Chapter One — 1.1 Background to the Study

Over the past decade, the relationship between loan default rate and financial inclusion of rural dwellers has become a subject of considerable debate among scholars and industry practitioners alike, particularly within the context of Selected Deposit Money Banks in Nigeria where operating conditions differ markedly from more developed markets.

Within the context of Selected Deposit Money Banks in Nigeria, this relationship carries particular significance. Organizations in this setting operate under a distinct combination of economic, regulatory, and market conditions that may amplify or dampen the effect of loan default rate on financial inclusion of rural dwellers, making a context-specific inquiry both timely and necessary.

1.2 Statement of the Problem

Despite a growing body of literature on loan default rate, there remains limited consensus on the precise nature of its relationship with financial inclusion of rural dwellers, particularly within Selected Deposit Money Banks in Nigeria. Many organizations continue to make decisions about loan default rate without a clear, evidence-based understanding of how those decisions ultimately affect financial inclusion of rural dwellers. This gap between practice and empirical understanding is the central problem this study seeks to address.

1.3 Objectives of the Study

1. To examine the effect of Loan Default Rate on financial inclusion of rural dwellers in Selected Deposit Money Banks in Nigeria.
2. To assess the extent to which loan default rate influences financial inclusion of rural dwellers within the study area.
3. To identify the challenges associated with loan default rate in relation to financial inclusion of rural dwellers.
4. To recommend strategies for optimizing loan default rate in order to improve financial inclusion of rural dwellers.

1.4 Research Questions

1. What is the effect of loan default rate on financial inclusion of rural dwellers in Selected Deposit Money Banks in Nigeria?
2. To what extent does loan default rate influence financial inclusion of rural dwellers within the study area?
3. What challenges are associated with loan default rate in relation to financial inclusion of rural dwellers?
4. What strategies can be adopted to optimize loan default rate in order to improve financial inclusion of rural dwellers?

1.5 Significance of the Study

This study is significant to a range of stakeholders. For policymakers and regulators, the findings offer evidence to guide the design of frameworks that support healthier outcomes around financial inclusion of rural dwellers. For managers and practitioners within Selected Deposit Money Banks in Nigeria, the study provides practical insight into how loan default rate can be better managed. Finally, it contributes to the academic literature on finance / banking by extending existing knowledge into a specific empirical context, and offers a reference point for future researchers.

1.6 Scope of the Study

The study is limited to an examination of Loan Default Rate and its relationship with financial inclusion of rural dwellers within the context of Selected Deposit Money Banks in Nigeria. It reflects a BSc-level scope of analysis and relies on data and perspectives available within that scope; generalizing the findings beyond this specific context should therefore be done with appropriate caution.