CREDIT APPRAISAL, COLLECTION POLICY AND LOAN PERFORMANCE OF MICROFINANCE BANKS IN KWARA STATE, NIGERIA
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Date
2022
Journal Title
Journal ISSN
Volume Title
Publisher
Gusau Journal of Accounting and Finance (GUJAF)
Abstract
Abstract
The arrival of microfinance banks as another channel to mainstream the provision of
financial services has become a major succour. Yet, the banks encountered high risk of
default which is not unconnected with the peculiarities in its lending policies. In view of this,
the study examines the effect of credit appraisal policy and credit collection policy on loan
performance of MFBs in Kwara State, Nigeria. The study employed survey research design
and the population consists of bank managerial and senior staffers from which one hundred
and forty (140) were drawn conveniently as sample Data obtained through questionnaire
were analyzed using descriptive and inferential statistics. The hypotheses for the study were
tested using ordered logistic regression with average partial effects. The study found that
collection policy significantly affects the loan performance of MFBs while credit appraisal
policy does not significantly affect their loan performance as evidenced by their p-values.
The study therefore concluded that collection policy influence loan performance of MFBs in
Kwara State. Therefore, the study recommends that the credit appraisal policies should be
restructure to capture the relevant information which will help these banks to determine the
default intent of customers. Also, further monitoring mechanism should be put in place for
bank loan collection policy in order that its effectiveness in increasing loan performance is
improved.