Socio-Economic Factors and Table Banking Loans Default Levels Among Women Groups in Machakos County, Kenya

Abstract

Defaulting on a loan happens when one fails to make sufficient payments for an extended period. Lenders will deem a loan in default when the borrower haven’t paid the minimum required payment for a certain number of months as detailed in the loan contract. Loan defaults can happen with any type of loan, table banking being one of them. In Kenya as in most developing countries, table banking has been recognized and accepted by development agencies and the government as effective tool for economic development poverty alleviation and industrialization. It’s a proven method for women to spearhead their finances and experience economic perks through organized and calculated means. However, despite of their important role many of these table banking programs have collapsed because of problems in repayment. The general study objective was to investigate the effect of social economic factors on Table Banking loans default among Women in Machakos county, Kenya. The specific objectives were to determine the relationship between level of income, literacy level, borrowing experience as well as household demand and Table Banking loans default level among Women in Machakos County, Kenya. The study design was descriptive with a target population consisting of 22,500 women contained in all the 1500 women groups in Machakos County. A sample size of 384 women group members was selected through simple random sampling technique. Primary data on the selected women from the women groups were collected using structured questionnaires. The response rate was 342 women representing 89 percent. Data was analyzed using frequency distribution, chi-square tests and regression analysis. It was disclosed that there was a negative but significant association between level of income, literacy level, borrowing experience and household demand and table banking loan default level by women in women groups. Demographic factors also had a negative but significant relationship with table banking loan default level among women in women groups in Machakos County. For practice the study recommended that: Firstly, women should engage in extra financial activities to increase their income level. Secondly the uptake of loans should be with the reason of income generation and not necessarily meeting the households’ needs. This will ensure that the loans taken will be regenerated to assure repayment in time and minimize defaulting of the table banking loans. Thirdly the government should enhance entrepreneurship and financial management trainings including incorporating it through formal education. This study focused on socio-economic factors influence on women's default table banking loans, therefore, other influential factors and disciplines should be studied to useful to reduce the defaulting of table banking loans. The study was limited in Machakos County. Low biasness can be attained for all the Kenyan women groups, therefore, a study focusing on other locations and larger spheres of the population of the study should be done, that is, in county, regional and national levels.