Credit Monitoring Activity and Asset Quality in the Case of Dashen Bank
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Date
2015-01
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Addis Ababa University
Abstract
This research paper presents assessment of credit monitoring and asset quality
in the case of Dashen Bank. The study was conducted on the basis of opinion
survey collected from randomly selected credit officers working in Dashen Bank
through interview. The collected data were analyzed using descriptive qualitative
research to assess and describe the relationship of credit monitoring and asset
quality in banks operating in Ethiopia, particularly in Dashen Bank Share
Company. The research also aimed at assessing the factors that affect asset quality
and areas of improvement in the credit monitoring activity. The results from the
analysis has emphasized on four findings. First, credit monitoring activity and
asset quality are related and the relevance of their relationship is significant.
Second, credit monitoring activity and asset quality are affected by credit
governance, collateral position of borrowers, credit culture, market condition,
economic conditions, finical conditions and the monetary policy of National Bank
of Ethiopia. The economic condition, market condition, monetary policy and credit
culture are external factors that significantly affect credit monitoring activity while
the credit governance, collateral position and financial condition are internal
factors that significantly affect asset quality. But the later factors are also affected
by the credit monitoring activity. Finally, it was also recommended that the credit
deployment plan and loan portfolio management, the credit appraisal and
approval function and the performance evaluation and monitoring activity should
be regularly reviewed in line with all relevant internal and external factors to
ensure prevalence of enhanced credit monitoring activity and asset quality.
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Keywords
Credit Monitoring Activity