This study examines the loan characteristics, relationship characteristics and lender characteristics as determinants of credit default for sample of business loans of the Khanbank in Mongolia. The result after using Logit analysis to define determinants of credit default for overall sample shows that relationship characteristic and lender characteristics are the main factors that influence credit risk. Result proves that number of banks that relationship with borrower and loan officers’ experience has negatively associated with credit default possibility while ratio of loan size and borrowers’ total assets has positively related with credit default possibility. Moreover, logit analysis for loans issued in city and loans issued in rural area presents that loan officers’ experience is important factor for credit risk in both areas. However, for loan issued in rural area ratio of loan size and borrowers’ total asset is positively related with credit default, while loan officers’ education specialty significantly affects on credit risk in the city.

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