Effectiveness of Loan Appraisal Techniques in Microfinance Performance, A case study of Finca Tanzania at Dodoma Branch

Maotela , Raymond Ramadhani (2015) Effectiveness of Loan Appraisal Techniques in Microfinance Performance, A case study of Finca Tanzania at Dodoma Branch. Masters thesis, The Open University Of Tanzania.

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Abstract

The study generally aimed at investigating the role of Loan Appraisal Techniques on profitability of Microfinance institution, at Finca –Tanzania Dodoma branch. Specifically the study assessed the Effectiveness of Loan Appraisal Techniques in performance of Microfinance institutions, through examine the available and required Loan Appraisal Techniques used by giant microfinance institutions and the user of these techniques in appraising loan customer, also In-depth analysis the study went further to assess the knowledge of customer on loan appraisal techniques. Survey was conducted with sample of 55 respondents. Structured questionnaires, interviews and observation, person communication were tools used to collect primary data. Library, internet, emails, websites, journals, published documents and key information were tools used to collect secondary data. Tools of data analysis included relevant computer application using descriptive statistics, while findings was presented using tables, graphs and percentages were used. The finding definitely reveals that Microfinance institutions need to undergo several steps that would necessarily improve the profitability of loans products by employing effective loan appraisal techniques that will assist in acquiring more information of their credit customer for loan granting processes. Despite the facts that most Loan Appraising Techniques act as milestones in lending, if this is not taken as serious practice may endanger the health & future prospects of these microfinance institutions. A part from LA techniques used by microfinance institutions more effective techniques needed to be employed in the processes to secure MFIs profits. Also the study suggested other studies should cover the same concepts in banking sectors.

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