A Study of Credit Risk in Credit Unions in Belize
Augustine Dele Domingo1, Somanadevi Thiagarajan2
1Augustine Dele Domingo, Department of Mathematics, Physics and Information Technology, University of Belize, Belmopan, Belize.
2Dr. Somanadevi Thiagarajan, Faculty of Management and Social Sciences, University of Belize, Belmopan, Belize.
Manuscript Received on December 11, 2014. | Revised Manuscript Received on December 12, 2014. | Manuscript published on December 15, 2014. | PP: 16-19 | Volume-1 Issue-3, December 2014.
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© The Authors. Blue Eyes Intelligence Engineering and Sciences Publication (BEIESP). This is an open access article under the CC BY-NC-ND license (http://creativecommons.org/licenses/by-nc-nd/4.0/)
Abstract: Credit Unions play an important role in providing loans to the weaker sections of the society and hence contribute to the economic development of a nation. The purpose of this study was to examine the credit risk associated with the select credit unions in Belize. The study included a survey of members of credit unions and loan officers of major credit unions in Belize. Primary data were collected using Questionnaires, secondary were collected from the audited annual reports of credit unions and the Statistical Institute of Belize. The data were analyzed using SPSS software. The analysis showed that the credit unions exercise due care in approving loans to borrowers. The credit management system used by the credit unions includes investigation of the employment status of borrowers, identities of borrowers, legal contract to surrender salaries and other benefits against the loan, monitoring of the use of loans for the purposes being approved for and the use of shares as collateral for loans. These measures lead to the conclusion that the credit risk management policies of the selected credit unions are adequate for effective risk management. Based on these findings, recommendations were made to further tighten the credit policies of the credit unions and to increase their asset base so that they can continue to contribute to the economic development of Belize.
Keywords: – Credit Risk, Credit Unions, Economic Development, Risk management