![]() The research was based on a sample of 12 registered and operational Zimbabwean Micro finance institutions. In order to make the research effective in achieving its defined objectives, the researcher mainly targeted loans officers, credit risk analysts, recoveries officers and the managers. Exploratory and descriptive research designs were used that enabled the researcher to organize the collection of data. The research secondary objectives included the credit appraisal techniques used by micro-finances, impact of the used techniques on reducing portfolio at risk, effect of credit terms on loan performance and other components of credit risk management that microfinance institutions can employ to increase loan performance. The principal aim of this study was to analyze the impact of credit appraisal techniques employed by microfinance institutions in improving loan performance. Annual consolidated reports by various micro-finance institutions recently reported deterioration in aggregate loan quality with gross non-performing loans and defaulting loans increasing. The Reserve Bank of Zimbabwe and other analysts attributed this failure to poor credit risk management practices in banks and in most cases the causes of the failure were also directly related to lax credit risk management controls. This research was mainly influenced by the high levels of non-performing loans and increasing number of defaulting loans being experienced by microfinance institutions in Zimbabwe resulting in deteriorating loan performance.
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