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BORROWER’S CHARACTERISTICS AND LOAN REPAYMENT PERFORMANCE AMONG SMALL AND MEDIUM ENTERPRISES IN MOGADISHU, SOMALIA

Loan repayment performance is so instrumental to both the borrowers and the lending financial
institutions. Loan repayment performance arises when the borrower repays loan on time as
specified in loan contract (Worokinasih & Potipiroon, 2019). Loan repayment performance
measures if the borrowers repay their loans in full as specified in the contract. The higher the
loan repayment performance, the greater the liquidity position of the lending institution and
ability to meet debt obligation (Rafay, Farid, Yasser & Safdar, 2020). High loan repayment
performance allow financial institutions to reduce interest rate it charge borrowers and thus
lowering financial cost of accessing credit and this allow more borrowers to access funds.
High loan repayment performance increases the adequacy of the lending institutions to meet
the needs of the borrowers (Salifu, Tofik-Abu, Rahman & Sualihu, 2018).

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