The Causes and Effects of Loan Defaults on the Profitability of Rural Banks

The study was aimed at identifying the causes and effects of loan defaults on the profitability of rural banks (a case study of Ga Rural Bank). The specific objectives of the study were;

1. To analyse the factors accounting for loan default in the rural banking industry.
2. To determine ways of reducing loan defaults in financial institutions.
3. To examine the effect of bad loans on the lending potential and profitability of rural banks.

The study adopted a descriptive study approach. The target population of this study comprised all the workers of Ga Rural Bank limited (Head office). All the 30 employees of the bank were sampled for the study. Convenience sampling was used as the sampling technique. Questionnaires were used as the data collection instrument. The Statistical Package for Social Sciences (SPSS) was used in the analysis of data.