Beyond Income: The Complexities of Credit Risk in Developing Countries

Nartey Menzo, Benjamin Prince and Mogre, Diana and Asuamah Yeboah, Samuel (2024): Beyond Income: The Complexities of Credit Risk in Developing Countries.

Abstract

This paper investigates the complex interplay of factors contributing to credit risk in developing countries. Focusing on borrower characteristics, we examine the interconnected roles of income levels, employment stability, and credit history. The analysis reveals how lower income, volatile employment, and limited credit access can significantly amplify credit risk. The paper explores the challenges posed by these factors in developing economies and proposes strategies to mitigate credit risk and foster financial inclusion. By understanding these dynamics, policymakers and financial institutions can implement targeted interventions to enhance economic resilience and promote sustainable development.

• Item Type: MPRA Paper
• Language: English
• Keywords: Credit risk, Developing countries, Income levels, Employment stability, Credit history, Financial inclusion, Economic resilience, Policy interventions Credit risk, Developing countries, Income levels, Employment stability, Credit history, Financial inclusion, Economic resilience, Policy interventions Credit risk, Developing countries, Income levels, Employment stability, Credit history, Financial inclusion, Economic resilience, Policy interventions
• Subjects: G - Financial Economics > G2 - Financial Institutions and Services > G21 - Banks ; Depository Institutions ; Micro Finance Institutions ; Mortgages; O - Economic Development, Innovation, Technological Change, and Growth > O1 - Economic Development > O16 - Financial Markets ; Saving and Capital Investment ; Corporate Finance and Governance; O - Economic Development, Innovation, Technological Change, and Growth > O1 - Economic Development > O17 - Formal and Informal Sectors ; Shadow Economy ; Institutional Arrangements

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