Determinants of repayment behavior in the Centenary Rural Development Bank in Uganda.

摘要

Many studies of developing country financial markets have applauded microfinance institutions using group rather than individual lending technology to attain outreach and viability. The Centenary Rural Development Bank (CERUDEB) in Uganda was used to illustrate that despite multiple constraints in the financial market, a microfinance institution can be turn-around from bankruptcy to profitability using an innovative individual lending technology. The key features contributing to this transformation and the factors influencing the probability of delinquency were investigated.; The hypotheses tested were: (a) in an underdeveloped financial market, a bankrupt microfinance institution can achieve substantial outreach and profitability using individual lending technology; (b) specific borrower and loan characteristics determine the probability of delinquency.; Qualitative analysis of the portfolio indicates that the intervention by International Project Consult (IPC) into CERUDEB contributed to (i) steady growth in voluntary deposits and loans; (ii) downscaling to include smaller loans; (iii) profitability in keeping with the bank's mission statement.; Using the standard moral hazard framework and panel data, a random effects ordinal logit model was specified to determine the factors influencing repayment. Delinquency increases for borrowers with: (i) a high ratio of loan amount to collateral; (ii) less disposable income before a loan is disbursed; (iii) personal guarantors rather than chattel items as collateral for loans; (iv) less frequent repayment schedule; (v) no expectations of future loans from the lender; (vi) residing in urban areas; (viii) a short duration in current residence relative to age; (ix) males owning fewer assets; (x) cash flow exceeding the loan amount requested.; The restructuring strategy spearhead by IPC improved loan recovery in CERUDEB while maintaining the bank's mission statement due to: (a) a better governance structure that reduced opportunistic rent-seeking behavior; (b) appropriate internal checks and balances that increased transparency, accountability and reduced moral hazard among bank staff; (c) individual computer-based lending technology that improved client screening and monitoring, flexibility in collateral requirements and incentives for borrowers and staff.; CERDUDEB still faces the challenges of achieving more depth of outreach cost-effectively, decreasing transaction time, maintaining staff quality, avoiding political intervention, insider lending, and exercising cautious branch formation.