TABLE OF CONTENTS
DECLARA'rION ......................................................................................................... i
APPRC)V 1I, ............................................................................................................... ii
DEDICArION ........................................................................................................... iii
ACKNOWLEDGEMENT ......................................................................................... iv
TABI,E OF CONTENTS ............................................................................................ v
1C]~C)NYMS ............................................................................................................ vii
ABS'l'R_Ac·r ............................................................................................................. viii
L1s·r ()F ST!'flJIES ................................................................................................ ix
CllAP'I'ER ONE ....................................................................................................... 1
1.0 Introduction .................................................................................................... 1
1.1 Background of the Financial Sector.. ............................................................. 1
1.2 Background of the Study ............................................................................... 2
1.3 Statement of' the Problem ............................................................................... 5
1.4 General Objective of the Study ...................................................................... 6
1.5 Specific Objectives ........................................................................................ 6
1.6 Research Questions ........................................................................................ 6
1.7 ScopeoftheStudy ......................................................................................... 7
1.8 Significance of the Study ............................................................................... 7
ME'l'l 101)01 ,OGY ..................................................................................................... 7
ClIAP'fER ·rwo ...................................................................................................... 9
REVIEW OF RELATED LITERATURE ............................................................. 9
2.0
2.1
2.3
2.4
2.4.1
2.4.2
2.4.3
2.4.4
2.4.S
Introduction .................................................................................................... 9
Scope of a Financial Sector (Sources of Credit) ............................................ 9
Effectiveness of the Law how it has Supported the Debtor and Creditor .... 10
Circumstances that Lead to Borrowing ........................................................ 13
Circumstances Leading to Debt Defaulting and how it Affects the Bank .. 14
Lopsided Credit Distribution ....................................................................... 14
High Degree of Concentration on Loan and Deposit Sides ......................... 14
Interest Rate Spreads and Risks ................................................................... 15
Non- Performing Loans ............................................................................... 15
Exchange Rate Risk ..................................................................................... 15
V
2.4.6 Credit Risk ................................................................................................... 15
2.4.7 Health and Soundness of the Financial Sector.. ........................................... 16
2.5 Possible Interventions to Reduce Consequences of Debt Defaulting .......... 23
2.5.1 Bankruptcy Protection Schemes .................................................................. 23
2.5.4
2.5.6
2.5.7
Economic Policv Research .......................................................................... 24
Large Reserves Maintenance ....................................................................... 24
Strengthening of Commercial Courts .......................................................... 25
High Interest Rate ........................................................................................ 25
Close lonitoring ......................................................................................... 25
Further Strengthening of Banking Supervise to Safeguard the Gains Made25
S un1n1ary ....................................................................................................... 26
(:IIAPTER THREE ................................................................................................ 27
3.0
3.1
3.1
., "1 .).L
.., .., .) .. )
3.4
3.5
Introduction .................................................................................................. 27
f)ebtor .......................................................................................................... 27
What does the Financial Institution do? ....................................................... 27
Who can benefit from a Loan? ..................................................................... 28
Procedure in brief. ........................................................................................ 28
Advantages of Loan Management ............................................................... 29
Disadvantages of a Loan Management ........................................................ 29
Conclusion .................................................................................................... 30
(:IIAP'rl~ll FOlJR ................................................................................................... 31
RESEARCH FINDINGS INTERPRETATION AND DISCUSSION ............... 31
4.0 Introduction .................................................................................................. 31
4.1 Discussions with Respondents ..................................................................... 31
4.2 Solutions to Reduce Debt Defaulting .......................................................... 39
CIIAP'fl~Il FIVI{ .................................................................................................... 41
CONCLUSIONS AND RECOMMENDATIONS ................................................ 41
5 .0 Conclusion ................................................................................................... 41
5.1 Recommendations ........................................................................................ 41
Rl!FERENCES ......................................................................................................... 43
