Bank Efficiency in Effective Handing Of Loans RDA Bank Data

Borrowing and lending is inevitable as credit is perhaps is as old as trade and commerce. The overall effort in credit scoring is to reduce default rate of borrowers and to compare the features and characteristics with earlier records and previous loans they have paid back. This study examined bank efficiency in effective handling of loans. The study established three objectives. The study investigated the relationship between loan history, guarantee and collateral as predictors of good or bad loans. The data for this study was obtained from RDA Bank(Remote Deposit Anywhere) for 599 customers who have received various loans from the bank. Regression analysis was used to examine the relationship between the variables and test the hypotheses. The study found that loan history and guarantee are statistically significant predictors of loan status while collateral isn’t a significant predictor of loan default. It is important for bank managers to understand the factors that trigger default behaviour. This will in no small measure improve bank efficiency in effective handling of loans and also reduce the potential for loss.