Effect of Socio-economic Factors on Loan Repayment Performance of Youth Revolving Fund in Oromia Regional State, Ethiopia

Abstract

The Youth Revolving Fund (YRF) loan was established to help unemployed youths alleviate their economic and social difficulties. However, its loan repayment performance is not as expected. Thus, the objective of this study was to examine the effect of socio-economic factors on loan repayment performance of the YRF in the Oromia Regional State. Data was collected through a survey involving 328 respondents. Results showed peer pressure, loan diversion, time of maturity of investment and predominant economic shocks affected loan repayment at a 5% significance level. The paper provides recommendations for the government to create awareness about the YRF loan, as well as to reconsider training and guidance, and to develop an alternative fund utilization strategy.