Practices of Credit Eligibility Assessment and its Perceived Relationship with Operational Efficiency: The Case of Dashen Bank S.C

Abstract

Maintaining proudest credit lending process is a prerequisite for any financial institutions so as to effectively process the given loan. Time oriented loan processing has its own remarkable impact in terms of increasing operational efficiency and customer’s satisfaction. This research paper is intended to assess the practice of credit eligibility assessment and its perceived relationship with operational efficiency in the case of Dashen Bank particularly its contribution in terms of increasing service quality and customer satisfaction, to see how the bank is using the evaluation criteria during loan processing and challenges faced by the bank on its credit lending process due to application of eligibility criteria. For the purpose of the study both primary and secondary data were collected and used. The primary data were collected using structured questionnaire and interview. The secondary data were also collected from the bank’s policy, procedure, different reports, training materials, directives which are issued by National Bank of Ethiopia. Based on the nature of the study, the research design is descriptive with quantitative and qualitative research method. Descriptive statistical tools are used to analyze the data collected. Hence, the nature of the Study is descriptive, the researcher found that the credit lending process of the bank is not fully supported by system, knowledge gaps also observed in understanding and using the credit analysis and appraisal procedure of the bank. The researcher also found relationship between risk grading and creditworthiness, loan processing time, service quality and customer satisfaction. Finally, based on the data analysis recommendations were given. These include, the bank has to arrange training and development session in relation to the credit lending process to fill created knowledge gap, exhaustively see the variables included in the eligibility criteria so as to mitigate the level of customer dissatisfaction and refine the criteria considering the changing situations, design room of providing work around solution for dissatisfied customer bank level in order to decrease migration of customers to other banks, systematize the credit lending process using prudent loan origination modules in order to optimize the operational efficiency and the bank has to pay due attention to partially use relationship based financing other than highly sticking on the analysis based financing.