Influence of perceived high-interest rates on women entrepreneurs' willingness to seek loans from financial institutions in Dar es Salaam, Tanzania
Keywords:
Financial Institutions, Loans, Perceived high interest rate, & Women entrepreneursAbstract
The main objective of this study was to examine the influence of perceived high interest rates on women entrepreneurs’ willingness to seek bank loans in Ilala Municipality. The specific objectives involved to examine the entrepreneurs’ willingness to seek loans, to assess the influence of financial literacy on women entrepreneurs’ willingness to seek loans; and to examine the effect of collateral requirements on women entrepreneurs’ willingness to seek loans. The study adopted an explanatory research design under a quantitative approach. The study population comprised 370 women entrepreneurs, from which a sample of 192 respondents was selected using Yamane’s formula at a 95% confidence level. Stratified random sampling was employed while data were collected through questionnaire survey. Quantitative data were analysed using descriptive statistics and multiple linear regression. The regression results revealed a strong positive relationship between the independent variables (perceived high interest rates, financial literacy, and collateral requirements) and the dependent variable (willingness to seek bank loans), with a correlation coefficient (R) of 0.782 and a coefficient of determination (R²) of 0.612. The analysis of variance (ANOVA) confirmed the model’s significance (F = 92.068, p < 0.001). The regression coefficients further indicated that perceived high interest rates had a negative and statistically significant effect on willingness to seek loans (β = -0.358, p < 0.05), suggesting that high interest rates discourage borrowing among women entrepreneurs. Financial literacy had a positive and significant influence (β = 0.279, p < 0.05), implying that improved financial knowledge enhances women’s confidence in seeking loans. The study concludes that while women entrepreneurs in Ilala Municipality are generally willing to seek bank loans, their actual participation is hindered by high-interest rate perceptions, limited financial literacy, and stringent collateral conditions. It is recommended that financial institutions introduce gender-sensitive credit policies that lower interest rates.
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