The Impact of Service Quality Dimensions on Borrower Satisfaction in Microfinance Credit Recovery: Evidence from Nepal

Abstract

This paper examines the imperative interplay between the dimensions of service quality and the satisfaction of borrowers in the unique setting of microfinance credit recovery practices in Nepal. The study uses a primary data set of 428 data points collected on varied microfinance customers in urban and rural sectors to study the impact of recovery practices on institutional loyalty in the long-term. The analysis was done with the help of high-order statistical software packages to guarantee accuracy in calculating the weight of different service factors. The results suggest that the human attitude of recovery agents and the clarity of communication play a significant role in determining the level of emotional and financial satisfaction among borrowers. Through systematic modeling of the data, this study indicates that the psychological stress that comes with debt may be alleviated through high service quality at the sensitive stage of credit recovery, leading to a more sustainable lending ecosystem. This paper gives an elaborate model of how microfinance institutions could improve their collection strategies so that they cease to be merely transactional but more of a relationship-based recovery model that values the dignity of the borrowers and effective dissemination of information.