CORRELATIONAL STUDY OF FINANCIAL LITERACY ON LOAN REPAYMENT OF SMALL AND MEDIUM ENTERPRISES WITHIN SACCOs IN RWANDA
Authors:
BUMBALI Machiavel, (MBA), INGABIRE Aline, (MBA) & SIBOMANA Providence, (MBA, MA),
Abstract:
This study sought to assess the correlational influence of financial literacy on loan repayment of SMEs within SACCOs in Rwanda. The objectives were to determine how bookkeeping literacy influence loan repayment of SMEs within SACCOs, to examine how budgeting literacy affect loan repayment of SMEs within SACCOs and to assess how debt management literacy affect loan repayment of SMEs within SACCOs. Literature ascertains that access to financial literacy, budgeting literacy, and bookkeeping skills could be a potential source for the customers’ ability to save, to perform better in the business, to increase their income; in short, to cater for the loan repayment.
The study adopted a descriptive quantitative research design. The total population of 130 which are SMEs were taken into consideration in its entirety. Data were analyzed using SPSS software Version 20 and presented in form of tables and graphs. The findings revealed a high positive correlation between bookkeeping, budgeting and debt management literacy and loan repayment. Moreover, R-squared was 77.2% meaning that the financial literacy factors accounted for a greater percentage of loan repayment variations. The study recommended that SACCOs should initiate more financial training to reach all members and encourage all members to attend such training. The SACCOs should also employ high qualified trainers to offer quality training to the members.