EFFECT OF FINANCIAL LITERACY ON LOAN REPAYMENT PERFOR MANCE OF MEMBERS IN THE CASE OF DURO SHALLA SACCOs UNION WEST ARSI ZONE, REGIONAL STATE, ETHIOPIA

Abstract

Financial literacy is the possession of knowledge, skills, and attitudes that enable an individual to use money effectively by making sound informed financial decisions.The main purpose of this study was to assess the effect of financial literacy on the loan repayment performance of members in the Duroshalla Saving and Credit Cooperatives Union in the Oromia regional state of Ethiopia. The resrachrer investigated the effect of variables of such as demographiccharacteri stics, socio economic related and financial literacy variables such as budget literacy, debt man agement literacy, and saving literacy debt management literacy, budgeting literacy, bookkeeping literacy,and saving literacy.The syudy employed both explanatory and descriptive survey reseach design with mixed approach also purposive sampling andsimple random sampling technique used .The collected data was analyzed using descriptive statistics and binary logistic regression additnally used (SPSS)version 26. The result of this study has shown that age, education level, occupation, marital status, budgeting literacy, debt management literacy, and saving literacy var iables have positive and significant effect on the loan repayment performance of the members of Duroshalla SACCOs Union in West Arsi Zone, Oromia, Ethiopia. On the other hand, family size and gender have anegative effect loan repayment performance of the members But bookkeeping l iteracy is not significant. Specifically, older, more educated, married members,in certain occupat ions ,with higher monthly incomes are more likely to repay loans on time. Furthermore, member s with better budgeting, debt management, and saving literacy skills demonstrate higher odds of timely loan repayment. The study underscores the importance of enhancing financial literacy programs within SACCOs to improve loan repayment rates and ensure the sustainability of these cooperatives.The recommendations for Duroshalla should provide finance al for training, offer i ncentives for older members, promote education and skill development, consider marital status i n loan assessment, encourage income-generating activities, assist members with larger families in financial management, promote budgeting and debt management literacy programs, and encourage saving habits among members.