ASSESSMENT OF CREDIT RISK MANAGEMENT IN BANKING BUSINESS: THE CASE OF BANK OF ABYSSINIA S.C

Abstract

The objective of this research is to assess the credit risk management of Bank of Abyssinia S.C which is great concern for most banks because unable to control credit risk can easily and most likely facilitate bank failure. So Managing credit risk is complicated task so it needs comprehensive consideration and practices for identifying, measuring, controlling and minimizing credit risk. In this study, the researcher utilized purposive sampling technique in order to select participants of the study. For the purpose of this study, both primary and secondary data were used. Primary data were collected through questionnaires distributed to respondents that involve professionals working in the banks such as Department Managers and Senior Officers working on loan processing. Descriptive statistics such as average, percentages, frequencies and tables were used to analyze and present the data. The study found that factors such as information asymmetry on credit policy, weak credit analysis and poor credit monitoring are influence towards the attainment of successful credit risk management in BOA. Based on the findings, the paper recommends that the bank’s credit policies should be designed and implemented with consideration for internal and external factors that enable the bank to maintain sound credit granting standards; monitor and control credit risk; to properly evaluate new business opportunities; and identify and administer problems of credits.