ANALYSIS OF THE CREDIT RISK MANAGEMENT SYSTEMS AND PRACTICES IN COMMERCIAL BANKS OF ETHIOPIA: A CASE STUDY OF COMMERCIAL BANK OF ETHIOPIA, HQ.

Abstract

This paper is about “Analysis of credit risk management systems and practice in Commercial Banks of Ethiopia”, a case study of Commercial Bank of Ethiopia, HQ. The numbers of respondents were two hundred and six (206). While collecting the requisite data four points such as: credit risk environment ,sound credit appraisal process credit administration, measurement and monitoring aspects and internal control over credit risk in Commercial Bank of Ethiopia, open ended and closed ended questioner and interview were used. The objective of the study was to critically asses the strategic attention and consideration given for credit risk management practice in CBE, review the credit risk management process and techniques of CBE and explore the considerations given to human resource skill variety in order to successfully manage credit risk. Descriptive statistics was applied to analyze respondent’s information. From the analysis it was found that the board of directors and the management of Commercial Bank of Ethiopia have been exercising their power properly to oversight credit risk management, update the current credit risk management trend, and to apply combination of different risk management techniques and has competent employees. In addition, the result shows that the Commercial Bank of Ethiopia identifies, assesses, analyzes, monitors and evaluates credit risk throughout the processes. As a conclusion, the researcher recommends that Commercial Bank of Ethiopia should assess credit risk as appropriate, monitor and evaluate its credit risk management practice to formulate timely mitigation mechanisms.