ASSESSMENT OF NON-PERFORMING LOAN IN CASE OF COMMERCIAL BANK OF ETHIOPIA, BEKUR BRANCH, WOLKITE TOWN

Abstract

Loan becomes nonperforming when it cannot be recovered within certain stipulated time that is governed by some respective principle of loan. The objective of this study is to assess the nonperforming loans of commercial bank of Ethiopia, Wolkite branch. The researcher used to mixedapproach which means, both qualitative and quantitative research approach to gather relevant data from the concerned body and also the researcher applied descriptive method of the research design because the method used to describe the state of the nature of NPLs in detail. A primary method of data collection was applied. The primary data was collected through questionnaire from the customers and employees of the bank and interview to the loan manager of the bank. The researcher used judgmental sampling technique to accumulate a desire data about the non-performing loans of the bank within the sample size of 30 and 10 respondents are customers and employees respectively. The data was presented and analyze through tabular representation and descriptive method of analysis so as to clarify points related to the subject matter in detail. The finding of the study shows that: poor asset management, unplanned expansion and diversification of business and the bank over financing to the borrowers. Finally, the researcher recommend that it is advisable to have clear policy and procedure in the bank for credit assessment and detailed consultation is provided to new applicants regarding asset management and over all bank rule and regulation.