Debt Collection Optimization Commercial Bank Of Ethiopias Case

This thesis develops and analyzes a finite horizon Markov decision process model for commercialrnbank of Ethiopia’s debt collection optimization problem. Two sectors namely domestic tradernand services (DTS) and foreign trade (FT) have been studied primarily because of loan turnoverrnrates and economic policy focus. A 2 years long data are used to determine cost of holding anrnoutstanding loan in a certain state or delinquency status on a log scale where each state/status isrnscaled by the percentage of provision allocated to the states. Conclusions are made in terms ofrnwhich loan segments banks need treat with more caution. Simple but important suggestions onrnways of improving the operations of banks are made in the end.

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