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Journal of Islamic Business and Management



Socio Economic Determinants of Customer's Default Risk Assessing the Islamic Consumer Portfolio's Credit Factors in the Public Sector Bank : A Case Study

Masood Ali Shah , Ali Abdullah , Shafiullah Jan
Published Online: June 2026
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Abstract

Abstract Purpose: This study investigates the effects of borrower-specific characteristics such as education, occupation, employment duration, and socioeconomic status on default risk in a public sector bank in Pakistan. The study also assesses the effectiveness of the Consumer Risk Rating (CRR) system in predicting customer defaults. Design/Methodology/Approach: The research is quantitative in nature and is applied to a case study of 100 cases drawn from 2,076 consumer financing accounts in a public-sector bank. Descriptive statistics, correlation analysis, linear regression, and probit models were used for data analysis.


Keywords

Islamic banking, Credit risk, Consumer Portfolio, Default Risk, Socio-economic factors, ShariahCompliant financing.