Teklu, Tilahun (PhD)Girma, Benyam2018-06-182023-11-182018-06-182023-11-182015-02http://etd.aau.edu.et/handle/12345678/1179This thesis develops and analyzes a finite horizon Markov decision process model for commercial bank of Ethiopia’s debt collection optimization problem. Two sectors namely domestic trade and services (DTS) and foreign trade (FT) have been studied primarily because of loan turnover rates and economic policy focus. A 2 years long data are used to determine cost of holding an outstanding loan in a certain state or delinquency status on a log scale where each state/status is scaled by the percentage of provision allocated to the states. Conclusions are made in terms of which loan segments banks need treat with more caution. Simple but important suggestions on ways of improving the operations of banks are made in the end.enComputationalThesis