AN ASSESSMENT OF CREDIT RISK MANAGEMENT IN DASHEN BANK SHARE COMPANY

Abstract

Credit Risk Management becomes major discussion issues in the financial institutions because of uncertainty related to borrowers’ business. This study of Credit Risk Management is attempted to assess practices related to credit risk management in Dashen Bank (DB). Thus, the rationale behind for undertaking this study was to assess credit risk management techniques and tools that are being used and how Dashen Bank implements those techniques, policies and procedures, as well as, to know how the bank identify, measure, monitor, evaluate and control credit risk and to suggest possible solutions. The study design was descriptive in which quantitative and qualitative data sets were mixed to describe the state of affair. To this effect, both primary data survey data (using questionnaire) and interview data were used along with secondary data. The questionnaire was adapted from previous studies and was used to quantify the perception of the respondents towards the credit risk management practice of Dashen Bank. Ninety six samples were involved using stratified random sampling at head office, district offices and branches. The researcher organized and analyzed the collected data by SPSS-23. From the findings it is concluded that the bank has well organized credit policy and good credit granting practice and used suitable credit risk assessment tools and techniques and credit risk management practice. However, the bank has some pitfalls like rigidity on the Bank’s credit policy and process. Furthermore, implementation of procedure and credit operation manual, strategies and polices as well as credit collection techniques are questionable. Thus, it is recommend that Dashen Bank should simplify and review its credit manual, policy and procedure as well as ensure its implementation to become more competitive in the banking industry and meet customer expectation. The bank should also design and adopt credit risk model in addition to the existing model that are more popular for credit evaluation to predict the level of risk originated from the business perspective that can help to construct effective credit risk management techniques. Finally, the study may provide a possible opportunity to all stake holders to gain deep knowledge about the banks credit management practice and have important practical implications for the bank regulators authorities and policy makers of the bank.