Entrepreneurial and business skills in relation to loan repayment rates of Microfinance clients in Ghana.ENVIRONMENT – AN ECONOMETRIC ANALYSIS OF BUSINESS DECISIONS IN GHANA
Vol. Volume 21, Number 4 December/2016
Daniel Agbeko, Vincent Blok, S.W.F. Omta & G. Van der Velde
Entrepreneurial and business skills are generally considered key to microbusiness success, and, therefore, to Microfinance Institution (MFI) clients’ loan repayment. However, empirical evidence is largely lacking, and where present, it is inconclusive on the importance of these skills for microfinance success. The present paper uses objective MFI loan repayment data to empirically test whether loan repayment rates positively correlate with self-evaluations on entrepreneurial and business skills of loan clients. A survey was conducted among 235 loan clients of uniCredit, an MFI in Ghana. We establish that MFI clients’ self-evaluation of their entrepreneurial and business skills are not related to their loan repayment rates. We however observe that women repay their loans better than do male microbusiness entrepreneurs, and loan repayment was also better for those entrepreneurs with more than 15 years of business experience.
Entrepreneur, microfinance, skills, business, loan, client.