/j.ebm.20251106.13},
  eprint = {https://article.sciencepublishinggroup.com/pdf/10.11648.j.ebm.20251106.13},
  abstract = {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.},
 year = {2025}
}

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TY  - JOUR
T1  - Determinants of Loan Repayment of Small and Microfinance Institution, in Case of Gambella City, Gambella Regional State
AU  - Medi Ochogi Lero
Y1  - 2025/12/19
PY  - 2025
N1  - https://doi.org/10.11648/j.ebm.20251106.13
DO  - 10.11648/j.ebm.20251106.13
T2  - European Business & Management
JF  - European Business & Management
JO  - European Business & Management
SP  - 213
EP  - 225
PB  - Science Publishing Group
SN  - 2575-5811
UR  - https://doi.org/10.11648/j.ebm.20251106.13
AB  - 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.
VL  - 11
IS  - 6
ER  -

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