THE PSYCHOLOGY OF GHANAIAN LOAN CLIENTS AND HOW IT AFFECTS LOAN REPAYMENTS: A CASE STUDY OF PAN-AFRICAN SAVINGS AND LOANS

This study sought to examine the relationship between borrower psychology or behaviour, the intended purpose of loans, and credit repayment performance. The methodology used was a cross-sectional survey design, with a sample of 800 respondents selected using purposive and simple random sampling. Self-administered questionnaires were used to collect data, which were processed and analyzed using the Statistical Package for the Social Sciences (SPSS V22.0.0). The findings showed significant positive correlations between borrower psychology or behaviour, intended purpose of loans and credit repayment performance which implied that the way borrowers behaved during credit accessibility or after acquiring credit from or even before taking the loan from the bank, had a lot of effects on how borrowers use the money acquired from the bank which would in turn affect effectiveness and efficiency of credit repayment. From the regression analysis, it was apparent that borrower psychology or behaviour was a strong predictor of credit repayment performance; therefore, the management of credit institutions should put a lot of emphasis on the training of loan officers to enable them screen prospective clients well before giving them loans, since what they use the loans for affects how they repay the loans. Management should also let borrowers know the importance of using the loans for their intended purpose, since it is the business that repays the loan, not the borrower, as most people think.