Credit Risk Management and its Impact on Performance on Ethiopian Commercial Banks
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Date
2011-06
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A.A.U
Abstract
Credit risk management has become an important topic for financial institutes, especially since
the business sector of financial services is related to conditions of uncertainty. The turmoil of the
financial industry emphasizes the importance of effective risk management procedures.
Consequently, this thesis studies "Credit Risk management and its impact on performance in
Ethiopian Commercial Banks. " This research objective was formula ted in order to gain a better
Under standing of credit risk management and its impact on performance (return on asset).
Credit risk has always been a vicinity of concern not only to bankers but to all in the business
world because the risks of a trading partner not fulfilling his obligations in full on due d
ate can
seriously jeopardize the affaires of the other partner.The axle of this study is to have a clearer picture of how banks manage their credit risk. In this
light. the study in its first sect ion gives a background to the study and the second part is a
detail ed literature review on banking and credit risk management tools and assessment models.
Quantitative research design is employed under the quantitative research design survey method is
used. The data were collected by cross sectional survey method. The forth part of this study is
analysis of primary data by descriptive statistical tools and on hypothesis testing using regress ion
model. This leads the researcher to conclude in the last section that banks with good credit risk
management policies have lower loan default rate and relatively higher return on asset
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Keywords
Impact, Management