Analysis of Credit Risk Management Practice: The Case of Berhan Bank S.C

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The main purpose of the study was to analyze the credit risk management practice of Berhan bank with specific objectives of assessing the alignment between the credit risk policy and procedures of the bank and its practice, bank specific factors that influence credit risk management practice and the mechanisms that the bank uses to handle credit risk. For the purpose of the study both primary and secondary data have been used. Primary data was collected using a structured questionnaire data collection method. The information related to the study problems was obtained through questionnaires from the Credit Analysis and Appraisal, Risk and Compliance Management and Credit Follow-up and Portfolio Management departments. Secondary data was collected from the bank’s Credit policy and procedures, the annual reports of the bank, NBE directives and other documents regarding the bank’s credit history. Based on the nature of the study the research design is descriptive with a qualitative and quantitative research method. Data collected using questionnaires was analyzed by the help of statistical package for the social sciences (SPSS) Descriptive statistical tools were used to analyze the data collected. The software was used in order to have the descriptive quantitative results which were in the form of percentages and frequencies. Hence, the nature of the Study is descriptive. Therefore, the findings of the study showed that the bank has credit risk management policy and procedures that aligns with the regulations of the NBE and this helps it to handle credit risks. However, there was a lack of communication of the policy and procedures to the staff that work on CRM practice and lack of training for the qualified staff in the department. So as to this the recommendation that was given to the concerned body of the bank is to create a suitable environment for the credit risk management practice of the bank to be implemented by equipping the staff with the proper training and also reviewing and updating the policy and procedures on a regular basis.



Credit risk management practice, Credit policy and procedure