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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Date
2011-06
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A.A.U
Abstract
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.
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Keywords
Assessment of Performance of Micro Finance, in Credit Risk Management