THE ROLE OF DEMOGRAPHIC FACTORS OF GROUP MEMBERS ON REPAYMENT OF GROUP LOANS AMONGST MICROFINANCE INSTITUTIONS IN NAKURU TOWN
Keywords:
Demographic Factors, Group Loans, Loan Repayment PerformanceAbstract
There has been significant growth in the recent years of MFIs which offer financial services to people who are
financially excluded by mainstream financial institutions. The MFIs therefore use group lending methodology
to replace the need of collateral in forms of land or log books with social collaterals. However, despite the
advantages associated with group lending, challenges do exist that impact on loan repayment performance of
groups. this study sought to examine the role of demographic factors of group members on repayment of group
loans amongst microfinance institutions in Nakuru. The descriptive research design was used for this study. The
target population of this study was the group members of the groups that have borrowed from MFIs within
Nakuru town. The target population of this study is 2280 groups that have undertaken borrowing from MFIs in
Nakuru Town. A sample size of 96 respondents was derived using Nassiuma’s (2009) formula. The structured
questionnaire was used for the purposes of data collection. The pilot study was therefore undertaken amongst
groups in MFIs in Gilgil Town town using 10 respondents which constitute 10% of the sample size. The content
validity of the study was examined using the experts of MFIs which constituted of the university based lecturers
as well as industry practitioners. A Cronbach alpha coefficient of 0.7 and above was used for the study. Both the
descriptive and inferential statistics were used for the study. The descriptive statistics that were utilized include
frequency distributions, means, and standard deviations. The one way ANOVA was used for hypothesis testing.
The study concluded that demographic factors had significant influence on the loan repayment of group loans
amongst microfinance institutions in Nakuru. In the context of the ranking of the levels of influence amongst the
indicators of demographic factors gender was the most influential.
