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Factors Influencing Loan Defaults in Tanzania: A Case Study of CRDB, NMB, TPB, and EXIM in Iringa Municipality

Author

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  • Reinfrida Nahonyo

    (Department of Accounts and Finance, Ruaha Catholic University, Iringa Tanzania)

  • David Mosoma

    (Department of Accounts and Finance, Ruaha Catholic University, Iringa Tanzania)

Abstract

This paper explored the determinants of loan defaults among the CRDB, NMB, TPB and EXIM bank customers in Iringa Municipality, Tanzania. A mixed method approach was used and 140 borrowers and 8 banking employees were questioned and interviewed. Quantitative analysis used descriptive statistics and correlation and regression analyses; qualitative data was collected through in†depth interviews. The result suggests that bank specific variables such as high interest rate, weak credit appraisal system and lack lustering in monitoring are the major cause of default. Borrower-side factors such as the use of loan funds and unemployment, and macro factors such as inflation and income tax, also play significant roles. The analysis is informed by theories derived from the Individual Lending Model and the Theory of Planned Behavior. Although the study was conducted in one town, it has implications for wider policy measures in Tanzania. The study calls for strengthening credit appraisal, training and policy overhauls to control such defaults.

Suggested Citation

  • Reinfrida Nahonyo & David Mosoma, 2025. "Factors Influencing Loan Defaults in Tanzania: A Case Study of CRDB, NMB, TPB, and EXIM in Iringa Municipality," International Journal of Research and Innovation in Social Science, International Journal of Research and Innovation in Social Science (IJRISS), vol. 9(7), pages 1522-1530, July.
    • Handle: RePEc:bcp:journl:v:9:y:2025:issue-7:p:1522-1530
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    References listed on IDEAS

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    1. Giorgio Calcagnini & Germana Giombini & Elisa Lenti, 2015. "Gender Differences in Bank Loan Access: An Empirical Analysis," Italian Economic Journal: A Continuation of Rivista Italiana degli Economisti and Giornale degli Economisti, Springer;Società Italiana degli Economisti (Italian Economic Association), vol. 1(2), pages 193-217, July.
    2. Bos, Jaap & Li, Runliang & Sanders, Mark, 2018. "Hazardous Lending: The Impact of Natural Disasters on Banks'Asset Portfolio," Research Memorandum 021, Maastricht University, Graduate School of Business and Economics (GSBE).
    3. Supriya Garikipati, 2012. "Microcredit and Women's Empowerment: Through the Lens of Time-Use Data from Rural India," Development and Change, International Institute of Social Studies, vol. 43(3), pages 719-750, May.
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