An Analysis of Debt Default Probability of Bank Client: A Case Study of Teachers and Local Government Clients of Krung Thai Bank, Hod Branch

Abstract

This study aims to analyze the factors affecting the probability of default of the bank customers using the Probit model. The results showed that seven factors could statistically affect debt default, namely gender, income, expenditure, loan interest rate, bank services, the objective of borrowing, and collateral loan. The critical factors that resulted in the bank's customers having a higher chance of defaulting on their debts were the monthly expenses and the purpose of the loan, especially for consumption. Therefore, the results of this study reflect that when considering credit for new customers, banks should consider and pay attention to gender, income, loan interest rate loan, repayment service, collateral loan, especially the customer's expenses, and the borrowing objectives before credit approval. This is an essential factor affecting the chances of defaulting on the bank's customers.