Psychological traits and loan repayment behaviors among microfinance borrowers in Tanzania

Abstract This study examines the influence of psychological characteristics - self-control, optimism, and deliberative thinking on loan repayment among Tanzanian microfinance borrowers. Using the Theory of Planned Behavior (TPB), these traits are conceptualized as determinants of repayment intention and behavior. Data were collected through a structured survey in three major Tanzanian cities and analyzed with structural equation modelling (SEM). Results indicate that optimism negatively and significantly affects repayment behavior, while self-control and deliberative thinking have positive and significant effects. The findings extend TPB by demonstrating the predictive role of psychological traits in financial behavior and emphasize their importance in assessing credit risk. Practically, the study recommends integrating behavioral screening and into microfinance services. At the policy level, it highlights the need for psychologically informed lending practices to strengthen repayment performance and guarantee the financial sustainability of microfinance institutions.