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The significance of socioeconomic factors on personal loan decision a study of consumer banking local private banks in Pakistan

Author

Listed:
  • Azam, Rehan
  • Muhammad, Danish
  • Syed Akbar, Suleman

Abstract

This paper explores the influences of the approved results of loans cases, the loan applicants’ socioeconomic attributes in the decision of perusal loan. The results can improve the credit quality and avoid the misjudgment of screening personal loan customers and also establish a better personal loan risk management forecasting model. The main purpose of the present paper was to evaluate significance of loan applicant socioeconomic attributes on personal loan decision in the local private commercial banks of Pakistan. The statistical techniques, descriptive and logistic regression were used. The model identified that out of six independent variables, region, residence status and year with the current organization have significant impact on personal loan decision.

Suggested Citation

  • Azam, Rehan & Muhammad, Danish & Syed Akbar, Suleman, 2012. "The significance of socioeconomic factors on personal loan decision a study of consumer banking local private banks in Pakistan," MPRA Paper 42322, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:42322
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    File URL: https://mpra.ub.uni-muenchen.de/42322/1/MPRA_paper_42322.pdf
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    References listed on IDEAS

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    1. Orazio P. Attanasio & Pinelopi Koujianou Goldberg & Ekaterini Kyriazidou, 2008. "Credit Constraints In The Market For Consumer Durables: Evidence From Micro Data On Car Loans," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 49(2), pages 401-436, May.
    2. Jacobson, Tor & Roszbach, Kasper, 2003. "Bank lending policy, credit scoring and value-at-risk," Journal of Banking & Finance, Elsevier, vol. 27(4), pages 615-633, April.
    3. Steenackers, A. & Goovaerts, M. J., 1989. "A credit scoring model for personal loans," Insurance: Mathematics and Economics, Elsevier, vol. 8(1), pages 31-34, March.
    4. D. J. Hand & W. E. Henley, 1997. "Statistical Classification Methods in Consumer Credit Scoring: a Review," Journal of the Royal Statistical Society Series A, Royal Statistical Society, vol. 160(3), pages 523-541, September.
    5. Jessica Holmes & Jonathan Isham & Ryan Petersen & Paul M. Sommers, 2007. "Does Relationship Lending Still Matter in the Consumer Banking Sector? Evidence from the Automobile Loan Market," Social Science Quarterly, Southwestern Social Science Association, vol. 88(2), pages 585-597, June.
    6. Stefano Caselli & Stefano Gatti & Francesca Querci, 2008. "The Sensitivity of the Loss Given Default Rate to Systematic Risk: New Empirical Evidence on Bank Loans," Journal of Financial Services Research, Springer;Western Finance Association, vol. 34(1), pages 1-34, August.
    Full references (including those not matched with items on IDEAS)

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    Cited by:

    1. Rais Ahmad Itoo & A. Selvarasu & José António Filipe, 2015. "Loan Products and Credit Scoring by Commercial Banks (India)," International Journal of Finance, Insurance and Risk Management, International Journal of Finance, Insurance and Risk Management, vol. 5(1), pages 851-851.

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    More about this item

    Keywords

    personal loan; socioeconomic; consumer banking; logistic regression model;
    All these keywords.

    JEL classification:

    • H8 - Public Economics - - Miscellaneous Issues
    • L84 - Industrial Organization - - Industry Studies: Services - - - Personal, Professional, and Business Services
    • K35 - Law and Economics - - Other Substantive Areas of Law - - - Personal Bankruptcy Law
    • D81 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Criteria for Decision-Making under Risk and Uncertainty
    • G23 - Financial Economics - - Financial Institutions and Services - - - Non-bank Financial Institutions; Financial Instruments; Institutional Investors
    • H24 - Public Economics - - Taxation, Subsidies, and Revenue - - - Personal Income and Other Nonbusiness Taxes and Subsidies
    • D14 - Microeconomics - - Household Behavior - - - Household Saving; Personal Finance
    • I22 - Health, Education, and Welfare - - Education - - - Educational Finance; Financial Aid
    • D71 - Microeconomics - - Analysis of Collective Decision-Making - - - Social Choice; Clubs; Committees; Associations
    • D31 - Microeconomics - - Distribution - - - Personal Income and Wealth Distribution
    • G2 - Financial Economics - - Financial Institutions and Services
    • A13 - General Economics and Teaching - - General Economics - - - Relation of Economics to Social Values
    • H81 - Public Economics - - Miscellaneous Issues - - - Governmental Loans; Loan Guarantees; Credits; Grants; Bailouts
    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill
    • K36 - Law and Economics - - Other Substantive Areas of Law - - - Family and Personal Law
    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages

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