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ENTREPRENEURIAL AND BUSINESS SKILLS AND LOAN REPAYMENT RATES OF MICROFINANCE CLIENTS IN GHANA

Management Studies Group, School of Social Sciences, University of Wageningen, Hollandseweg 1, 6707, KN Wageningen, The Netherlands

E-mail Address: daniel_agbeko@yahoo.com

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VINCENT BLOK

Management Studies Group, School of Social Sciences, University of Wageningen, Hollandseweg 1, 6707, KN Wageningen, The Netherlands

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SWF OMTA

Management Studies Group, School of Social Sciences, University of Wageningen de Leeuwenborch, Building 201, Bode 77 Hollandseweg 1,6706, KN Wageningen, The Netherlands

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G VAN DER VELDE

Management Studies Group, School of Social Sciences, University of Wageningen de Leeuwenborch, Building 201, Bode 77 Hollandseweg 1,6706, KN Wageningen, The Netherlands

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https://doi.org/10.1142/S1084946716500242Cited by:1 (Source: Crossref)

Abstract

Entrepreneurial and business skills are generally considered key to microbusiness success, hence to Microfinance Institution (MFI) clients’ loan repayment as well. However, empirical evidence is largely lacking, and where present, it is inconclusive on the importance of these skills for microfinance success. The present paper uses objective MFI loan repayment data to empirically test whether loan repayment rates positively correlate with self-evaluations on entrepreneurial and business skills of loan clients. A survey was conducted among 235 loan clients of uniCredit — an MFI in Ghana. We establish that MFI clients’ self-evaluation of their entrepreneurial and business skills are not related to their loan repayment rates. However, we observe that women repay their loans better than do male microbusiness entrepreneurs, and loan repayment was also better for those entrepreneurs with more than 15 years of business experience.

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