| dc.description.abstract | The Development of credit card industry has been a laudable success. However, the environment that Commercial Banks in Kenya operate in is full of a considerable number of numerous risks and uncertainties. The risks include credit risk, operational risk, and liquidity risk, among other risks. Credit risk is one of the major risks that Banks have to content with. This is due to the fact that lending is the backbone of all Banks business.
The objective of this study is look at the Relationship between Credit Card Default Risk and Cardholders Characteristics, Credit Card Characteristics, Behavioral Scoring Process among Commercial Banks in Kenya and how they mitigate against credit card Default Risk. As a matter of fact, credit card business in Kenya is still not fully developed. The lending Banks ensure personal credit applications presented for approval are duly analyzed and related lending risks identified and also Monitoring of excesses. Banks always focus on a customer's ability to pay the credit card loan.
Customers are required to furnish the Bank with all requisite information to assess their creditworthiness. However, most of the lending practices border the traditional approaches of appraising and managing credit risk of conventional loans yet credit card loans are very unique as discussed in the paper. Commercial Banks should stick to the guidelines put in place by the Central Bank of Kenya and other Credit Card Payment Companies such as Visa and MasterCard. The Central Bank of Kenya should equally restructure policy papers addressing the unique credit risk of default of credit cards. They should also come up with their own internal mechanisms to manage credit card default risk depending on the kind of credit card loans they advance.
In summary, the entire study will seek to answer the question 'The Relationship Between Credit Card Default Risk and Cardholders characteristics, Credit Card Characteristics and Behavioral Scoring Process Among Commercial Banks in Kenya?' By and large The 17 Commercial Banks issuing credit cards and any entering the credit card business should develop proper and accredited credit risk management techniques/methods which will assist in coming up with sound credit policies which to a large extent will reduce the high levels of bad loans as a result of credit card default. | en_US |
