THE EFFECT OF BORROWER’S CAPACITY TO PAY ON LOAN REPAYMENT IN UGANDA DURING COVID-19 PANDEMIC
This study was conducted with the aim of investigating the effect of borrower’s capacity to pay on loan repayment during COVID -19 pandemic at Lyamujungu SACCO in Uganda. A crosssectional survey design was used using Lyamujungu SACCO as a case study. This was approached with qualitative and quantita...
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| Format: | Article |
| Language: | English |
| Published: |
Global Scientific Journals
2024
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| Subjects: | |
| Online Access: | http://hdl.handle.net/20.500.12493/1968 |
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| Summary: | This study was conducted with the aim of investigating the effect of borrower’s capacity to pay on
loan repayment during COVID -19 pandemic at Lyamujungu SACCO in Uganda. A crosssectional
survey design was used using Lyamujungu SACCO as a case study. This was approached
with qualitative and quantitative approaches. Using questionnaire and interviews, data was
collected from 108 clients of Lyamujungu SACCO. In addition, interviews were conducted with
the general manager, branch managers and loans officers. The collected data was cross checked
for errors omission and completeness, coded and analyzed using SPSS computer package. Data
was presented in form of tables as frequencies, percentages, standard deviation, mean and
significance levels were determined for hypothesis. Results for the study objective revealed that
SACCOS started giving less loans in comparison to what they applied for (M=4.05, SD=1.256)
and closed very early during covid-19 pandemic (M=3.73, SD=1.378) all of which affected the
borrowers capacity to repay loans, consequences that drive SACCO members into loan repayment
failure (M=4.70, SD=.459) and loss of savings leading to absolute poverty(M=4.56, SD=.600)
were the major factors that determined the borrower’s credit on loan repayment during covid-19
pandemic. Results from null hypothesis testing on the item was rejected indicating borrowers
capacity(.040), thus the study concluded that there is evidence to suggest that the distribution of
the mean score of each of the variable is not the same across the ability of the borrower to repay
the borrowed loan. The study recommends SACCOs to seriously consider having in place effective
credit standards, credit policy, credit terms and collection policies or procedures as mechanisms |
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