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Author(s): TWESIGE Danie , UWAMAHORO Alexis, DUKUNDE Angelique, MUVUNYI Eugene NDIKUBWIMANA Jean Bosco
The study analysed the effect of loan management on the performance of microfinance institutions in Rwanda. To achieve objectives, the population included 18 SACCOS in Musanze district three employees from each SACCO was purposively selected. This made the sample of the study to be 54. The data obtained were analysed using SPSS and some qualitative techniques describing categorical character of the responses from the respondents and quantitative methods were adopted using some descriptive, co-relational research design and other tabular representations to show how loan management contributes to the performance of SACCO. The results revealed that the credit risk management techniques adopted in SACCO include among others the capital analysis of the borrowers, character analysis of the borrowers, analysis of capacity to pay, collateral evaluation, analysis of project conditions and the loan management is more effective. The reduction of non-performing loans, increase of profits, increase of owners’ equity and increase in reputation of organization are among the described indicators of performance as linked to loan management. There is a positive relationship between loan management and performance of the microfinance institutions and this is measured by the Pearson correlation coefficient of 0.73 (73%) which is high moderate positively, this explain that the better loan management in microfinance institutions the more performance and 53.3% of the variation of the performance is explained by loan management. Some suggestions concerning the microfinance institutions itself, the government and customers were also given accordingly.