Abstract
Effects of Credit Policies on Delinquency Management of Microfinance Banks in Southwest, Nigeria
Highlights
Credit policy is a guide to successful credit administration and benefits must be weighed against the cost to ensure the benefits are worth the effort of administering the credit
The study establishes that delinquency management of microfinance banks is influenced by credit standard policy and credit terms and conditions
The findings indicated that the mechanism used by microfinance banks to collect loan has been adequate to an extent in reducing loan delinquency
Summary
Credit policy is a guide to successful credit administration and benefits must be weighed against the cost to ensure the benefits are worth the effort of administering the credit. These factors create volatility in microloan portfolio quality, heightening importance of controlling credit risk In this regard, microfinance banks need a good and effective corporate governance system that highlights repayment problems clearly and quickly, so that loan officers and their supervisors can focus on delinquency (repayment rate) before it gets out of hand. Based on foregoing, microfinance banks in Nigeria are faced with the problem of loan delinquency/default, which may have long-term consequences if not addressed It is in the interest of the management and board of directors to fashion best credit policies which will have a bearing on the direction the firm takes and its ability to survive in the industry.
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