• Login
    View Item 
    •   UNZA Repository Home
    • Theses and Dissertations
    • Graduate School of Business
    • View Item
    •   UNZA Repository Home
    • Theses and Dissertations
    • Graduate School of Business
    • View Item
    JavaScript is disabled for your browser. Some features of this site may not work without it.

    Risk-return trade off and loan default consideration in lending decisions: a case study of whence financial services

    Thumbnail
    View/Open
    Main Document.pdf (752.7Kb)
    Date
    2020
    Author
    Chikweti, Henry Lukama
    Type
    Thesis
    Language
    en
    Metadata
    Show full item record

    Abstract
    In a bid to construct a decision-making model to remedy the contradictions encountered in lending decisions, the study explored the dysfunctionality caused by risk-return and loans default considerations in lending decisions. Whence Financial Services, a microfinance institution was selected as a case study on the basis of being a good representative of the type of institutions that have exploited the niche under review in terms of size, capacity and range of services offered. Documentary review, survey questionnaire, in-depth interviews and a workshop were used to collect data for the study. Through analysis of this data, the study found that the dysfunctionality was primarily due to risk considerations and the risk was mainly due to information asymmetry between lenders and borrowers. Therefore, the decision-making model was constructed through establishment of a series of actions to be taken before a lending institution settles for guidelines to inform lending decisions, subject to the information asymmetry challenge. The model ensures the risk is managed through weaving together risk management measures to deal with the information asymmetry. The study established that the risk of default was at about 36% and this was way too high compared to the 2% residual risk internationally accepted for microfinance institutions. Therefore, in order to reduce this risk to acceptable levels, the Government and the central Bank of Zambia (BoZ) should take keen interest in local microfinance start-ups which usually start out operations using the money lenders certificate and support them through regulation and constant monitoring. This would greatly help in managing their risk exposure which is core to the dysfunctionality under review which continues to adversely affect the entire finance industry through moral hazard, adverse selection and excessive indebtedness. This is because such a development would increase customer and other stakeholder confidence in the microfinance institutions and this in turn would be vital as it would enable microfinance institutions to collaborate with other stakeholders, a development central to resolving the information asymmetry constraint. Keywords: Risk, Loans default, Microfinance, moral hazard, adverse selection, excessive indebtedness and information asymmetry.
    URI
    http://dspace.unza.zm/handle/123456789/6641
    Publisher
    The University of Zambia
    Subject
    Microfinance--Zambia
    Excessive indebtedness and information asymmetry--Zambia
    Description
    Thesis
    Collections
    • Graduate School of Business [49]

    DSpace software copyright © 2002-2016  DuraSpace
    UNZA homepage | UNZA Library | Contact Us | Send Feedback
    Theme by 
    Atmire NV
     

     

    Browse

    All of UNZA RepositoryCommunities & CollectionsBy Issue DateAuthorsTitlesSubjectsThis CollectionBy Issue DateAuthorsTitlesSubjects

    My Account

    LoginRegister

    Statistics

    View Usage Statistics

    DSpace software copyright © 2002-2016  DuraSpace
    UNZA homepage | UNZA Library | Contact Us | Send Feedback
    Theme by 
    Atmire NV