The main purpose of this study was to examine the determinants of loan default and its effects on financial performance of commercial banks in Ghana by using Fidelity Bank Limited as a case study. The study employed quantitative and qualitative research techniques as the research design. In achieving the research objectives primary and secondary data was used. The primary data was collected through a well structured questionnaire. Simple random technique was used to select 120 loan clients and a purposive sampling was used to select a credit staff. The data was collected from four branches of Fidelity Bank in the Brong Ahafo Region of Ghana. It was realized that the delays in loan approval, poor management, poor credit appraisal and diversion of loans are the main determinants of loan default in Fidelity bank. The study also found that SME clients (49.5%) defaults more than agric, personal and salary loan clients. The major cause of loan default according to the findings of this study was decrease in demand of goods and service (16.1%) sold by the loan clients. Again, it was realized that loan default has a negative impact on profitability. It is recommended that the following measures should be implemented to reduce the rate of loan default; good credit structuring, consistent monitoring, sound credit risk policies and standards, quality analysis, well trained staff, good corporate governance system, independent credit assessment, rescheduling and provision of additional funds.
Inhaltsverzeichnis
Abstract
INTRODUCTION
1.0 Background to the Study
1.1 Statement of Problem
1.2 Objectives of the Study
1.3 Research Questions
1.4 Justification of the Study
1.5 Scope of the Study
1.6 Limitation of the Research
1.7 Organization of the Study
LITERATURE REVIEW
2.0 Introduction
2.1 Conceptual Issues
2.1.1 Lending
2.2 Loan Default
2.2.1 Determinants of Loan Default
2.2.2 Minimizing Loan Default
2.2.2.1 Collateral
2.2.2.2 Credit Securitization
2.2.2.3 Compliance to Basel Accords
2.2.2.4 Adoption of a sound internal lending policy
2.2.2.5 Asset-by-asset Approach:
2.2.2.6 Portfolio Approach
2.2.2.7 Credit Scoring Systems
2.3 Effect of Loan Default
2.4 Loan Repayment
2.5 Credit Risk
2.5.1 Sources of Credit Risk
2.5.2 Importance of Credit Risk
2.6 Credit Risk Assessment
2.7 Review of Theories
2.7.1 Liquidity Theory of Credit
2.7.2 Portfolio Theory
2.7.3 Credit Risk Theory
2.7.4 Tax Theory of Credit
2.8 Conceptual Framework
METHODOLOGY
3.0 Introduction
3.1 Research Design
3.2 Population and Sampling Technique
3.3 Data Collection
3.3.1 Primary Data
3.3.2 Secondary Data
3.4 Data Analysis
3.5 Model Specification and Estimation Technique
3.6 Profile of Organization
ANALYSIS OF DATA AND PRESENTATION OF RESULTS
4.0 Introduction
4.1 Demographic Characteristics of Respondents
4.2 Determinants of Loan Default in Fidelity Bank.
4.3 Type of Client who normally default in Fidelity Bank
4.4 Causes of Loan Default
4.5 Impact of Loan Default on Profitability
4.6 Rate of Default in relation to sectors of the economy.
SUMMARY OF FINDINGS, CONCLUSIONS AND RECOMMENDATIONS
5.0 Introduction
5.1 Summary of Findings
5.2 Conclusions
5.3 Recommendations
REFERENCES
APPENDIX I
APPENDIX II
- Quote paper
- Anthony Abaidoo (Author), Shadrach Oppong (Author), 2015, Determinant of Loan Default and Its Effect on Financial Performance of Commercial Banks in Ghana. A Case Study of Fidelity Bank Limited, Munich, GRIN Verlag, https://www.grin.com/document/373126
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