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An assessment of mortgage loan default propensity in Ghana

De-Graft Owusu-Manu (Department of Building Technology, KNUST, Kumasi, Ghana)
Richard Ohene Asiedu (Department of Building Technology, Koforidua Polytechnic, Koforidua, Ghana)
David John Edwards (School of Engineering and the Built Environment, Birmingham City University, Birmingham, UK)
Kenneth Donkor-Hyiaman (School of Real Estate and Planning, Henley Business School – University of Reading, Henley-on-Thames, UK)
Pius Akanbang Abuntori (Department of Industrial Finance and Investments, Institute of Distance Learning, Kwame Nkrumah University of Science and Technology, Kumasi, Ghana)
Hatem El-Gohary (Qatar University, Doha, Qatar)

Journal of Engineering, Design and Technology

ISSN: 1726-0531

Article publication date: 20 June 2019

Issue publication date: 3 September 2019



Credit market development requires appropriate credit assessment and default policies. This paper aims to examine the impact of household characteristics on mortgage default, using survey data collected from Ghanaian financial institutions.


Data were gathered using semi-structured questionnaires from customers of five universal banks in Ghana. A logistic regression was used to model the determinants of credit default propensity.


Contrary to established knowledge, the study shows that females are more likely to default on credit than their male counterparts. This is even more likely if the female is older, unmarried, divorced and financially illiterate and has lower educational attainments. These factors are associated with lower earning capacity, which increases default tendencies. The findings confirm that price instability (typified by excessive movements in inflation and exchange rates in addition to low national savings rate) are adversely linked to credit defaults. Borrower’s perception of constraints to credit access (such as collateral requirements, interest rate and loan size) influence credit default. Banks should be encouraged to invest in the financial literacy skills development of their customers to mitigate credit default tendencies.

Social implications

The study is of practical value to credit officers and the development of the credit market in Ghana. A novel model is presented for assessing credit applications and developing credit default policies.


The research findings have not only expanded the frontiers of literature but also empirically examined the determinants of credit default propensity, which provides a basis for developing and improving credit default policy in the credit market.



Owusu-Manu, D.-G., Asiedu, R.O., Edwards, D.J., Donkor-Hyiaman, K., Abuntori, P.A. and El-Gohary, H. (2019), "An assessment of mortgage loan default propensity in Ghana", Journal of Engineering, Design and Technology, Vol. 17 No. 5, pp. 985-1017.



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