Title: THE DETERMINANTS OF NON-PERFORMING LOANS AND THEIREFFECTS ON THE PERFORMANCE OF COOPERATIVE CREDIT UNIONS IN BAMENDA
Authors:
Visemih, William Muffee and Azie, Brenda Neh
Abstract:
The main objective of this study is to assess the determinants of non-performing loans, and the effect of non-performing loans on the performance of Cooperative Credit Unions (CCUs), in Bamenda. The study adopted the descriptive and inferentialresearch design. The target population of study consists of CCUs in Bamenda. Data for this study was collected, firstly using structured questionnaires for the primary data, and then audited CCUs financial statements for the year 2022, with respect to secondary data. The study made use of convenience sampling and a sample of twenty three (23) CCUs were selected from the target population. Data was coded and analysed with the aid of SPSS, using simple linear regression analysis, precisely Ordinary Least Squares (OLS) to test the hypotheses. Findings indicate a statistically significant negative relationship between members’ education and the volume of non-performing loans in CCUs. Statistically significant and thus inconclusive results are obtained for loan appraisal in the ex-ante lending period, communication, and follow-up on the use of funds in the ex-post lending period, and the volume of non-performing loans in CCUs. Finally, a positive, though statistically insignificant relationship was obtained for the effect of non-performing loans on performance of CCUs, measured using Return on Assets. Again, not much could be drawn from this result due to its statistical insignificance. The study recommended that CCUs should invest more in ex-ante lending activities, client education to be precise. This could take several forms, like financial literacy training, basic bookkeeping skills, capacity building, and technical assistance among others.
Keywords: Client education; Credit Union; Communication; Loan appraisal; Non-performing loans; Performance.
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