THE APPLICATION OF CAMPARI MODEL IN LENDING DECISION IN THE CASE OF ETHIOPIAN PRIVATE BANKS

Abstract

The objective of the study is to assess the application of CAMPARI Model in lending decisions in the Ethiopian Private Banks. Data was collected from four banks of the loan officer and customers. A questionnaire was designed and filled by the 30 bank loan officers and 28 bank customers. The collected data was analyzed using descriptive statistics. It was found that all these four banks use CAMPARI model in lending decisions. The study analyzed each factor that has impact on bank lending. These factors are character of loan applicants, ability to repay loan, margin to repay loan, purpose of loan, amount of loan, repayment of loan and insurance for the loan. It was found that the banks concentrate more on character, ability to pay, and the purpose of loan. They concentrate less on margin of profit and terms of repayment. The study also showed that there is a direct relationship between CAMPARI model and lending decision. In practice the lending process of private banks uses CAMPARI model were utilized and followed as procedure for making a lending decision