ASSESSMENT OF ASSET QUALITY MANAGEMENT PRACTICE: THE CASE OF BERHAN BANK

Abstract

This study was conducted to assess asset quality management practice of Berhan bank. The study used primary data using questioner. The study populations of 74 were from Berhan Bank employees who are directly involved in credit processing and administering loans in head office and Addis Ababa branch managers. The data collected using questionnaires were analyzed with descriptive statistics using SPSS 23. Descriptive analyses were used to analyze the data collected. The findings of the study revealed that majority respondents agree with the practice of weak risk assessment and due diligent has an impact on asset quality of the bank. Moreover, high lending interest rate, unsecured loans and political also have an impact on asset quality of the bank. Therefore, the study recommended that the bank should give more emphasis on its risk assessment and due diligence procedure before approval of loans and also lending interest rate should be reviewed and reduces to increase asset quality of the bank. In addition, the study recommended that unsecured loans are more risky than secured loans .Therefore; the bank should look for collateral when granting loans. Furthermore reduce and, if possible, eliminate all political influence involved in the giving of loans to specific political individuals and groups.