1. Presented to: Ms. Sana Farooq Presented by: Sania Moazzam 09U0153 Thursday, April 04, 2013

2.  Non-performing or 'infected loans’ have reached a staggering Rs.653 billion in Pakistan(Sabir, 2012)  Important to screen loan applicants to determine the creditworthiness of borrowers  Sample size:100 respondents  Analysis of socio-demographic and financial variables in Stata 11 software

3.  Ho: There is no significant relationship between the debt burden of the prospective borrower and the subsequent approval of loan request.  H1: There is an inverse relationship between the debt burden of the prospective borrower and the subsequent approval of loan request. Has the bank approved or disapproved the loan request? Debt burdenDisapprovalApprovalTotal No debt burden012 Less than 40%113748 More than 40%34640 Total4555100

11.  Both Sullivan and Fisher (1988) and Canner and Luckett (1991) found that the likelihood of late or missed payments on the borrowers’ auto loans and credit cards tend to arise in households that have a high ratio of monthly consumer debt payment to the monthly disposable income (Sullivan, 1988).

12.  Ho: There is no significant relationship between the age of the potential borrowers and the subsequent approval of loan request.  H1:There is a significant relationship between the age of the potential borrowers and the subsequent approval of loan request. Has the bank approved or disapproved the loan request? AgeDisapprovalApprovalTotal 21-25549 26-3062026 31-35161026 36-40246 41-4541014 46+12719 Total4555100

17.  Ho: There is no significant relationship between the number of dependents and the subsequent approval of loan request.  H1:There is a significant relationship between the number of dependents and the subsequent approval of loan request. Has the bank approved or disapproved the loan request? Number of dependantsDisapprovalApprovalTotal None111425 1-3213253 4-613619 7-9033 Total4555100

26.  Ho: There is no significant relationship between the educational qualification of the borrowers and the subsequent approval of loan request.  H1: There is a significant positive relationship between the educational qualification of the borrowers and the subsequent approval of loan request. Has the bank approved or disapproved the loan request? Educational QualificationDisapprovalApprovalTotal Matric/O Level101 Intermediate/ A Level314 Undergraduate325 Graduate212647 Postgraduate172643 Total4555100

28.  highly qualified individuals are normally considered to get highly paid jobs (I.L. Ali, personal communication, February 15, 2013). Ali (2013) claims that with a better qualification on hand, they are likely to get hired by cash rich multinational companies

31.  The thesis intended to investigate the characteristics that banks evaluate before giving out loans to borrowers  According to this research, all four variables have a significant relationship with obtaining the loan approval  Higher the debt burden, lower the chances are of obtaining approval.  The likelihood of loan approval is less in the early twenties and late forties  Lesser the number of dependents, the higher the chances are of obtaining approval.  Higher the educational qualification, higher the chances are of obtaining approval.

32.  Impact of economic environment must also be studied  Need to investigate the credit history of borrowers  The study must be conducted on more banks  Lending policies must be tightened  Aggressive promotion of credit cards must be avoided

33.  Aazim, M. (2012, June 11). Imbalance in Bank Lending. Retrieved February 14, 2013, from The Dawn: http://dawn.com/2012/06/11/imbalance-in-bank-lending/  Ali, I. L. (2013, February 14). Credit Officer Soneri Bank. (S. Moazzam, Interviewer)  Canner, G.B., & Luckett, C.A. (1991). Payment of household debts. Federal Reserve Bulletin, 77(April), 218-229.  Meyer, M. B. (1993). The Political Economy of Rural Loan Recovery: Evidence From Bangladesh. Savings and Development, 17 (1), 23-38.  Peterson, CM., & Peterson, R.L. (1981). Down payments, borrower characteristics, and defaults. Journal of Retail Banking, 3( 1, March), 1-6.  Sabir, M. A. (2012, August 27). Banking Sector: Non-performing Loans on the Rise. Retrieved February 14, 2013, from Investor Guide: http://investorguide360.com/latest-economic-news/banking-sector-non-performing- loans-on-the-rise-investcap-research/ http://investorguide360.com/latest-economic-news/banking-sector-non-performing- loans-on-the-rise-investcap-research/  Sullivan, C., & Fisher, R.M. (1988). Consumer credit delinquency risk: Characteristics of consumers who fall behind. Journal of Retail Banking, 10(3, Fall), 53-64.