INVESTIGATING THE REAL TRIGGERS OF LOAN DEFAULT IN NIGERIA

Loan defaults come with dire consequences for banks, the economy and the defaulting customers. In Nigeria, banks loan portfolio hit =N13tr in April 2015. Out of this amount, over =N546.02b was classified as non-performing debts in March 2015. This study sought to order environmental factors responsible for loan default; determine prevalence of loan default in sectors and recommend loan management strategies. In a survey of 120 bank borrowing customers cutting across 13 sectors of the economy, the study applied logistic regression to determine the significance of each of 10 identified environmental factors responsible for loan default, resulting in an order of significance of loan default factors. Also applying the list of loan defaulters released by Central Bank of Nigeria in 2015, the study analysed the list according to sectors covering banks which account for about 50% of loans to the economy, and determined the prevalence of loan default as a ratio of loan default to total loans advanced to each sector. It is recommended that Banks should be more critical of the Service sector with the highest loan loss prevalence in their lending decisions.