ASSESSMENT OF CREDIT RISK MANAGEMENT OF THE MICROFINANCE INSTITUTIONS IN ISLANDGARDEN CITY OF SAMAL

Abstract

ABSTRACT Microfinance institutions (MFIs) perform financial functions such as payment services, money transfer, insurance, and loans for rural poor people and low-income households. As with any financial institutions, credit risk management practices are essential to mitigate loan losses. The study sought to an assessment of credit risk management of MFIs in Island Garden City of Samal using client appraisal, credit risk control, and collection policy as the dimensions. The statistical tools employed were descriptive statistics specifically: mean and standard deviation. Primary data collected using survey questionnaires perceived by the managers of 4 MFIs in the Island Garden City of Samal. Also, secondary data obtained from MFIs. The study revealed that collection policy, client appraisal, and credit risk control got high mean scores on credit risk management of MFIs in the Island Garden City of Samal. Lastly, this concluded that MFIs in the Island Garden City of Samal used credit risk management to minimize the number of loan delinquents.