THE EFFECT OF CREDIT COLLECTION POLICY ON PORTFOLIO AT RISK OF MICROFINANCE INSTITUTIONS IN TANZANIA

Danstun Ngonyani and Harun Mapesa
Additional contact information
Danstun Ngonyani: St John’s University of Tanzania, Tanzania
Harun Mapesa: School of Business, Mzumbe University, Tanzania

Studies in Business and Economics, 2019, vol. 14, issue 3, 131-144

Abstract: This paper presents the results of the study on the effect of credit collection policy on portfolio at risk of microfinance institutions in Tanzania. The study used cross-sectional survey data of microfinance institutions in three regions of Dar es salaam, Morogoro and Dodoma. Random sampling was employed to obtain a sample of 219 respondents in all three regions. Multiple linear regression analysis was used to determine the effect of credit collection policy on portfolio at risk of microfinance institutions. Results show that, there is a positive relationship between interest rates charged and portfolio at risk of microfinance institutions. On the other hand, the variable for grace period on loans and loan sizes to borrowers had a negative relationship with portfolio at risk of microfinance institutions. The study recommends that, microfinance institutions in Tanzania need to reconsider the interest rates charged to their clients to enhance sustainability of their loan portfolios. Moreover, microfinance institutions need to enhance provision of grace period to their customers. Also, establish efficient loan product sizes which suffice diverse client’s needs. That would encourage and broaden client repayments, contribute to financial performance and reduced risk of portfolio of microfinance institutions.

Keywords: Credit collection; Portfolio at risk; Microfinance institutions (search for similar items in EconPapers)
Date: 2019
References: Add references at CitEc
Citations:

Downloads: (external link)
http://eccsf.ulbsibiu.ro/RePEc/blg/journl/14311ngonyani.pdf (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:blg:journl:v:14:y:2019:i:3:p:131-144

Access Statistics for this article

More articles in Studies in Business and Economics from Lucian Blaga University of Sibiu, Faculty of Economic Sciences Lucian Blaga University of Sibiu, Faculty of Economic Sciences Dumbravii Avenue, No 17, postal code 550324, Sibiu, Romania. Contact information at EDIRC.
Bibliographic data for series maintained by Mihaela Herciu ().