“the effect of interest rate on loan repayment in commercial bank in rwanda” Fidele Kwizera Giovanni Online published on 12 May, 2017. Abstract This research entitled “The effect of interest rate on loan repayment in commercial bank in Rwanda” a case study of KCB Musanze Branch, has the following specific objectives-to describe loan policy of KCB Musanze Branch, to analyze quality of loan portfolio of KCB Musanze Branch and to establish the relationship between interest rate and loan repayment in KCB Musanze Branch and research questions are (1) How is the interest rate on loans in KCB? (2) What is the quality of loan portfolio of KCB Musanze Branch? And (3) Is there any relationship between interest rate and loan repayment in KCB Musanze Branch? And then the hypotheses of the study is that Interest rate influences loan repayment in KCB Musanza Branch. The study population was employees and clients of KCB Musanze Branch. The sample size is 99 respondents from the population of 18761 employees and clients of KCB Musanze Branch. Sampling technique used was purposive sampling The results indicated that the majority of respondents equal 60.7% said that the collateral is important in order to get loans whereas. The quality of loan portfolio is mainly justified by the fact that Non performing loans are in normal range as per regulations of central Bank of Rwanda (NBR). The findings revealed that there is strong relationship between interest rate and loan repayment in KCB Musanze Branch and implied that when interest rates are low, people are willing to borrow because they find it relatively easy to repay their debt. When interest rates are high, people are reluctant to borrow because repayments on loans cost more. In conclusion the interests rate is a critical factor in loan payment in KCB Musanze Branch. As recommandation, financial institutions should set affordable interest rates on loans. Top |