Does service quality influence loan repayment behaviour of microfinance institution clients? : an integrated model approach to access behavioural dimensions

The study aims to investigate the key behavioural dimensions that significantly influence loan repayment behaviour of microfinance institution clients. The study also intendes to evaluate the impact of service quality of MFIs on clients' satisfaction.The primary data was gathered from 235 microfinance institution (MFI) clients through a structured questionnaire in Khordha district, Odisha. The theory of planned behaviour (TPB) was measured using three constructs, namely perceived behavioural control, subjective norm and attitude. Norm activation model (NAM) was measured by three constructs, such as awareness of consequences, ascription of responsibility and personal norms. Service quality of MFI was measured using five constructs, namely assurance, empathy, reliability, responsiveness and tangible. Confirmatory factor analysis (CFA) and structural equation modelling (SEM) were employed to analyse the sample data.The study results show that personal norms, attitude, ascription of responsibility and client satisfaction significantly influence the loan repayment behaviour intention of clients, whereas perceived behavioural control, subjective norms and awareness of consequences did not impact loan repayment behaviour. Furthermore, service quality dimensions were found to be critical in measuring client's satisfaction and had a significant impact on client's satisfaction.It is very essential for MFIs to understand and predict the repayment behaviour of clients. Group lending mechanisms are more suitable for women to access financial assistance from MFIs. In addition, developing trustworthy relationships between MFI and clients improves their outreach, engagement and retention of clients, leading to greater financial inclusion and socioeconomic development.The study stands out by focusing on the measurement of service quality in MFIs, an area with no existing research. An integrated model was used to identify the factors influencing client behaviour towards MFIs comprehensively and in a better way. Furthermore, the study contributes to the literature by providing empirical evidence on the importance of behavioural intention and service quality in shaping client behaviour towards MFIs loan repayment.