The Effect of Access to Credit on Standard of Living among the Beneficiaries of Selected Groups: A Case of Iringa Municipality

Lodrick Mwakapala
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Lodrick Mwakapala: Iringa Regional Police Commander Office, Graduate School, University of Iringa, P. O. Box: 280 Iringa, Tanzania.

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Abstract: This study examined the effect of access to credit on the standard of living among members of Tusaidiane Manispaa and Umoja Community-Based Savings Groups (CBSGs) in Iringa Municipality, Tanzania. Specifically, it analysed five credit access dimensions: credit service availability, ease of loan application, loan approval rate, loan interest rate, and collateral requirement. A mixed method approach was adopted, combining quantitative and qualitative technique. The study employed a descriptive cross-sectional design was adopted, using structured questionnaires administered to 120 respondents, complemented by qualitative insights from key informant interviews. Data were analysed using descriptive statistics, reliability tests, and multiple linear regression (MLR) through SPSS. The findings revealed that loan approval rate, loan interest rate, and collateral requirement had significant positive effects on members' standard of living, while credit service availability and ease of loan application were statistically insignificant. The regression model explained 51.8% of the variation in standard of living, with diagnostic tests confirming the reliability of the model. These results suggest that strengthening approval mechanisms, adopting flexible but accountable collateral arrangements, and ensuring balanced interest rates are critical for improving household welfare through CBSGs in Tanzania.

Date: 2025-10-23
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Published in Asian Journal of Economics, Finance and Management , 2025, 7 (1), pp.1118-1128

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Persistent link: https://EconPapers.repec.org/RePEc:hal:journl:hal-05329944

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