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Search Results: 1 - 10 of 465 matches for " Loan Default "
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Journal of Central European Agriculture , 2008,
Abstract: This paper analyses the extent of default among beneficiaries of government sponsored loan scheme. The loan performance indices estimated reveal that over 75% of the loans disbursed by AKSALB in the period under review were still held by 59 percent of the loan beneficiaries. This situation is an indication of high level of loan defaulting among the benefiting farmers. Certain personal and facility factors are estimated to determine the probability of default among the beneficiaries. Notably among these include sex, household size, farm size, loan from other sources, primary occupation of the beneficiary, time lapse between loan application and disbursement, total farm expenditure and duration of the granted loans. With such high level of default, the Board outreach and sustainability capacity is questionable thus putting a caveat on the relevance of the Board as agricultural micro financing institution.
Determinants of Loan Defaults in Some Selected Credit Unions in Kumasi Metropolis of Ghana  [PDF]
Edward Yeboah, Irene Mirekuah Oduro
Open Journal of Business and Management (OJBM) , 2018, DOI: 10.4236/ojbm.2018.63059
Credit Unions play a pivotal role in the Microfinance Industry in Ghana. They are not only deeply rooted in financial intermediation but also provide favorable terms and conditions in financial products and services to their members compared to banks and other financial institutions. The sustainability of Credit Unions has been threatened by the incidence of loan defaults or non-performing loans. The diagnostics of the causes of loan defaults in Credit Unions become paramount toward sound credit risk management practices. The study relied on primary data. Purposive sampling technique was applied to select 244 Credit Union members. Questionnaires were used for data collection and logistic regression model was adopted. The study utilized Statistical Product and Service Solution (SPSS v. 20) and Stata (v.14) as statistical tools for data analysis. The results reveal that education, loan diversion, monitoring, marital status and income are significant factors that influence loan default. Thus, credit education should be intensified and that effective loan monitoring should be vigorously pursued. Additionally, loan appraisal systems should be robust with the application and development of credit scoring systems that will factor in key variables of loan default.
O Oni,O OLADELE,I Oyewole
Journal of Central European Agriculture , 2006,
Abstract: This study is interested in determining factors infl uencing default in loan repayment among poultry farmers in Ijebu Ode Local Government Area of Ogun State. A total of 100 poultry farmers were randomly sampled from the study area. Probit model was employed to determine and analyse the factors infl uencing default in loan repayment in the study area. Descriptive statistics were also employed to describe the socio-economic characteristics of the farmers. Finding revealed that majority of the farmers in the study area are educated. About 55.0 percent of the farmers source their credit from formal fi nancial institutions. Result from the probit model revealed that fl ock size of the farmers signifi cantly infl uence default in loan repayment at (P<0.10) level. Age of the farmers signifi cantly infl uence default in loan repayment at (P<0.01) level, while Educational level and Income of the farmers also signifi cantly infl uence default in loan repayment at (P<0.05) level.
Credit risk and loan default among Ghanaian banks: An exploratory study
Matthew Ntow-Gyamfi,Sarah Serwaa Boateng
Management Science Letters , 2013,
Abstract: Banks are principally in the interest earning business. The interest earning nature of banks comes with the amount of loans that banks are able to advance to their customers. To ensure that the stream of interest is not treacherous, banks must put in place stringent credit risk management practices. In this study, we investigate credit risk and default among Ghanaian banks and how these banks are coping with such pressures. Using a survey method, we found that though varied in nature, all the banks have some form of credit management procedures put in place to manage their loan portfolios. We found loan application processes to be bank specific. However, there are some common requirements that banks usually demand from customers in the process of assessing their suitability for a loan. We also found most of the credit management practices of banks to be consistent with the CAMPARI model. We recommend that the Central Bank facilitate in the establishment of a vibrant credit-referencing bureau in order to provide credit history of customers of the banks.
Relationship between Banks’ Capital and Credit Risk-Taking through Syndicated Loan  [PDF]
Shu Ling Lin, Wei Peng Chen, Jun Lu
Modern Economy (ME) , 2015, DOI: 10.4236/me.2015.612123
Abstract: This paper aims to investigate whether banks exploit their information advantage over bank-dependent borrowers, analyzing the impact of capital level on banking credit risk-taking under syndication loans. By using a unique data composed of 4828 syndicated loan of publicity banks facilities from the U.S. for the period 1987-2010, we propose theoretical issues of the impact and effectiveness of banks’ credit risk-taking from the perspectives of borrowers’ bank dependent. The results show that there is positive correlation between the ratios of bank’s capital over its total assets and banks’ credit risk-taking. It implies that banks with lower capital level charge higher lending spread for borrowers with fewer cash flows; hence the banks would bear a lower probability of default.
Pricing for Basket CDS and LCDS  [PDF]
Tao Wang, Jin Liang, Xiaoli Yang
Modern Economy (ME) , 2012, DOI: 10.4236/me.2012.32024
Abstract: In this paper, under the reduced form framework and “Bottom Up” method, a model for pricing a basket Loan-only Credit Default Swap (LCDS), with the negative correlation between prepayment and default, is established. A general pricing formula for it is obtained, where one factor CIR (Cox-Ingersoll-Ross) and ICIR (Inversed CIR) models are used to describe the negative correlation between prepayment and default. In this situation, the positivity of prepayment and default intensity processes are guaranteed. Numerical computations are presented.
Jamal Nazrul Islam,Haradhan Kumar Mohajan,Rajib Datta
International Journal of Economics and Research , 2012,
Abstract: The microfinance system of Grameen Bank is a revolutionary tool to eradicate poverty of the rural people especially the women of Bangladesh. At present GB is the largest microfinance bank in Bangladesh and probably the biggest microcredit organization in the world. It provides loans to assetless and landless poor people whom no commercial bank give loan. Microcredit is the most useful and popular financial system in the world to face financial crisis of the poor people. Grameen Bank loan distribution has risk of default andsometimes the loans are used even dowry which is crime against women right. The rate of interest in Grameen Bank is very high and due to high interest rate the poor women can not use the loan in a high profitable business to bear this burden, so some of the borrowers lose lands and assets to pay the loan. The paper discusses both advantages and drawbacks of Grameen Bank with mathematical calculations in some details.
Determining the Probability of Default of Agricultural Loans in a French Bank
Amelie Jouault,Allen M. Featherstone
Journal of Applied Finance and Banking , 2011,
Abstract: Recently, financial institutions have developed improved internal risk ratingsystems and emphasized the probability of default and loss given default. Thedefault characteristics are studied for 756 loans from a French bank: CIC- BanqueSNVB. A binomial logit regression is used to estimate several models of theprobability of default of agribusiness loans based on information available at loanorigination. The results show that leverage, profitability and liquidity at loanorigination are statistically significant indicators of the probability of default. Asleverage increases, profitability decreases, or liquidity decreases, the probability ofdefault increases. As the length of loan increases, the probability of default alsoincreases. Finally, it is more accurate to develop a model for each type ofcollateral (activity). By developing more quantitative credit scoring models,banks may benefit from lower capital requirements while borrowers may seebetter rates where the risk of loans is appropriately priced.
The Research on Correlations of Credit Risk and Moral Hazard for the EG
Yu XIA,Zongfang ZHOU,Yang YANG,Cao XU
Management Science and Engineering , 2013, DOI: 10.3968/3300
Abstract: This paper, under the assumption of risk-neutral, analyzed the relationship between the probability of occurrence of moral hazard and the default probability of the EG (enterprise group), theoretically demonstrated the inner mechanism between the moral hazard and credit risk of the EG, and highlighted the role of bank loan interest played in the control of moral hazard and credit risk. The research shows: (1) There is nonlinear relationship between the probability of occurrence of moral hazard and the default probability of the EG; (2) There is an exogenous variable, loan interest rate, which makes the default probability extremum.
Targeted Sensitization as a Strategy to Reducing Loan Default in Microfinance Bank Operations in Yola, Adamawa State, Nigeria  [PDF]
Shuaib Jalaludeen, Ferdinand Che, Fatima Jalal-Eddeen
Open Access Library Journal (OALib Journal) , 2018, DOI: 10.4236/oalib.1104275
Background: In Nigeria and other developing countries, the main reason for poverty and uneven income and wealth distribution is low economic growth performance and low labor returns amongst others. The growing gap between the rich and the poor in the developing countries is alarming hence the need for government and policy makers to focus more toward ensuring a fair distribution of wealth among its populace. Although progress has been made toward poverty reduction in Nigeria, still more needs to be done to narrow this unacceptable gap so as to achieve the needed economic and social growth for society to thrive. In an attempt to address this gap, the central bank of Nigeria came up with the microfinance policy in 2004 and the sole purpose was to give micro, small and medium enterprises access to informal financial services to boost their capacity towards economic growth and development. However, the biggest threat to operations of the microfinance institutions is loan default, a situation where the clients do not fulfill payment of their credit facilities when due. Methods: This mixed method cross-sectional study used a questionnaire to collect responses from eligible persons. The participants in the survey are clients from three randomly selected microfinance institutions in Yola, Adamawa State, Nigeria. The collated data were analyzed using SPSS version 24 and simple Microsoft Excel to look at reasons for defaulting loan repayment and whether targeted sensitization has any significant role in reducing loan default rates. Results: Out of the 150 (100%) questionnaires distributed, 70 (46.7%) were returned and used for the analysis. Reasons for default in repayments revealed short repayment period (40%), multiple loans (11.43%), high-interest rates (2.86%), family obligations (20%) and poor business turnover (25.71). Of the 52.86 percent of the respondents who claim they were contacted by their respective microfinance institutions for sensitization programs, 94.74 percent found the sensitization program helpful. Conclusion: This study has underscored the importance of targeted sensitization as an important strategy in reducing loan defaults in microfinance operations. Similarly, there is the need for further studies to look at the impact of multiple borrowing on loan repayment by the clients.
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