Borrower Characteristics and the Level of Non-Performing Loans among Saving and Credit Cooperative Societies in Tanzania: Moderating Effects of the Educational Level of Loan Committee Members

Abstract

This study investigates how borrower characteristics influence non-performing loans (NPLs) among 45 SACCOs in Ubungo Municipality from 2017 to 2024. Specifically, the study analyzed the influence of borrowers’ income level, borrowers’ loan purpose, and borrowers’ credit history on NPLs, while also examined the moderating effect of loan committee members’ educational level, covering financial statements and regulatory supervision reports. Descriptive statistics (mean, standard deviation, skewness, and kurtosis) and inferential statistics (Pearson correlation and regression analysis using pooled OLS) were computed using SPSS Version 23, supported by robustness checks. A two-way fixed-effects panel model shows that higher borrower income, productive-purpose loans, and stronger credit histories reduce NPLs, while higher loan-committee education further strengthens these relationships. Policy recommendations include stricter borrower profiling, committee qualification standards, and alignment of repayment schedules with income cycles.