Assessment of Factors Affecting Loan Collection Performance of Development Bank of Ethiopia

Abstract

The main objective of Development Bank of Ethiopia is to operate profitably in order to maintain its stability and improve growth and sustainability by supporting large and macro level enterprises to reduce unemployment rate in the country. However, DBE experience high levels of non-performing loan collection and sustainability of the institution and hinders the achievement of its goals. This study was aimed at Assessment of Factors affecting loan collection performance. However, its nonpayment also leads to incidence of huge loss on institution in particular and country in general. Hence, this study was conducted to assess Factors affecting loan collection performance Developmental Bank of Ethiopia. To this end, the researcher has selected 43 loan collectors to distribute questionnaires and 2 management bodies of the institution to conduct interview and collect data through structured questionnaire. This study used primary sources of data, which is the data was gathered through questionnaires and interview. This research applies descriptive research design that describes the cause of nonperforming loan collection and also possible challenges and corrective measures for the factors that affect performance of loan collection in the institution. The finding of this study shows the increment of non-performance of loan collection rate in the institution from time to time and this is because of factors like lack of follow up of the borrowers, lack of adequate manpower, methods of loan collection not suitable, the bank cannot run its activities according to the schedules it sets, it did not supervise regarding utilization loan, the policy and principle that the bank has are not strong and sufficient. And finally, the researcher tries giving some necessary recommendation for the problems obtained for the concerned bodies. The following are some of recommendation. These are the bank ought to solve lack of skilled and experienced man power, it should collect the loan based on the schedule it set, it should be revised its loan collection method and etc.