Determinants of Successful Loan Repayment Performance in Project Financing in The Case of Awash Bank
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Date
2024-06-03
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A.A.U
Abstract
This study assesses the elements that lead to effective loan repayment performance project
financing in case of awash bank. The study used an explanatory design and a quantitative
research approach. Secondary data from Awash Bank’s customers file regarding their loan
payment is secured for analysis. The information gathered comes from each borrower's file.
Therefore, there were seventy-five (75) bank’s customer’s files. Of these, 40 (53%) had
successfully funded projects with no defaulters, whereas the remaining 35 (47%) had
unsuccessful projects (defaulter). The study's main variables include Amount of loan, loan
processing time, educational level, loan repayment performance and managerial experience. The
study indicated that the performance of loan repayment is statistically significantly correlated
with loan processing time, amount of loan, project follow up, managerial experience, and
educational level. The findings of the study suggest as Awash Bank ought to step up its
monitoring and follow up tasks for the project to help it make well informed choices and offer
technological support for its credit-supported initiatives; raise the debt-to-equity proportion of
borrowers to help them become more morally responsible; be mindful to reduce the bureaucracy
which slows down loan administration times; crucially evaluate the time frame for project
execution when evaluating projects and improve its capacity for project execution; identify and
address the underlying reasons behind of project delays; and enhance the effectiveness of its
system for attracting customers by taking into account the educational level of borrowers,
project managers managerial backgrounds and styles of management.