MSC in Accounting and Finance

Permanent URI for this collectionhttps://etd.hu.edu.et/handle/123456789/135

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    EFFECT OF CREDIT MONITORING ACTIVITIES ON ASSET QUALITY: A CASE STUDY ON PRIVATE AND PUBLIC BANKS IN ETHIOPIA
    (Hawassa University, 2024-04) DAWIT BEYENE
    Credit monitoring activities play a crucial role in determining the asset quality of banks. Effective credit monitoring involves regularly assessing the creditworthiness of borrowers, analyzing their financial health, and evaluating potential risks associated with loans and investments. By actively monitoring credit, banks can identify and address any red flags or signs of non-performing or problematic loans at an early stage. This proactive approach allows banks to take appropriate measures to mitigate risks, such as restructuring or refinancing loans, resulting in improved asset quality. Moreover, credit monitoring activities enable banks to make informed decisions regarding credit extension, thereby ensuring that the loans offered are to creditworthy individuals or businesses, further enhancing the overall asset quality of the banks. This study examines the effect of credit monitoring activities on asset quality: a case study on private and public banks in Ethiopia. A response rate of 88.6% was achieved from respondent and both quantitative and qualitative data analysis tools were employed. The study concludes that the independent variables, namely collateral information, business ratings information, customer credit status information, and consumer default information, have a positive impact on asset quality in banks. Based on the study's findings, it is recommended that banks give more weightage to collateral information, business ratings information, customer credit status information, and consumer default information in their assessment of asset quality. By placing greater emphasis on these independent variables, banks can better identify and manage potential risks associated with loans and other credit facilities. It is imperative for banks to regularly update and upgrade their risk assessment models and systems to incorporate these variables effectively. Furthermore, banks should invest in technologies and data analytics tools that can provide accurate and real-time information on these variables, allowing for more informed lending decisions and ultimately improving their overall asset quality.