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The study investigated the factors leading to loan repayment problems within the banking industry. The specific objectives were examine how borrowers characteristics, project characteristics and loan characteristics leads to unsuccessful loan repayment, evaluate the role of technology in enhancing loan repayment and assess the credibility of loan appraisal procedures in the bank. The targeted population was 350 business operators who are taking loan from Tanzania Postal Bank. The study employed simple random sampling technique to select 100 businessmen who were taking loan at TPB. Data was collected using questionnaire and interview. The study employed descriptive statistics and hypothesis testing design in investigated the factors leading to loan repayment problems within the banking industry.
The study discovered that borrower characteristics (in this case gender, level of education, size of household and experience in business), project characteristics (business activity, size of labour and ownership of the business) and loan characteristics (size of the loan, loan processing time and loan diversion) have effect on late repayment of loan to the bank. Furthermore, the technological used in payment of loan to the bank had impact on the clients’ ability to make on time payments. Finally the study found that credible loan appraisal procedures have significantly effect to timely repayment of loan to the bank.
The study recommends that the bank management should make efforts on allowing borrowers characteristics, loan characteristics, and project characteristics capitalized in credit policy so that provision of loan base on critical analysis of them in order to reduce late repayment of loan to the bank |
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