The relationship between qualitative credit assessment and default rates in credit card business in Kenya

Abstract

The study delved to research on the relationship between qualitative credit assessment and default rates in credit card business in Kenya. The study was done on seven credit card issuing commercial banks in Kenya. Questionnaires were sent to the respondents in respective banks. Out of the seven commercial banks which issue credit cards, 5 responded which translates to 71.43%. The data so received was analyzed. There was found to be a strong relationship between qualitative attributes of a customer and default rates in credit card business in Kenya. The relationship was rated to 90% relationship. Banks have special attention to the customers’ attributes. Most of this information is based on the information provided in the application form. This captures from basic personal information to financial information, to academic background. This gives Commercial banks in Kenya the information important in deciding who should get credit card or not. The relationship between default rates and qualitative assessment is a key pointer to the success in credit card business among credit card issuing commercial banks. CRB Africa also plays a key role in the provision of customers’ financial history. In Kenya, there has been little research on credit cards especially default rates. This provides a formidable challenge in in-depth research on the topic.