Credit Risk Management and Loan Performance: Empirical Investigation of Micro Finance Banks of Pakistan

Sufi Faizan Ahmed and Qaisar Ali Malik
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Sufi Faizan Ahmed: Department of Business & Economics, Foundation University Rawalpindi Campus, Pakistan.
Qaisar Ali Malik: Department of Business & Economics, Foundation University Rawalpindi Campus, Pakistan.

International Journal of Economics and Financial Issues, 2015, vol. 5, issue 2, 574-579

Abstract: The main aim of the paper is to evaluate the influence of credit risk management practices on loan performance (LP) while taking the credit terms and policy (CTP), client appraisal, collection policy (CP) and credit risk control (CRC) as the dimensions of the credit risk management practices. For statistical evaluation, the primary data in cross sectional form has been taken into consideration. The data is collected from the managerial level credit risk management staff of microfinance banking sector. Multiple regression analysis has been used for empirical relationship evaluation of the credit risk management practices on the performance of loan. The results of the analysis are showing that the credit terms and client appraisal have positive and significant impact on the LP, while the CP and CRC have positive but insignificant impact on LP. The study is helpful for the management to enhance the LP by focusing on the dimension of the credit risk management practices used in the study. Future aspects of the research have also been taken into account and elaborated.

Keywords: Loan Performance; Credit Risk Management; Credit Terms; Credit Policy; Credit Risk Control; Loan Appraisal; Micro Finance (search for similar items in EconPapers)
JEL-codes: G20 G21 G30 G32 (search for similar items in EconPapers)
Date: 2015
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

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