Assessment of Performance of Micro Finance Institutions in Credit Risk Management: The Case of Five Micro Finance Institutions in Addis Ababa

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Risk is the fundamental element that drives financial behaviour of micro finance institutions. Financial Institutions, therefore, shou ld manage the risk efficie ntly to survive in this highly un ce rtain wor ld. The future of mi cro finance in stitutions will undoubtedly rest on ri sk management dynamics. Onl y those micro finance institutions that have effic ient risk management system will survive in the market in the long run. The effective manage ment of credit risk is a critical component of comp rehen sive ri sk management essent ial for long-term success of a micro finance in sti tution that is why a micro finance's success lies in its ability to manage a risk. The st udy was tried to eva lu ate the performance sa mple mi cro finan ce in stitution s in credit ri sk managem e nt. To conduct this study the res ea rche r were employed mixed approach and used que st ionnaires, interview and document ana lys is as a so urce of data. The data obta in ed from diFferent so urce s were analyzed and presented the findings. In conc lu sion th e study were tries to seek to outline the components of an effective cred it ri sk management system and also were try to find the failure to effectively manage credit ri sk contributed to a greater exten t to the micro finance in stitutions crisis.



Assessment of Performance of Micro Finance, in Credit Risk Management