ASSESSMENT OF THE PERFORMANCE OF PROJECT FINANCING IN THE CASE OF COMMERCIAL BANK OF ETHIOPIA

Abstract

This research studies the performance of project financing in case of commercial bank of Ethiopia. The research employed both quantitative and qualitative research approaches to achieve the intended objectives. Both primary and secondary data types were used to collect data from managerial and non-managerial credit performers using questioners and internal records of the bank. The population of the respondents is 83 out those 56 selected for sample size and used systematics and census sampling technique for select the employees of CBE respondents. From sample size 43 performers are responses the questioners. The paper assessed the capacity of project financing in commercial bank of Ethiopia credit portfolio and examined the bank project financing appraisal technique, to assess CBE has sufficient professionals to finance project and to ermine credit risk management and credit risk grading techniques .The findings indicate the bank has no separate project financing appraisal at procedure level. CBE has inadequacy gab observed in project financing by inviting appropriate expert in the area. In the technical feasibility analysis it has lack of qualified staff for the level of technology. Measurements of customer management, business risk and customer relationship risk are subjective and are not well defined parameter credit grading system. it has no separate credit risk management for project financing Based on the finding the following recommendation forwarded CBE should formulate an appraisal process or procedures for project financing that would encompass matters with basic identification of credit worthy customers, comprehensive credit analysis and authentic sanctioning process. And bank should also make use of approved and certified feasibility report of the proposed project which was suggested by appropriate technical professionals before financing. CBE shall either employee qualified staffs to assess the level of technology in each project or invite external assessors to assure the technical feasibility of the project. The bank should prepare more defining parameters of customer management risk, customer relation risk and customer business or industry risk.