The Effect of Credit Management on Bank Performance: in the Case of Zemen Bank

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2022-04-06

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A.A.U.

Abstract

This research study is about analyzing the effect of credit management on bank performance. The study critically assessed the effects of credit management on Zemen bank performance. A descriptive survey design and an explanatory research design were used in this study. Data was gathered in both qualitative and quantitative formats. Interviews were used to obtain qualitative data, which was summarized, and questionnaires were used to collect quantitative data, which was analyzed using descriptive and inferential analysis methods. The sampling was done with a purposeful sampling strategy. As already stated Primary, data was gathered from respondents via questionnaires and interviews, while secondary data was gathered via the bank's annual reports, directives, and bulletins. The independent variables and dependent variable (performance) have a positive connection, according to the findings. Credit processing and assessment, loan default, and collection policy all have a significant impact on performance. Credit monitoring and management, as well as credit policies and practices, have a moderate impact on performance. Both of these variables have a lot of weight. The bank's credit creation, policy, and process are flexible, the credit analysis and procedure are outstanding, and the bank has a moderate procedure that aids in performance enhancement, according to data analysis on credit creation, policy, and procedure. The bank should perform periodic loan reviews that address all or at least the majority of presently existing loans, it is also necessary for the bank to improve its credit policies and procedures, which will aid in the reduction of default rates and non-performing loans. As a result, the bank's credit performance will improve, according to one possible recommendation. This is the major internal control that allows the bank to identify the overall credit risk level of the loan and improve loan portfolio management efficiency.

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