A Research Submitted in partial fulfillment of the requirement for the Award of
Master degree of Business Administration in Corporate Management at
Mzumbe University
The research meant at analyzing the factors leading to loan repayment defaulting in
MFIs, a case of Dar es Salaam Region in Tanzania. This study specifically focused on
assessing institutional factors, borrower factors and loan characteristics leading to
loan repayment default in MFIs.
The study was quantitative in nature and a descriptive research design was used in the
study. A total of 150 respondents were involved in the study and Cronbach’s alpha
was used to analyze the reliability and factor analysis was used to analyze the validity
of the instrument. The data were analyzed by multiple regression analysis and
Pearson correlation.
The findings revealed that borrowers’ factors and loan characteristics have positive
and significant influence on loan repayment defaulting in MFIs in Tanzania (t =
2.563, p = 0.011; t = 6.072, p = 0.000) and institutional factors have insignificant
influence on loan repayment defaulting in MFIs (t = -0.540, p = 0.590)..
Results established necessitated recommendations to Bank of Tanzania who are key
regulators of Tanzania economy, the Microfinance institutions and to borrowers. The
study recommended to microfinance institutions to provide education to their
customers regarding credit facilities, importance of credit facilities and what type of
securities to be imposed by borrowers. Moreover improvements should be ensured on
loan appraisal procedures and polices so to help reducing loan repayment defaulting
rate in MFIs.