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International Journal of Social Science & Interdisciplinary Research_______________________________________ ISSN 2277-3630
IJSSIR, Vol. 4 (5), MAY (2015), pp. 52-72
Online available at indianresearchjournals.com
CREDIT RISK MANAGEMENT TOOLS PRACTICED IN
ETHIOPIAN COMMERCIAL BANKS
ATAKELT HAILU ASFAW¹; PROF. P. VENI²
1.
2.
RESEARCH SCHOLAR IN THE DEPARTMENT OF COMMERCE AND MANAGEMENT STUDIES, ANDHRA
UNIVERSITY, VISAKHAPATNAM INDIA.
PROFESSOR, THE DEPARTMENT OF COMMERCE AND MANAGEMENT STUDIES, ANDHRA UNIVERSITY,
VISAKHAPATNAM, INDIA.
ABSTRACT
Examining and comparing the Credit risk management tools practiced in public and private Ethiopian
commercial banks is the main purpose of this study. Primary data, gathered through self-developed
questionnaire, was used for this study. The survey result revealed that Collateral, Guarantee, Multi-tier
Credit approval and Credit limit system are the four mostly applied and highly effective Credit risk
management instruments in Ethiopian commercial banks. Additionally, Diversification has been highly
applied and effective tools in private banks and setting strong covenants as well while its application has been
moderately effective. Stress testing and Risk based loan pricing technique have been slightly applied in public
sector commercial banks. Types of credit, deposit rate, operating cost, lending rate of other banks, and bank’s
profitability are mostly considered factors while pricing loans. It is observed that there was no statistically
significant difference in the mean score of the level of considering loan-pricing factors between public and
private sector banks. Furthermore, there was statistically significant difference in the level of applying Credit
risk management tools between private and public commercial banks. Finally, Ethiopian commercial banks
appear to be highly conservative lender on consumer loans, agricultural loans and Micro and Small enterprise
loan while highly aggressive on Commercial loans, Import and export credit facilities.
KEYWORDS: Credit, Import and export.
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International Journal of Social Science & Interdisciplinary Research_______________________________________ ISSN 2277-3630
IJSSIR, Vol. 4 (5), MAY (2015), pp. 52-72
Online available at indianresearchjournals.com
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