Abstract

Due to persistent increase in loan default in developing countries especially Nigeria, several lending institutions resort to group lending that is based on joint liability approach to mitigate default. This study analyzes the mitigation of loan default in Nigeria through joint liability approach: The case of beneficiaries of microfinance bank agricultural loan in Calabar metropolis, Cross River State.  It specifically analyzes the determinants of loan default among sampled beneficiaries and compares the mean repayment amount between beneficiaries of joint and individual liability. The study used 120 respondents from the selected microfinance institutions in the study area. Data collection was done with the aid of a structured questionnaire. The study used probit model and the Z test to analyze the data. The result revealed that household size and business experience were the key determinants of loan default. There was a significant difference in amounts of loan repaid between joint and individual loan beneficiaries. The study concluded that joint liability is a better approach when it comes to borrowing than the individual liability.  The study further shows that the key determinants of loan default were household size and business experience; therefore, beneficiaries are encouraged to reduce their household size as this will reduce default.

Key words: Beneficiaries, default, joint, mitigating, lending, liability, loan, and probit model.