purpose
The study evaluates bank credit department employees' opinions on loan defaults in Malawi's
banking sector, providing valuable insights for risk management compliance and policy choices.
MAIN OBJECTIVES
This research aims to assess Malawi's lending institutions, identify realistic methods for minimizing
loan defaults, understand bank debt recovery procedures, explain problems, and assess loan default
effects on commercial banks.
RESEARCH QUESTIONS
The research aims to minimize loan default by identifying bank level and macro level factors causing
bank customer and employee defaults, and identifying solutions for Malawian banks to reduce loan
default.
PURPOSE AND SIGNIFICANCE OF THE STUDY
The study aims to identify the reasons behind loan defaults in Malawi’s banking sector and
suggests ways to address this issue. The opinions of significant bank credit department
employees were assessed to understand the causes of loan defaults. The study’s findings can
be used to fill in information gaps about current lending policies and to inform new lending
policy choices. The results of this study could serve as a useful starting point for more
research as well as a guide for possible investors in the Malawi banking sector
OBJECTIVE
I. This research aims to assess Malawi's lending institutions,
II. identify realistic methods for minimizing loan defaults
III. understand bank debt recovery procedures, explain problems,
IV. assess loan default effects on commercial banks.
RESEARCH APPROACH
A research approach is a method and procedure used by researchers to achieve their research
objectives.
Research strategy involves phases from general assumptions to detailed data collection, analysis,
and interpretation. There are two types of research approaches: deductive and inductive. Deductive
research involves obtaining data and converting it into numerical form for statistical computations.
Inductive research studies empirical reality to construct theories, moving from specific observations
to universal patterns.
Research Design and Strategy
A research strategy is a comprehensive approach used to investigate specific questions. The
banking industry was used as a case study, utilizing questionnaires and interviews for primary data
and literature review for secondary data, including books, journal articles, reports, and foreign
sources.
Population and sampling techniues
The study will be conducted in central business Blantyre city, Zambia, with a population of 100
managers, loan employees, and customers. The sample size is 50% of the target population,
consisting of 50 respondents, with 10% being loan workers and 40% being bank clients. The margin
of error is 10% and confidence interval is 90%.
Data collecting is crucial for obtaining accurate information from various sources. This study used
primary and secondary data to analyse the effects of loan default on lending institutions'
profitability. Primary data was obtained from key industry players through questionnaires and
interviews. Secondary data, from textbooks, periodicals, and publications from the Reserve Bank of
Malawi and FCB bank, was used for a literature review.
Data Analysis and Interpretation
The study utilized Excel for data analysis, presenting findings in various forms like frequencies,
percentages, and tables. Excel's quick location of cases and variables, along with its wide range of
methods, graphs, and charts, aids in meaningful interpretations.
FINDINGS(USE GRAPHICS AS INDICATED)
The study shows that a flexible payment plan, proactive customer outreach, outsourcing recovery to
collection agencies, and extending or lowering interest rates are effective in preventing loan
defaults.
CONCLUSION
The study reveals that loan default in FCB is primarily due to inadequate supervision of clients,
inadequate training on loan utilization and repayment, and insufficient follow-up on repayment. This
lack of skills reduces the likelihood of clients repaying loans, leading to increased default rates and
business failure.
Thank you
