Factors Influencing Loan Repayment Among Microenterprises In The Greater Accra Region: A Case Study Of La Nkwantanangmadina Municipality.

ABSTRACT Although microenterprises contribute significantly to the growth and development of every country, they are confronted with double-barren issues of access to credit and loan repayment. Existing studies that have attempted to estimate factors associated with loan repayment have also relied heavily on limited micro-finance datasets while others have concentrated on loan repayment among farmers and thus leaving loan repayment among microenterprises at the regional and national level largely unexplored. This study therefore explored socioeconomic factors and loan conditions that associate with loan repayment among microenterprises in the Greater Accra region using a nationwide survey dubbed the Ghana Socioeconomic Panel Data Survey of 2014. The survey had 5009 households and covered several aspects of debt holdings for household members. A total of 144 (26.8%) households with debt holdings for the Greater Accra region were compared to 1420 (33.5%) debt holdings for other regions as well as 678 (36.5%) debt holdings for households with microenterprises. The loan conditions and socioeconomic factors associated with loan repayment for these debt holdings were compared to situations of Greater Accra region, Ghana and households with microenterprises. To ensure triangulation of data, in-depth interviews with some purposively selected micro-entrepreneurs were conducted to further deepen the understanding of the factors that influence loan repayment of households. The study found that in the Greater Accra region, borrowers with some level of formal education were less likely to repay their loans compared with borrowers without any form of education. It was also found that borrowers who obtained loans for the purposes of consumer goods were less likely to repay their loans. The study recommends that creditors of loans to microenterprises in the Greater Accra region should consider factors such as age, educational level, purpose of loan and sources of loan in designing credit facilities to determine who is likely to pay back a loan on time.