Demographic characteristics of credit officers and risk management in MFIs in Tanzania

Neema Mori | Evelyn Richard | Martha Swai

This article examines the effect of credit officers’ demographic features on risk management in microfinance institutions (MFIs). The paper utilizes a dataset of 200 credit officers from 20 MFIs in Tanzania. Descriptive analyses and econometric models are used for analysis. Credit officers’ work experience, age, and education level influence credit risk management as measured by portfolio at risk. Based on the information asymmetry theory, the study observed that the gender, marital status, and the location of MFIs do not influence credit risk management. MFIs should consider the demographic profile of their credit officers and employ educated, skilled, and experienced personnel for screening and monitoring the use of the loan to reduce the risk of the loan not being repaid. The study contributes to the theory by showing that experience and education matter in terms of organizations’ ability to reduce information asymmetry problems, which in turn helps risk management.