| Abstract: | The performance and profitability of the bank highly depend on the credit performance; due to this the bank should have strong commitment and devote large efforts to improve their credit performance. The major aim of the study was to assess the credit management practice of Development Bank of Ethiopia. The study was employed descriptive research design method and quantitative research approach .The methods used to analyze the data collected were using descriptive statistics, frequency and percentages, using SPSS 20. In the sampling techniques stratified and simple random sampling method were used. The structured questionnaires were administered based on sample determined 173 respondents from the Bank’s head office and selected district and branches under Addis Ababa City. Among the questionnaires, 160 were correctly filled and returned. And the study result was analyzed by assessing four basic indicators which include due diligence, project appraisal, approval, credit risk management and credit follow-up, review and collection. The basic findings of the study revealed that due diligence assessment before contract signing was adequately practicing which is the mean 3.49 except ineffective prevention money laundering system (51.26%), proper project appraisal was not undertaken before loan approval the mean was 2.78 such as lack of project management software technology (72.6%), not clear standards, and guidelines (55.7%) found to be inadequate. Regarding the loan approval process was found the mean was 2.98 which mean inadequately practicing like absence of accountability on decision-makers (61.5). Under the credit risk management practice, the mean is 3.19 it seems ineffective there were no clear procedural and guidelines(49.4), lack of credit auditing practice to confirm credit rating(55.1%), insufficient to deal with new products and activities (50.7%)and lack of periodical review of loan portfolio policy. The existing credit follow-up, review and collection practices the mean 2.65 were found to be ineffectively practiced. The researcher recommends that the bank needs to apply organized system to prevent money laundry, apply latest project management software, apply its standards, guidelines, and procedure, and other techniques, emplace accountability on decision-makers, and work on capacitating its employees. |
