Factors Affecting Non-Performing Loans in Commercial Bank of Ethiopia
This study investigates the factors affecting Non-Performing Loans of Commercial Bank of Ethiopia during the period from 2002 to 2015. The variables were chosen based on findings from the previous literatures. A mixed research approach and explanatory design were adopted in carrying out this research. Secondary time series data were collected from audited annual reports and performance reports of the bank; and the required ratios were calculated. In addition, 12 credit experts from the concerned departments and functional units responsible for lending matters in the bank were interviewed. Multiple linear regression equation was used to estimate the model using SPSS version 20 software. The results obtained from regression output indicated that among the studied variables, loan to deposit ratio; financial performance measured in terms of return on equity; and capital adequacy were found to be statistically significant determinant of NPLs. On the other hand, loan growth, cost efficiency and bank size were statistically insignificant in affecting NPL. The findings from the interview result indicates that, variables such as poor credit risk assessment, focusing on collateral based lending, poor loan monitoring and follow-up, poor banker's skill in dealing with lending matters, undiversified loan products, short loan life and lack of credit advisory practices were also the bank specific factors that affect NPLs of CBE. The study suggests that focusing on these NPL indicators could further reduce the probability of default while extending credit in the future. Further studies were recommended by including macroeconomic and other bank specific variables; and by increasing the sampled periods
Year of publication: |
2018
|
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Authors: | Aynalem, Sirak |
Publisher: |
[2018]: [S.l.] : SSRN |
Subject: | Äthiopien | Ethiopia | Bank | Notleidender Kredit | Non-performing loan |
Saved in:
freely available
Extent: | 1 Online-Ressource (97 p) |
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Type of publication: | Book / Working Paper |
Language: | English |
Notes: | Nach Informationen von SSRN wurde die ursprüngliche Fassung des Dokuments June 15, 2016 erstellt |
Other identifiers: | 10.2139/ssrn.3215668 [DOI] |
Source: | ECONIS - Online Catalogue of the ZBW |
Persistent link: https://www.econbiz.de/10012914530
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