The main objective of this study was to examine the determinants of non-performing loans in the case of the Development Bank of Ethiopia, Bahir Dar District. Descriptive and explanatory research designs were employed. The study uses both a quantitative and qualitative research approach. The study also uses both primary and secondary data sources. The primary source was collected from all 125 employees using questionnaires and interviews conducted with concerned managerial staffs of the district. The secondary source was gathered from DBE manuals, policy and procedure of the bank, NBE directives, bank's T-24 system, loan positions and provisions documents.
The data was analyzed and interpreted by using descriptive and inferential statistics with the help of SPSS version 22.0 and qualitative analysis like interview and document analysis. The correlation between independent variables (bank specific and External factor) and dependent variables (nonperforming loan) were tested by using person correlation and the casual relation was analyzed by using linear multiple regression analysis.
The finding of the study indicate that credit assessment, project monitoring, credit appraisal, bank top management, political and social instability, availability of infrastructure, collateral strength and market factor are significant factors for occurrence of non-performing loans. However, credit term and condition and lending interest rate are insignificant factor for the occurrence of non-performing loans. Finally, the study recommends the district should perform proper selection of customers and make appropriate due diligence based on KYC assessments, proper monitoring and follow up as per the schedule, make accurate credit appraisal, granting loans via strong collateral coverage, sound decision made by top management based on policy and procedure of the bank, improve capacity of credit performer by providing relevant training.
Inhaltsverzeichnis (Table of Contents)
- CHAPTER ONE: INTRODUCTION
- 1.1 Background of the study
- 1.2 Statement of the problem
- 1.3 Objectives of the study
- 1.3.1 General objective
- 1.3.2 Specific objectives
- 1.4 Significance of the study
- 1.5 Scope of the Study
- 1.6 Limitation of the Study
- 1.7 Organization of the Paper
- CHAPTER TWO: REVIEW OF RELATED LITERATURE
- 2.1 Introduction
- 2.2 Theoretical Review Literature
- 2.3 Basic concept of Nonperforming Loan
- 2.3.1 Classifications of Loans and advance
- 2.3.2 Five Cs of Nonperforming/Bad loans
- 2.3.3 The "Five C's-the Basic Components of a Credit Analysis
- 2.3.4 Determinants of Non-Performing Loan (NPL)
- 2.4 Empirical studies
- 2.4.1 Empirical studies in other Countries
- 2.4.2 Empirical studies in Ethiopia
- 2.4.3 Present knowledge gap
- 2.5 Conceptual framework
- 2.6 Research Hypothesis
- CHAPTER THREE: RESEARCH METHODOLOGY
- 3.1 Introduction
- 3.2 Research approach
- 3.3 Research Design
- 3.4 Types of data and Source
- 3.5 Target Population
- 3.6 Data collection instrument
- 3.7 Validity and Reliability of Research
- 3.8 Data analysis Technique
- 3.9 Ethical Considerations
- CHAPTER FOUR: DATA PRESENTATION, ANALYSIS AND DISCUSSION
- 4.1 Introduction
- 4.2 Response rate
- 4.3 Demographic Characteristics of Respondents
- 4.4 Descriptive Analysis
- 4.5 Decision rule
- 4.6 Correlation Analysis
- 4.7 Multiple Regression Analysis
- 4.7.1 Regression Model Diagnosis
- 4.7.2 Test for Multi co Linearity
- 4.7.5 Regression Analysis of Dependent and Independent Variables
- 4.7.6 Effects of the Determinant on nonperforming loans
- 4.8 Qualitative Analysis of Interview
- 4.9 Nonperforming loan ratio Analysis
Zielsetzung und Themenschwerpunkte (Objectives and Key Themes)
This research thesis aims to identify the determinants of non-performing loans (NPLs) at the Development Bank of Ethiopia (DBE) in the Bahir Dar District. The study seeks to understand the factors contributing to NPLs and provide recommendations for mitigating their occurrence.
- Determinants of Non-Performing Loans (NPLs)
- Impact of various factors on loan defaults
- Analysis of NPLs within the Ethiopian banking context
- Development and testing of a regression model to explain NPLs
- Recommendations for reducing NPLs at DBE
Zusammenfassung der Kapitel (Chapter Summaries)
CHAPTER ONE: INTRODUCTION: This chapter sets the stage for the research by providing background information on non-performing loans within the Ethiopian banking system, specifically focusing on the Development Bank of Ethiopia (DBE). It clearly defines the problem of high NPLs at DBE Bahir Dar District, stating the research objectives, significance, scope, and limitations. The chapter concludes by outlining the structure of the thesis.
CHAPTER TWO: REVIEW OF RELATED LITERATURE: This chapter presents a comprehensive review of existing literature on non-performing loans. It covers theoretical frameworks explaining NPLs, examines various classifications of loans and advances, and explores the 'Five Cs' of credit analysis as a framework for understanding loan risk. The chapter also delves into empirical studies conducted in other countries and in Ethiopia, highlighting existing knowledge gaps that this research aims to address. A conceptual framework and research hypotheses are then presented to guide the empirical investigation.
CHAPTER THREE: RESEARCH METHODOLOGY: This chapter details the research methodology employed in the study. It explains the research approach (likely quantitative, given the mention of regression analysis), research design, data collection methods, target population, and data analysis techniques. This chapter also addresses the validity and reliability of the research instruments and outlines ethical considerations for data collection and analysis. It provides a solid justification for the selected methods.
CHAPTER FOUR: DATA PRESENTATION, ANALYSIS AND DISCUSSION: This chapter presents the findings of the research. It includes descriptive statistics on the respondents, the results of the correlation analysis and multiple regression analysis conducted to test the research hypotheses and to determine the effects of various factors on NPLs at DBE. The findings are then discussed in detail, relating the results back to the literature review and conceptual framework presented in previous chapters. Qualitative data from interviews (if conducted) would be integrated here.
Schlüsselwörter (Keywords)
Non-performing loans, Development Bank of Ethiopia, Bahir Dar District, loan defaults, credit risk, regression analysis, Ethiopian banking system, financial performance, macroeconomic factors, credit appraisal.
Frequently Asked Questions: Determinants of Non-Performing Loans at the Development Bank of Ethiopia
What is the main topic of this research thesis?
This research thesis focuses on identifying the determinants of non-performing loans (NPLs) at the Development Bank of Ethiopia (DBE) in the Bahir Dar District. It aims to understand the factors contributing to NPLs and provide recommendations for mitigating their occurrence.
What are the key themes explored in the thesis?
The key themes include the determinants of NPLs, the impact of various factors on loan defaults, analysis of NPLs within the Ethiopian banking context, development and testing of a regression model to explain NPLs, and recommendations for reducing NPLs at DBE.
What is covered in Chapter One: Introduction?
Chapter One provides background information on non-performing loans in the Ethiopian banking system, focusing on the DBE. It defines the problem of high NPLs, states the research objectives, significance, scope, and limitations, and outlines the thesis structure.
What does Chapter Two: Review of Related Literature cover?
Chapter Two presents a comprehensive literature review on non-performing loans, including theoretical frameworks, classifications of loans, the 'Five Cs' of credit analysis, empirical studies from other countries and Ethiopia, and identifies knowledge gaps. A conceptual framework and research hypotheses are also presented.
What methodology is described in Chapter Three: Research Methodology?
Chapter Three details the research approach (likely quantitative, given the mention of regression analysis), research design, data collection methods, target population, data analysis techniques, validity and reliability of research instruments, and ethical considerations.
What are the findings presented in Chapter Four: Data Presentation, Analysis and Discussion?
Chapter Four presents research findings, including descriptive statistics, correlation analysis, multiple regression analysis results (testing research hypotheses and determining effects of various factors on NPLs), and a discussion relating the results to the literature and conceptual framework. Qualitative data (if any) is also integrated.
What are the key words associated with this research?
Key words include: Non-performing loans, Development Bank of Ethiopia, Bahir Dar District, loan defaults, credit risk, regression analysis, Ethiopian banking system, financial performance, macroeconomic factors, and credit appraisal.
What is the overall objective of this study?
The overall objective is to identify the key factors that contribute to non-performing loans at the Development Bank of Ethiopia in Bahir Dar and to propose solutions to reduce the number of such loans.
What types of analysis are used in this research?
The research utilizes both quantitative and qualitative analysis methods. Quantitative analysis includes descriptive statistics, correlation analysis, and multiple regression analysis. Qualitative analysis may include the interpretation of interview data.
What is the significance of this research?
The significance lies in its potential to provide valuable insights into the causes of NPLs at the DBE, leading to improved lending practices and reduced financial losses. The findings can inform policy and decision-making within the Ethiopian banking sector.
- Quote paper
- Anonym (Author), 2023, Assessing Non-Performing Loans in the Development Bank of Ethiopia, Bahir Dar District. An Analysis of Determinants Using Quantitative and Qualitative Approaches, Munich, GRIN Verlag, https://www.grin.com/document/1432182
