Effect of Client Appraisal and Loan Monitoring Strategies on the Repayment of Revolving Funds in Kenya

Abstract

the effects of loan appraisal process management on credit performance in microfinance institutions (MFIs). The study aimed to investigate various strategies used by MFIs to provide loans to clients and establish the organizations that had assumed Credit Management Practices. Data for this study was obtained from MFIs’ loan executives through use of Designed questionnaires. The study results indicated a solid connection between customer assessment, progression administration and loan efficiency of MFIs. According to the study findings, Client appraisal in credit management was highly used by MFIs since it was discovered to be feasible and vital in dealing with credits. The study results also revealed that security features were highly considered during client appraisal since most loan violations were by to Abstract: A revolving fund is generally setup in small amounts with an appropriation of seed money from the general fund which must exhibit the self-sustaining capacity. The Kenyan Government initiated the Youth Enterprise Development Fund in 2006 as a strategy of addressing youth unemployment. The Women Enterprise Fund on the other hand, was formed as a proactive government response to the dire challenges facing women of Kenya. Despite the importance of revolving funds in Kenya and developing economies, the repayment rate has been relatively low. This study examined the effect of client appraisal and loan monitoring strategies on the repayment of revolving funds in Kenya. The study focused on the government revolving funds in Kenya that were disbursed from 2010 to 2019, and it was carried out within 18 months from January 2020 to June 2021. The target population was the Youth officers in the constituencies and WEF Officers in the 47 counties. The study utilized a correlational research design, and a purposive sampling approach. Data was collected using questionnaires, and analyzed using SPSS version 23. The study established that business assessment visits had a positive and significant effect on the repayment performance of revolving funds (coefficient 5.473, P-000), frequency of training before disbursement had a positive and significant effect on repayment performance of revolving funds, (coefficient 2.715, P-0.002), and the type of training offered before disbursement had a positive and significant effect on repayment performance (coefficient 7.548, P-000). On the other hand, that the number of monitoring visits had a positive and significant effect on repayment performance of revolving funds in Kenya, (coefficient 2.327, P-0.023). Also, the number of arrears report had a positive and significant effect on repayment performance of revolving funds in Kenya, (coefficient 2.842, P-0.02). The study concluded that there exists a strong positive relationship between client appraisal strategies and repayment performance of revolving funds in Kenya, while loan monitoring strategies had a significant positive effect on repayment performance of revolving funds in Kenya.