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This study assesses the classification accuracy of an artificial neural network (ANN) model. It examines the application of loan recovery probability rather than odds of default as the case with traditional credit evaluation models.

Data on 2,300 loans granted over the period 2001-2012 was obtained from the databases of Nigerian commercial banks and primary mortgage institutions. A multilayer feed-forward ANN model with back-propagation learning algorithm was developed having classified the sample into training (38 per cent), testing (41 per cent) and validation (21 per cent) sub-samples.

The model exhibits a high overall percentage classification accuracy of 92.6 per cent. It also achieves relatively low misclassification Type I and Type II errors at 6.5 per cent and 8.2 per cent, respectively. Macroeconomic variables such as gross domestic product, inflation and interest rates have the strongest influence on the ANN model classification power. The result of the analysis shows that adopting odds of recovery in ANN classification models can lead to improved loan evaluation.

The paper is distinct from extant studies in that it presents a new dimension to loan evaluation in Nigerian lending market. To the best knowledge of the authors, the paper is among the first to explore probability of loan recovery as the basis for credit evaluation in the country.

The primary objective of the paper is to demonstrate the importance of borrower‐specific characteristics as well as local situation factors in determining the demand prospect as well as the risk of credit loss on residential housing loan repayment behavior in India.

Using 13,487 housing loan accounts (sanctioned from 1993‐2007) data from Banks and Housing Finance Cos (HFCs) in India, this paper attempts to find out the crucial factors that drive demand for housing and its correlation with borrower characteristics using a panel regression method. Next, using logistic regression, housing loan defaults and the major causative factors of the same are examined.

In analyzing the housing demand pattern, some special characteristics of the Indian residential housing market (demographic and social features) and the housing loan facility structure (loan process, loan margin, loan rate, collateral structure etc.), that have contributed to the safety and soundness of the Indian housing market have been deciphered. The empirical results suggest that borrower defaults on housing loan payments is mainly driven by change in the market value of the property vis‐à‐vis the loan amount and EMI to income ratio. A 10 percent decrease in the market value of the property vis‐à‐vis the loan amount raises the odds of default by 1.55 percent. Similarly, a 10 percent increase in EMI to income ratio raises the delinquency chance by 4.50 percent. However, one cannot ignore borrower characteristics like marital status, employment situation, regional locations, city locations, age profile and house preference which otherwise may inhibit the lender to properly assess credit risk in home loan business, as the results show that these parameters also act as default triggers.

This study contributes on the micro side of the housing market in India, since it uses unique and robust loan information data from banks and HFCs. The empirical results obtained in this paper are useful to regulators, policy makers, market players as well as the researchers to understand housing market demand and risk characteristics in an emerging market economy such as India.

The aim of the paper is to analyze whether performance measures and their factors for microfinance institutions (MFIs) in Muslim countries are significantly different from those in their non-Muslim counterparts, central to the Islamic scholars' argument that religious and cultural norms in Muslim countries may drive the preference of Islamic microfinance over conventional microfinance.

Using a cross-sectional dataset of 2,138 firm-years for 754 different MFIs across 83 countries, 33 Organization of Islamic Conference (OIC) member Muslim countries and 50 non-member countries, we analyzed the MFI performance based on three sets of measures: outreach, loan recovery and profitability and overall financial performance measures, with respect to two sets of explanatory variables, namely, country-specific and firm-level variables.

Results show that country gross domestic product size is positively related with profitability, and the percentage of women borrowers is also significant in driving loan recovery and firm profitability in the OIC sample, but they are otherwise not significant for the rest of the world sample.

This study contributes to the understanding of the core argument in the motivation of Islamic MFIs, which is whether cultural and religious factors are important for MFI success in Muslim countries.

This study introduces a variable that measures the difference between a country's independence year and their OIC membership year as a proxy for the “country religious inclination” of a Muslim country. Results suggest that countries with delayed membership in OIC show lower inclination to popular Islamic beliefs and higher market penetration of conventional microfinance outreach. Positive relationships among a country's religious inclination and loan loss ratios and loan provisions are also consistent with the moral hazard hypothesis that few religious communities may be more prone to default.

The purpose of this paper is to quantify the monetary amount of relationship investment in an investment banking context, investigate the drivers behind these relationship investments and look for evidence indicating reciprocity from the clients who receive these relationship investments. Relationship marketing has been one of the dominant mantras in marketing strategy circles, yet there is a lack of empirical evidence to prove significant relationship investment and reciprocity between exchange partners.

Relationship investment as the monetary amount by which the fair value of a loan at issuance is below its par value is measured. Regression analysis is used to study the drivers of relationship investment, including relationship depth, relationship breadth and relationship potential. Finally, reciprocity is studied as the extent to which bank’s expectations are realized through future revenues.

Based on 164 loans issued by a multinational investment bank, it was found that the bank provides significant monetary benefit to its corporate clients. The amount of monetary benefit provided to each client depends on the breadth and potential of the bank-borrower relationship. The author also finds evidence suggesting that the clients reciprocated these relationship investments and the bank anticipated the reciprocity by clients.

This paper is the first to empirically show a significant monetary investment in a relationship-marketing context, with the intention of building stronger relationship with clients and earning future revenues through reciprocity.

The purpose of this study is to assess reasons behind experienced challenges by local government authorities (LGAs) in operating Women, Youth and People with Disabilities Fund (WYDF) in Tanzania. Specifically, it assesses the reasons behind failures to recover loan by LGAs and groups of Women, Youth and People with Disability (WYPWD).

The qualitative approach was recruited in this study involving Tunduru District Council as a case study. Data were collected through Interviews, Focus Group Discussion and Documentary Review. Interviews were administered to Community Development Officers (CDOs) while FGD to WYPWD groups. Reviewed documents include laws, regulations and publications on social development funds. Data were analyzed using content analysis approach and backed up by quotations during presentation.

Failures to recover loans from beneficiaries is attributed to weaknesses of both groups and LGAs. LGAs suffer from lack of capability to manage the fund, poor governance practices and misuse of public funds, and groups lack awareness of the fund's goals.

Due to experienced challenges, efforts by groups and LGAs to reclaim loan have been unsuccessful, which has prevented the fund from achieving its goals.

The central government should concentrate on ongoing LGAs capacity building so that they can successfully handle the fund, it is advised for improvement. Again, LGAs should establish an information system linked with groups to track their projects implementation. Once more, groups should be informed about the purpose of creating the fund and the advantages of the loan to them and to local economic development (LED). Furthermore, groups need entrepreneurial abilities to be able to participate in businesses that they can manage. Moreover, organizations should receive ongoing education so that they may repay the loan voluntarily.

Community awareness on the aims of the fund should be provided to impact LED.

Recommendations given can be applied by other developing countries struggling to uplift citizens economically through social development funds.

This paper aims to study Qard-al-Hasan (QH) (good loan) from the stand point of its possible application to agricultural farming with a view to augmenting the sources of Riba (interest)-free agricultural financing for Muslim farmers of Islamic countries like Pakistan.

This paper is a study of QH (good loan) from the stand point of its possible application to agricultural farming with a view to augmenting the sources of Riba (interest)-free agricultural financing for Muslim farmers of Islamic countries like Pakistan.

The study reports that Riba-free financing is essentially needed by poor Muslim farmers who, owing to prohibition of Riba, do not rely on interest (Riba)-based financing. The study also shows that QH is a viable option for fulfilling this need and is beneficial for the farmers as well as for the Islamic banks or financial institutions.

The case of QH as a potential mode of agricultural financing, as presented in this paper, is based on a theoretical or conceptual framework. The findings need to be further substantiated with empirical evidence. A future study, based on reliable empirical data would certainly add value to the subject.

Islamic banks and financial institutions typically rely on Musharakah (partnership), Murabaha (sale with profit), Ijarah (leasing), Salam (advance payment sale), Istisna’ (manufacturing contract), etc., and they rarely use QH as a mode of financing. Despite its huge utility, QH is practically non-existent in its application as an agricultural financing instrument. This paper presents a case for QH that can be adopted by Islamic banks or financial institutions for provision of the much needed financing for the small farmers of Islamic countries, as well as those living in non-Islamic countries.

This paper investigates the financial strength of banks in Bangladesh and factors affecting the financial strength over the years 2010–2015 on 35 banks.

Additive value function with CAMEL rating (capital stength, asset quality, managerial efficiency, earning ability, liquidity) has been employed to calculate banks’ financial strength index (FSI). In the second stage, panel regression has been exercised to find out the determinants of banks’ financial strength.

Empirical finding exhibits that the Islamic banks of Bangladesh are financially stronger and outperform conventional and Islamic window banks with higher liquidity. In the ownership category, private banks have more financial strength with higher capital strength, asset quality, managerial efficiency and earning ability than public banks. Bank size, loan recovery, salary and banking sector development positively affect whereas the loan-asset negatively affect the bank’s financial strength in Bangladesh.

This study has its limitations despite its importance. CAMELS is a more improved form than using CAMEL. But because of the data deficiency on “S” which represents sensitivity, it would not be possible to use CAMELS framework. Further researchers could incorporate this.

Government and banks should allow Islamic banks to enter the market on easy terms because of their outstanding performance in the existing market. In addition, banks should provide loans with consideration so that they cannot create credit risk. In addition, they should calculate composite financial strength annually to understand which components they need to work on.

This study extends the extant result on the composite FSI. It is hard to examine the financial strength of banks using only ratio value, which misleads most of the time. The study offers evidence on how the FSI provides more rigorous results and what are the factors contribute most to the financial strength of banks.

To understand the challenges of building a successful business in an emerging market like Yola, Nigeria. To understand the role of micro-finance banks in doing business in Yola, Nigeria. To comprehend strategies adopted in market segmentation and sales of products or services to the customer. To apprehend strategies adopted to sustain and compete in Nigeria – both rural and urban.

Standard Microfinance Bank Limited (SMFB) was a private micro-finance bank situated at Yola, Adamawa State of Nigeria. It initially started as a community bank in 1992 to provide loans to individuals and small business owners in Adamawa. It started with the services of payment service and savings account with a limited lending capacity. It had become a full-fledged retail bank and was grown to 13 branches across Nigeria. It planned for expansion such as market development, product development and diversification by the year 2020. It had a customer base of 60,000 till the end of December 2018. Vazheparambil Mani Francis was the Chief Executive Officer (CEO) of the SMFB. The SMFB faced challenges such as operating the remote villages, lack of financial literacy among people, recovery of the loan amount, submission of false credentials and change of customer identity after loan by their customer. It was not going to be an easy task for him to operate the business of SMFB in Nigeria. However, in December 2018, Francis was facing a dilemma about the future success of SMFB business in Nigeria by looking into the challenges and complexities of business. Francis was determined to figure out the appropriate growth strategy for managing the challenges.

Undergraduate and graduate early-stage program.

Teaching notes are available for educators only.

CSS 11: Strategy.

The case illustrates the sequence of events that played out between the customer and his interaction with a Bank from which he availed a credit card and a loan. The failure of service deliverables and deficiencies in the processes of the bank resulted in default of the loan amount and inconvenienced the customer. In the case, the focus on the customer helps in understanding that organizations need to initiate responses for customer satisfaction at their interface points, as expected by its customers. The case is suitable for use in courses on ‘Services Marketing’ for Post Graduate courses and Management Development Programmes.

Microcredit schemes fashioned after the Grameen Bank model are widely acclaimed for their potential for empowering the poor through access to credit based on social collateral. However, women market vendors in Ibadan refer to microcredit loans as owo komulelanta, a term which translates as “resting the breasts on a hot kerosene lantern,” a plain critique of the stringent conditions of loan repayment. This paper presents the lived experience of borrowers based upon ethnographic fieldwork conducted between 2017 and 2019. It reflects on the Nigerian state's neoliberal policies of microfinance and the experience of women borrowers. The paper argues that social–emotional vulnerability of women borrowers is exacerbated by the acceptance of a loan due to the rigid system of repayment and harassment from providers.