Assessment of Term Loans Collection Performance of Oromia International Bank S.C
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Date
2020-05
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Abstract
The main objective of this study was to assess successfully collected term loans performance - considering the case of Oromia International Bank S.C (OIB). First-hand data was collected using structured questionnaires from 196 selected samples of survey respondents of same bank employees who directly engaged in day-to-day loan related administrations. A five - point Likert Scale technique was adopted to collect and organize data about factors that can lead to successfully settled term loans performances of OIB. Data analysis was then conducted by employing basic descriptive statistics to examine the relative importance of factors of the study in causing settled term loans performances of OIB. Considering descriptive results of mean and respective standard deviation, the study revealed that business experience of borrowers 4.34(.745), utilization of loan for approved purpose only 4.11(.991), collateral strength 4.02(1.338), business type 3.99(.953), screening 3.99(1.1), credit history 3.95(1.184), demand for other loan 3.74(.904), loan size 3.73(.968), length of loan contract 3.58(.933) and education level 2.68(1.165) were study factors, in that order, that were rated in terms of their relative importance towards leading to settled term loans performances of OIB. To achieve successful term loans collection performance, the study recommends that, after properly screening out risky loan applications, sufficient term loans amount should be extend against adequate repayment periods by focusing on such borrowers that can demonstrate adequate business experiences in running profitable or less risky business sectors, properly utilize loans for the approved purpose only without diverting to other risky purpose, offer strong collaterals relative to the amount of requested loans and also those borrowers that characterized by good truck of credit history in the past.
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A Thesis Submitted in Partial Fulfillment of the Requirement for Award of the Degree of Master of Business Administration in Finance
Keywords
Borrower-related factors and loan-related factors, Settled Term Loans Performance, Relative Importance