Credit Risk Management And Its Impact On Performance On Ethiopian Commercial Banks

Credit risk management has become an important topic for financial institutes, especiallyrnsince the business sector of financial services is related to conditions of uncertainty. Thernturmoil of the financial industry emphasizes the importance of effective risk managementrnprocedures. Consequently, this thesis studies “Credit Risk management and its impact onrnperformance in Ethiopian Commercial Banks.” This research objective was formulated inrnorder to gain a better understanding of credit risk management and its impact onrnperformance (return on asset).rnCredit risk has always been a vicinity of concern not only to bankers but to all in thernbusiness world because the risks of a trading partner not fulfilling his obligations in fullrnon due date can seriously jeopardize the affaires of the other partner.rnThe axle of this study is to have a clearer picture of how banks manage their credit risk.rnIn this light, the study in its first section gives a background to the study and the secondrnpart is a detailed literature review on banking and credit risk management tools andrnassessment models.rnQuantitative research design is employed under the quantitative research design surveyrnmethod is used. The data were collected by cross sectional survey method. The forth partrnof this study is analysis of primary data by descriptive statistical tools and on hypothesisrntesting using regression model. This leads the researcher to conclude in the last sectionrnthat banks with good credit risk management policies have a lower loan default rate andrnrelatively higher return on asset

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