An assessment of over-indebtedness among microfinance institutions’ borrowers: The Tanzanian perspective

The introduction of microfinance institutions is viewed as the best alternative source of financial services for low-income earners as a means to raise their income and reduce poverty. However, empirical research has indicated that the majority of microfinance institutions’ borrowers are over-indebt...

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Autores principales:	Pendo Shukrani Kasoga, Amani Gration Tegambwage
Formato:	article
Lenguaje:	EN
Publicado:	Taylor & Francis Group 2021
Materias:	indicators of over-indebtedness microfinance institutions micro-borrowers tanzania Business HF5001-6182 Management. Industrial management HD28-70
Acceso en línea:	https://doaj.org/article/c1b9a47bf4244e148cb465771e7bf8d4
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spelling	oai:doaj.org-article:c1b9a47bf4244e148cb465771e7bf8d42021-12-02T18:23:51ZAn assessment of over-indebtedness among microfinance institutions’ borrowers: The Tanzanian perspective2331-197510.1080/23311975.2021.1930499https://doaj.org/article/c1b9a47bf4244e148cb465771e7bf8d42021-01-01T00:00:00Zhttp://dx.doi.org/10.1080/23311975.2021.1930499https://doaj.org/toc/2331-1975The introduction of microfinance institutions is viewed as the best alternative source of financial services for low-income earners as a means to raise their income and reduce poverty. However, empirical research has indicated that the majority of microfinance institutions’ borrowers are over-indebted. Over-indebtedness has negative consequences for debtors, creditors, and for the economy as a whole. Since over-indebtedness is a context-specific phenomenon, it lacks universally accepted indicators. This study aims to validate indicators of over-indebtedness and examine the situation of over-indebtedness among micro-borrowers in the context of Tanzania. A survey of 535 micro-borrowers was conducted using a semi-structured questionnaire. Descriptive, thematic, and logistic regression techniques were employed for data analysis. Findings show that debt-to-income ratio, multiple borrowing, and delinquency have a positive and significant effect on over-indebtedness. Further, findings indicate that over-indebted micro-borrowers in Tanzania spend 75% or more of monthly income on servicing debts; are in the state of delinquency; are unable to meet basic needs due to loan repayment expenditure, have three or more credit commitments, and are in delinquency. To reduce over-indebtedness and hence poverty among micro-borrowers, microfinance institutions are advised to monitor debt levels among micro-borrowers, and reschedule loan repayment plans to already over-indebted micro-borrowers.Pendo Shukrani KasogaAmani Gration TegambwageTaylor & Francis Grouparticleindicators of over-indebtednessmicrofinance institutionsmicro-borrowerstanzaniaBusinessHF5001-6182Management. Industrial managementHD28-70ENCogent Business & Management, Vol 8, Iss 1 (2021)
institution	DOAJ
collection	DOAJ
language	EN
topic	indicators of over-indebtedness microfinance institutions micro-borrowers tanzania Business HF5001-6182 Management. Industrial management HD28-70
spellingShingle	indicators of over-indebtedness microfinance institutions micro-borrowers tanzania Business HF5001-6182 Management. Industrial management HD28-70 Pendo Shukrani Kasoga Amani Gration Tegambwage An assessment of over-indebtedness among microfinance institutions’ borrowers: The Tanzanian perspective
description	The introduction of microfinance institutions is viewed as the best alternative source of financial services for low-income earners as a means to raise their income and reduce poverty. However, empirical research has indicated that the majority of microfinance institutions’ borrowers are over-indebted. Over-indebtedness has negative consequences for debtors, creditors, and for the economy as a whole. Since over-indebtedness is a context-specific phenomenon, it lacks universally accepted indicators. This study aims to validate indicators of over-indebtedness and examine the situation of over-indebtedness among micro-borrowers in the context of Tanzania. A survey of 535 micro-borrowers was conducted using a semi-structured questionnaire. Descriptive, thematic, and logistic regression techniques were employed for data analysis. Findings show that debt-to-income ratio, multiple borrowing, and delinquency have a positive and significant effect on over-indebtedness. Further, findings indicate that over-indebted micro-borrowers in Tanzania spend 75% or more of monthly income on servicing debts; are in the state of delinquency; are unable to meet basic needs due to loan repayment expenditure, have three or more credit commitments, and are in delinquency. To reduce over-indebtedness and hence poverty among micro-borrowers, microfinance institutions are advised to monitor debt levels among micro-borrowers, and reschedule loan repayment plans to already over-indebted micro-borrowers.
format	article
author	Pendo Shukrani Kasoga Amani Gration Tegambwage
author_facet	Pendo Shukrani Kasoga Amani Gration Tegambwage
author_sort	Pendo Shukrani Kasoga
title	An assessment of over-indebtedness among microfinance institutions’ borrowers: The Tanzanian perspective
title_short	An assessment of over-indebtedness among microfinance institutions’ borrowers: The Tanzanian perspective
title_full	An assessment of over-indebtedness among microfinance institutions’ borrowers: The Tanzanian perspective
title_fullStr	An assessment of over-indebtedness among microfinance institutions’ borrowers: The Tanzanian perspective
title_full_unstemmed	An assessment of over-indebtedness among microfinance institutions’ borrowers: The Tanzanian perspective
title_sort	assessment of over-indebtedness among microfinance institutions’ borrowers: the tanzanian perspective
publisher	Taylor & Francis Group
publishDate	2021
url	https://doaj.org/article/c1b9a47bf4244e148cb465771e7bf8d4
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An assessment of over-indebtedness among microfinance institutions’ borrowers: The Tanzanian perspective

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