IMPACT OF SOCIO-ECONOMIC CHARACTERISTICS ON LOAN REPAYMENT AMONG COOPERATIVE ENTERPRISES IN OSHIMILI SOUTH LGA OF DELTA STATE

THE IMPACT OF SOCIO-ECONOMIC CHARACTERISTICS ON LOAN REPAYMENT AMONG COOPERATIVE ENTERPRISES IN OSHIMILI SOUTH LGA OF DELTA STATE

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THE IMPACT OF SOCIO-ECONOMIC CHARACTERISTICS ON LOAN REPAYMENT AMONG COOPERATIVE ENTERPRISES IN OSHIMILI SOUTH LGA OF DELTA STATE

Abstract

This study investigates the impact of socio-economic characteristics on loan repayment among cooperative enterprises in Oshimili South Local Government Area of Delta State, Nigeria. Despite the vital role cooperatives play in improving access to credit for grassroots entrepreneurs, persistent loan defaults threaten their sustainability. The study specifically examines how variables such as age, gender, income level, education, household size, and occupation influence members’ loan repayment behavior. A descriptive survey research design was adopted, and data were collected from a sample of cooperative members through structured questionnaires. Statistical tools, including correlation and regression analysis, were employed to analyze the relationship between socio-economic factors and repayment performance. The findings reveal that income level, education, and occupation significantly affect the likelihood of timely loan repayment, while gender and household size show weaker correlations. Based on the results, the study recommends that cooperative societies adopt socio-economic profiling during loan approval processes and offer tailored financial literacy training to improve repayment outcomes. This research contributes to a better understanding of borrower behavior in community-based lending systems and offers practical insights for enhancing cooperative credit sustainability.

CHAPTER ONE:

INTRODUCTION

1.1 Background to the Study

Access to credit is a vital component of enterprise growth and poverty reduction, especially in developing countries. Cooperatives serve as a key vehicle for channeling financial services to economically active poor and underserved populations (Oruonye & Musa, 2020). In Nigeria, cooperative societies play a crucial role in facilitating financial inclusion, especially among rural and semi-urban populations. However, loan repayment remains a significant challenge affecting the sustainability of these cooperatives.

Loan default rates in many cooperatives have been linked to a range of factors, including institutional inefficiencies, poor credit risk assessment, and importantly, the socio-economic characteristics of the members (Oni et al., 2015). Socio-economic characteristics such as age, gender, education level, income, household size, and occupation have been found to influence borrowers’ attitudes and capacity to repay loans (Adeyemo & Bamire, 2005). Inadequate understanding of these dynamics often leads to poor loan recovery strategies, threatening the viability of cooperative financial operations.

In Oshimili South Local Government Area of Delta State, cooperative enterprises have gained momentum as alternative credit sources, especially in the wake of the decline in traditional banking trust among the informal sector (Okonkwo & Eze, 2019). Despite their relevance, the loan repayment performance of members in these cooperatives has been inconsistent. Understanding the socio-economic factors that drive or hinder repayment will help in formulating more robust credit management strategies.

1.2 Statement of the Problem

Although cooperative societies are instrumental in grassroots credit delivery, the issue of poor loan repayment among members persists (Obamuyi, 2009). Delays and defaults in repayment can weaken cooperative capital bases, reduce trust among members, and limit future lending capacity. In Oshimili South, anecdotal evidence and preliminary reports from local cooperative boards suggest increasing trends in loan delinquency.

What remains unclear is the extent to which socio-economic characteristics of cooperative members contribute to this problem. Existing studies have generalized findings across different regions, with limited empirical data specific to Oshimili South (Emmanuel & Asogwa, 2021). Without a context-based understanding of how age, education, occupation, and income levels influence repayment behaviour, cooperatives in the area are left with ineffective, one-size-fits-all credit strategies.

1.3 Objectives of the Study

The main objective of this study is to investigate the impact of socio-economic characteristics on loan repayment among cooperative enterprises in Oshimili South LGA of Delta State. The specific objectives are to:

Examine the socio-economic profiles of cooperative members in Oshimili South LGA.

Determine the relationship between members’ socio-economic characteristics (e.g., age, income, education, occupation) and loan repayment performance.

Identify the most significant socio-economic factors affecting loan repayment.

Suggest strategies for improving loan repayment performance based on findings.

1.4 Research Questions

What are the socio-economic characteristics of cooperative members in Oshimili South LGA?

How do these socio-economic characteristics affect members’ ability to repay loans?

Which socio-economic factors are most significantly associated with loan repayment performance?

What strategies can improve loan repayment among cooperative members?

1.5 Research Hypotheses

H₀₁: There is no significant relationship between income level and loan repayment performance.

H₀₂: There is no significant relationship between education level and loan repayment performance.

H₀₃: Socio-economic characteristics do not significantly influence loan repayment performance among cooperative members.

1.6 Significance of the Study

This study is significant in several ways. Firstly, it will provide empirical evidence specific to Oshimili South LGA, filling a local research gap. Secondly, it will help cooperative managers and policymakers design socio-economically sensitive loan schemes that reduce default rates. Thirdly, the study will be useful to development agencies and NGOs focusing on microfinance and community-based lending systems.

Furthermore, the findings will benefit academics, researchers, and students by contributing to the literature on microfinance, rural credit, and cooperative management in Nigeria.

1.7 Scope of the Study

The study is focused on cooperative societies within Oshimili South Local Government Area of Delta State and will cover the period between 2019 and 2024. It will involve an analysis of members’ socio-economic characteristics, loan data, and repayment history. The study excludes non-credit-related cooperative activities.

1.8 Definition of Key Terms

Loan Repayment: The act of fulfilling the obligation to return borrowed money according to agreed terms.

Cooperative Enterprises: Voluntary associations formed to meet economic needs through jointly-owned, democratically controlled institutions.

Socio-Economic Characteristics: Attributes such as age, gender, income, education, occupation, and family size that define an individual’s economic and social position.

Loan Default: Failure to meet loan repayment terms within the stipulated timeframe.

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