interest rates and credit demand in microfinance institutions: a case study of pride microfinance limited

Description

This research was carried out on the Interest rates and credit demand in microfinance institutions, a case study of pride microfinance limited and the objectives of this research were; to establish the level of credit demand of pride microfinance, to establish the factors affecting interest rates of pride micro finance and to establish the relationship between interest rates and credit demand in pride micro finance. The research used both descriptive and analytical research design in the collection of data from the loan officials and clients. The research was cross-sectional investigating on the relationship between interest rates and credit demand. The sampling method used was purposive method and the sample size was 28 respondents. The findings of the study revealed that the interest rates charged favourable. The respondents were happy with the level of interest rates charged and this made it easy for them to get loans. According to spearman’s correlations, the result was +0.9, which implied that there was a strong relationship between interest rates and credit. Therefore, the higher the interest rates the lower the credit demand and the lower the interest rates the higher the credit demand. The extent to which interest rates influences credit demand is 0.81 and this means that interest rates contributes 81% on credit demand and 19% is contributed by other factors like inflation, market expectations, government borrowing and many others. The recommendation was that pride microfinance limited should reduce further on the level of interest rates charged to enable more clients to come and borrow in order for it to expand further and the research recommends the following areas for further research, the effects of borrower’s assessment on credit demand, the relationship between credit terms and credit demand and the effects of credit policy on credit accessibility