Abstract:
Development banks are state-backed financial institutions that are concerned with the provision
of long-term loans to not only profitable projects but also to socially beneficial ones. This study
was conducted on the Determinants of loan repayment; a Case of Development Bank of
Ethiopia, West Region. The main objective of this study was to identify and analyze the
determinants of loan repayment in DBE, West Region. The study was applying mainly primary
and secondary data. The primary data were collected from 104 selected borrowers through
questionnaires and interview with staffs and bank managers. For sample selection, stratified
random sampling was used where borrowers stratified based on their loan status. The binary
logistic model was used to identify the determinants of loan repayment of borrowers. The
characteristics of borrowers, factors in the side of lender institution, project and loan related
factors and the other external factors were analyzed through descriptive statistics such as
frequencies, percentages, mean, and standard deviation. Educational qualification of borrowers,
marital status, and proper loan appraisal, grace period of the project, timely loan disbursement,
and form of loan disbursement were influence on loan repayment significantly and negatively.
Based on the analysis, the researcher is recommended that to the bank to undertake proper loan
appraisal, disbursing loan at the right time , adjusting grace period based on the nature of
projects and the difficulties they faced to have good loan repayment.
