Chapter One — 1.1 Background to the Study

In recent years, Credit Scoring Models has emerged as a critical factor shaping customer retention across organizations operating in and around Developing Economies. As institutions grapple with the pressures of globalization, regulatory reform, and shifting stakeholder expectations, understanding how credit scoring models relates to customer retention has become an important area of both scholarly and practical concern.

Within the context of Developing Economies, 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 credit scoring models on customer retention, making a context-specific inquiry both timely and necessary.

1.2 Statement of the Problem

While credit scoring models is widely discussed in policy and industry circles, empirical evidence on its actual effect on customer retention within Developing Economies remains sparse and, in places, contradictory. This lack of localized, rigorous evidence makes it difficult for decision-makers to know with confidence whether current approaches to credit scoring models are helping or hindering customer retention — a gap this study sets out to close.

1.3 Objectives of the Study

1. To examine the effect of Credit Scoring Models on customer retention in Developing Economies.
2. To assess the extent to which credit scoring models influences customer retention within the study area.
3. To identify the challenges associated with credit scoring models in relation to customer retention.
4. To recommend strategies for optimizing credit scoring models in order to improve customer retention.

1.4 Research Questions

1. What is the effect of credit scoring models on customer retention in Developing Economies?
2. To what extent does credit scoring models influence customer retention within the study area?
3. What challenges are associated with credit scoring models in relation to customer retention?
4. What strategies can be adopted to optimize credit scoring models in order to improve customer retention?

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 customer retention. For managers and practitioners within Developing Economies, the study provides practical insight into how credit scoring models 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

In terms of scope, this PhD study confines itself to Developing Economies, focusing specifically on how credit scoring models relates to customer retention within that setting. Findings are interpreted within these boundaries rather than as universal claims applicable to every organization or market.