ASSESSEMENT OF CREDIT RISK MANAGEMENT PRACTICE: THECASEOFDASHEN BANK, GUBRE BRANCH.

Abstract

Credit risk management has become an important topic for financial institutes, especiallysincethe business sector of financial services is related to conditions of uncertainty. The turmoil of thefinancial industry emphasizes the importance of ef ective risk management practices. The purpose of this study was assessing the practice of credit risk management at DashenBankS.C., Gubre branch, particularly in light of the bank's performance amid financial uncertainties. A descriptive research design was employed to provide a clear assessment of current credit riskmanagement practices. The study utilized a mixed-methods approach, integratingbothqualitative and quantitative research techniques to derive comprehensive insights into the issue. The population of the study consisted of ten employees from the credit department includingmanagers and twenty-five credit customers, who are the whole available customers andhaslong-term relationships with the bank. This census allowed for an in-depth exploration of credit management perceptions. Primary data were collected via questionnaires, containing both closed and open-endedquestions, and through structured interviews with bank employees. Bank’s internal documentsand records, providing context on branch performance and customer demographics. Dataanalysis was conducted using SPSS software for quantitative data, while qualitative responseswere analyzed using content analysis to identify key themes. The results indicate a significant gap in the bank's credit risk management practices; althoughpolicies are in place, they are not ef iciently integrated with the bank's overall strategy, resultingin instances of loan defaults. Major findings suggest that while the bank possesses soundcredit risk policies, the execution and monitoring of these practices need improvement. Based on the findings, it is recommended that Dashen Bank enhance its credit management byestablishing well-defined credit criteria, implementing a robust review process for credit riskmanagement strategies, and striving to dynamically adjust practices according tocritical influencing factors to improve overall performance and competitiveness in the market