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Risk Factors of Loan Default Payment in Ghana: A case study of Akuapem Rural Bank

Author

Listed:
  • Samuel Antwi

    (Jiangsu University)

  • Ebenezer Fiifi Emire Atta Mills

    (Jiangsu University)

  • Gifty Atta Mills

    (Jiangsu University)

  • Xicang Zhao

    (Jiangsu University)

Abstract

This study seeks to determine some risk factors that influence loan default repayment among customers in Akuapem rural bank. Secondary data on some variables which influence customer loan default was obtained from the credit department of Akuapem rural bank. Data was collected for the period 2006 to 2010. A logistic regression model was fitted to the data. It was found that among the variables that were used, Security and Type of Loan were significant to the study whereas Sex, Marital Status, Age, Educational Level, Town were not significant to the study. We conclude that there is a high risk of customers who use personal guarantee to default than those who use collateral as a security in accessing the loan. Taking transport loan as a reference group, the risks of a customer defaulting when given a personal loan is less than when given a transport loan, all other factors being equal.

Suggested Citation

  • Samuel Antwi & Ebenezer Fiifi Emire Atta Mills & Gifty Atta Mills & Xicang Zhao, 2012. "Risk Factors of Loan Default Payment in Ghana: A case study of Akuapem Rural Bank," International Journal of Academic Research in Accounting, Finance and Management Sciences, Human Resource Management Academic Research Society, International Journal of Academic Research in Accounting, Finance and Management Sciences, vol. 2(4), pages 376-386, October.
    • Handle: RePEc:hur:ijaraf:v:2:y:2012:i:4:p:376-386
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    References listed on IDEAS

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    1. Anonymous, 1957. "International Monetary Fund," International Organization, Cambridge University Press, vol. 11(1), pages 176-179, January.
    2. U. Tun Wai, 1957. "Interest Rates outside the Organized Money Markets of Underdeveloped Countries," IMF Staff Papers, Palgrave Macmillan, vol. 6(1), pages 80-142, November.
    3. Anonymous, 1957. "International Monetary Fund," International Organization, Cambridge University Press, vol. 11(4), pages 683-686, October.
    4. Anonymous, 1957. "International Monetary Fund," International Organization, Cambridge University Press, vol. 11(3), pages 537-538, July.
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    Cited by:

    1. Eric Kofi Boadi & Eric Kofi Boadi & Yao Li & Victor Curtis Lartey & Victor Curtis Lartey, 2016. "Role of Bank Specific, Macroeconomic and Risk Determinants of Banks Profitability: Empirical Evidence from Ghana's Rural Banking Industry," International Journal of Economics and Financial Issues, Econjournals, vol. 6(2), pages 813-823.
    2. Nora Azureen Abdul Rahman & Zunarni Kosim & Siew Goh Yeok, 2018. "The Characteristics of Household Loans in Conventional and Islamic Banks in Malaysia," International Journal of Academic Research in Business and Social Sciences, Human Resource Management Academic Research Society, International Journal of Academic Research in Business and Social Sciences, vol. 8(7), pages 531-541, July.

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    More about this item

    Keywords

    Loan default; logistic regression; Risk; Akuapem rural bank;
    All these keywords.

    JEL classification:

    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages

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