A THESIS SUBMITTED TO SELECT BUSINESS AND TECHNOLOGY COLLEGE SCHOOL OF POST GRADUATE STUDIES IN PARTIAL FULFILMENT OF THE REQUIRMENTS FOR THE DEGREE OF MASTER OF BUSINESS ADMINISTRATION

Abstract

The objective of this study was to assess the practice of credit management at Global bank Ethiopia, the study was conducted using descriptive research method both primary and secondary sources of data used. A total of 50 study participants were involved in this study. Purposive sampling technique was utilized to select 50 participants of the study & (100% response rate) were responded to the questionnaires. Out of the total respondents, equal number of respondents, 19 (38%), were reported 8-14 days and 15-21 days taken to process for a given loan application. Only 25 (50%) study participants reported that they agree about the procedure followed for loan approval by the bank is satisfactory. It also uses to mixed research approach which is both quantitative and qualitative approach. The bank faced problems with credit management practice including non-performing loan at various levels and identified the causes of NPL. At borrower level, diversion of the borrowed fund to other than initially intended purposes, lack of proper business plan and contingencies at borrowers e.g. death, sick holds stand was identified. At bank level, lack of continuous follow up and proper risk assessment, problems associated with loan eligibility criteria, lack of consultation and communication with defaulter, lack of sufficient credit information from other Commercial banks, Mistake on estimation of Collateral and evaluating the borrower’s financial report and other were also identified. Finally, at the Economic level were unstable political situation, weak economic plan and strategy implementation and change in fiscal and monetary policies. The researcher conclude that the bank used different credit management tools, techniques and assessment models to manage their credit risk to reduce the amount of loan default. It is recommended that the Bank should have credit management policy and strategy that incorporate the ideas of the clients and trained employees to become more competitive in the banking industry and meet its vision. And also by giving full information to customers about the credit processes and repayment the banks must achieve its objective by collecting it interest accordingly. In addition to this within the variable of Conformity of the Bank to its credit policies and procedures in processing loan applications, the Bank in related to creating credit and collecting its loan on their due date, loans and advance evaluation system of the bank & Bank’s credit quality as compared to National Bank’s requirements and its credit policy.