MJAMR

Lending Terms, Information Asymmetry and Credit Accessibility Among Microfinance Clients in Kigezi Sub- Region, Western Uganda

Alex Irumba, Dr Ariyo Gracious Kazaara, Kamugisha Nelson


Abstract

This study examines the relationship between lending terms, information asymmetry and credit accessibility among selected MFIs clients in Kigezi sub-region, Uganda. A crosssectional research design along with a quantitative research approach was used. A sample of 375 MFI clients was selected from 11,492 MFI clients in 79 MFIs. This study used cluster, disproportionate, and simple random sampling to arrive at the sample. Data was obtained using a structured questionnaire, tested for validity using expert judgment and CVI while pretesting and Cronbach Alpha coefficient checked its reliability. SPSS v25 was used to analyze data. This study found a positive relationship between lending terms and credit accessibility; and a positive relationship between information asymmetry and credit accessibility. The study also found that both lending terms and information asymmetry are significant predictors of credit accessibility. Information asymmetry was the better predictor of credit accessibility. This study concludes that offering favourable lending terms and minimizing information asymmetry cannot be taken for granted in enhancing credit accessibility. The study recommends clients to provide quality information when processing credit from microfinance institutions, and increase their responsiveness to providing the information asked for during the loan process to improve credit accessibility. Clients should equally apply for flexible loan types especially group loans. The study theoretically contributes to Pecking Order Theory acknowledging that MFI clients evaluate lending terms before they made a decision to access credit or not. It also endorses the Organizational information processing indicating that the more informed MFIs clients are, the more they will increase desire to access credit.

Keywords

lending terms information asymmetry and credit accessibility
Metropolitan Journal of Academic Multidisciplinary Research

Cite This Article

Alex Irumba, Dr Ariyo Gracious Kazaara & Kamugisha Nelson (2023). Lending Terms, Information Asymmetry and Credit Accessibility Among Microfinance Clients in Kigezi Sub- Region, Western Uganda. Metropolitan Journal of Academic Multidisciplinary Research, 2(7). https://journals.miu.ac.ug/pages/article.php?article_id=955

More in This Issue

View full issue →
36
Internal Auditing and Fraud Prevention in Organizations a Case Study of NSSF Kampala Area
Apangu Innocent, Irumba Alex, Dr Ariyo Gracious Kazaara
Book keeping internal auditing fraud prevention monitoring and
37
International Trade and Economic Growth Nexus. Empirical Evidence from Uganda.
Dr Emmanuel Erem, Kato S.B. Patrick, Kadhiri Rwambale, Robert Kisembo
exports imports and foreign direct investment
38
Investigating the Impact of Drug Addiction on Socio-Economic Development of Youth in the Community, a Case Study of Katabi Subcountry
Walusimbi Muhammadi, Asiimwe Isaac Kazaara
drug addiction socio-economic development youth and community
40
Investigating the Role of Entreprenureship Skils Studies on Socio-Economic Development of Societies, a Case Study of Makerere Kikoni, Kampala District
Musisi Mutyaba, Akampurira Sarah, Ojok Alex
entrepreneurship skills and socio-economic development