Factors Influencing Loan Default: An Empirical Analysis Based on Microscopic Evidence

Abstract

With the rapid development of the loan industry, issues such as loan defaults have become hot topics of social concern. This article constructs a research model on the influencing factors of loan default from three dimensions: personal characteristics, credit characteristics, and loan characteristics. Using logit and other models, the predictive ability of different factors on loan default was tested on a massive dataset. The research results indicate that annualization and employment length negatively affect the probability of loan default, debt to income ratio, loan terms, loan amount, and loan interest rate positively affect the occurrence of loan default. There is an inverted U-shaped relationship between the homeownership and loan default. Moreover, we also divided the dataset for loan purposes and found differences in the influencing factors between real estate loans and non-real estate loans. The research conclusion helps to regulate lending behavior and has a good reference value for financial risk prevention and control.