Abstract:
This study was focused particularly on assessing the effectiveness of group lending and its
impact on profitability at Oromiya Credit and Saving Share Company of Jimma Zone. To
achieve this objective, the researcher used primary and secondary data. The researcher used
questionnaires, interviews and relevant documents to gather primary and secondary data from
the data sources and collects the questionnaires from 252 borrowers and interviewed 4 branch
manager of OCSSCO from the population.
Descriptive statistics with the help of Pie charts, graphs, table, Percentages were used in
analyzing the collected data. In addition to this econometric model by employing SPSS
(Statistical Package for Social Scientists) version -J 6 windows software were used to analysis.
With the help of logit model the researcher found that educational level, business type, land size,
other source of credit social ties, number of the group, screening the group before theformation,
internal rule and conduct, credit officer visit the group, distance and family size were positive
and statistically significant at J%, 5% and J0% significance level. While the age of the group
member, gender of the group member, visiting each other and training are positive and
insignificant.
The study recommended that the OCSSCO of Jimma zone should give attention on distance
between the group members, the period of training, educational level of the borrower,
experience and credit officer visit/pressure to make the group lending effective and to have
impacts on profitability.
