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VOL. 7, ISSUE 1 (2025)
Determining the causes of HIGH loan default rates, A case study of citizeniship economic empowerment commission (CEEC)
Authors
Bridget Sikana, Dr. Martin Chasha
Abstract
This study investigates the causes of high
loan default rates at the Citizenship Economic Empowerment Commission (CEEC),
focusing on lender-specific and borrower-specific factors, as well as potential
measures to mitigate defaults. The research employs a qualitative approach,
gathering insights from CEEC borrowers and stakeholders to understand the
underlying challenges affecting loan repayment. Key findings indicate that loan
defaults are driven by inadequate financial tracking systems, corruption in
loan disbursement, weak loan recovery mechanisms, and borrower perceptions that
CEEC loans are 'government money" with no strict repayment obligations.
Additionally, limited financial literacy and external economic challenges
further exacerbate default rates. The study contributes both theoretically and
practically to the field of microfinance and economic empowerment.
Theoretically, it aligns with the Credit Risk Theory, the Theory of Micro-Loan
Borrowing Rates and Defaults, and the Theory of Asymmetric Information,
offering insights into how institutional weaknesses and borrower behavior
influence loan performance. Practically, it provides actionable
recommendations, including implementing robust financial tracking systems,
enhancing loan recovery mechanisms, improving financial literacy training, and
increasing transparency in loan disbursement. Despite its contributions, the
study acknowledges limitations, such as reliance on qualitative data, which may
restrict generalizability. It also highlights areas for future research,
including exploring the role of technology in loan management and conducting
comparative studies on government-funded microfinance institutions. The
findings emphasize the need for a multi-faceted approach to strengthening
financial oversight, borrower education, and institutional accountability to
enhance loan repayment rates and ensure the sustainability of economic
empowerment initiatives.
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Pages:36-43
How to cite this article:
Bridget Sikana, Dr. Martin Chasha "Determining the causes of HIGH loan default rates, A case study of citizeniship economic empowerment commission (CEEC)". International Journal of Management and Economics, Vol 7, Issue 1, 2025, Pages 36-43
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