Assessment of Credit Risk Management in Banking Business: The case of Bank of Abyssinia S.Co.
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Date
2019-06
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A.A.U
Abstract
Credit risk is an essential factor that needs to be managed. Credit risk is the possibility that a borrower or counter party will fail to meet its obligations in accordance with agreed terms. Credit risk is one of the most vital risks for any commercial bank. Credit risk arises from non- performance by a borrower. Among the risks that face bank’s credit risk is one of great concerns to most bank authorities and banking regulators. This is because credit risk is that can easily and most likely prompts bank failure. Managing credit risk is not a simple task comprehensive consideration and practices are needed for identifying, measuring, controlling and minimizing credit risk.The focus of this research is to assess the credit risk management of Abyssinia Bank S.Co. In this study, the researcher utilized purposive sampling technique in order to select participants of the study. For the purpose of this study, both primary and secondary data were used. Primary data were collected through questionnaires distributed to respondents that involve professionals working in the banks such as Department Managers and Senior Officers working on loan processing. Descriptive statistics such as average, percentages, frequencies and tables were used to analyze and present the data. The study found that factors such as information asymmetry on credit policy, weak credit analysis and poor credit monitoring areinfluence towards the attainment of successful credit risk management in BOA. Based on the findings, the paper recommends that the bank’s credit policies should be designed and implemented with consideration for internal and external factors that enable the bank to maintain sound credit granting standards; monitor and control credit risk; to properly evaluate new business opportunities; and identify and administer problems of credits.
Description
Thesis submitted to the graduate studies of Addis Ababa University College of Business and Economics in partial Fulfillment of the requirements for the Award of Master of Arts Degree in Business Administration
Keywords
Credit, Credit Risk, Credit Risk Management