CHAPTERTWO

2.LI
TERATUREREVI
EW

2.
1.Pov
ert
yinEt
hiopi
a
Et
hiopi
aisoneoft
hepoor
estcount
ri
esi
nthewor
ldwi
thannualper
/capi
tali
ncomeof
$170.TheUni
tedNat
ionsdev
elopmentpr
ogr
am’
shumandev
elopmentr
epor
tfor2007-
2008r
ankedEt
hi aas169th outof177count
opi ri
esont
heHumandev
elopmentI
ndex
t
heav
eragel
i
feexpect
ancyaf
terbi
rt
his48y
ers.I
nfant
,mor
tal
i
tyandmal
nut
ri
ti
onr
ate
ar
eamongt
hehi
ghesti
nthewor
ldwhi
l
eaccesst
oeducat
ionhasi
ncr
easedi
nrecent
y
ear
s,t
heov
eral
ladul
tli
ter
acyr
atesi
slow compar
edt
othesub-Sahar
anAf
ri
can
st
andar
dsr
oughl
y44%oft
hepopul
ati
onl
i
vesbel
owmar
keddi
ff
erencesbet
weenr
ural
andur
banar
eas.Mostr
uralhousehol
dsl
i
veonadai
l
ypercapi
tali
ncomeofl
ess
t
hen$0.
50

Gener
all
y,r
uralhousehol
dshav
elessaccesst
omostessent
ialassessment
,ov
eral
l
pr
ogr
essi
nreduci
ngpov
ert
ysi
nce1992f
all
sshor
tofwhati
srequi
redofmeet190G1
by2015asr
esul
thi
ghv
ari
abi
l
ityi
nagr
icul
tur
alGDPandr
api
d

(
4)
 CHAPTERTHREE

3.METHODOLOGY

3.
1.St
udyar
ea

HawassaLocat
edi
nSi
amaRegi
on,t
hist
ownhasal
ati
tudeandl
ongi
tudeof7°
0477′
N
38.
4958°
0′Ewi
thanel
evat
ionof1708met
res(
5,604f
t)abov
eseal
evel
.Iti
slocat
ed
about275ki
l
omet
resbyr
oadf
rom Et
hiopi
a'
scapi
talAddi
sAbaba.HawassaAi
rpor
t
wi
thnei
ghbor
ingshashemane.Et
hiopi
anAi
rl
ineshasaschedul
edf
li
ghtf
ivet
imesa
weekconnect
ingi
ttot
hecapi
talAddi
sAbaba.Not
abl
etour
istat
tr
act
ionsi
ncl
udet
he
Hawassal
ake.

3.
2.Ther
esear
chDesi
gn
Thest
udyi
sfocusesont
heassessmentofcr
edi
tmanagementonf
inancei
nst
it
uti
ons
i
ncaseofAwachcr
edi
tandsav
ingShar
eCompanyi
nHawassa

br
anch.Thest
udywi
l
lbeusedbot
hqual
i
tat
iveandquant
it
ati
ver
esear
chappr
oachesi
n
or
dert
oachi
evet
her
esear
chobj
ect
ive.

3.
3.Sour
ceofdat
a
Inordertogetsuf
ficientandrel
evantinf
ormati
onforthestudyther esear
cherwil
luse
bothprimaryandsecondar ydat
a.Thepr i
marydatawil
lbecollectedfrom cust
omers,
employeesoftheinst i
tut
ionandmanagementont hecurrentsit
uationofthe
i
nstit
uti
onsandper formanceofempl oyeeandsecondarydatawillbecoll
ectedfr
om
books,manualsandr eports.

(
13)
Chapt
erf
our

4.
1WORKPLANi
n2024
No
Act
ivi
ti
es Des Jan Feb Ma Apr May Jun
r

Summiti
ng
Resear
ch
Ti
tle

1 Dr
aft
pr
oposal
wri
ti
ng

2 Quest
ionnai
re
pr
eparati
on

3 Pr
oposal
pr
esent
ati
on

4 Submissi
on
ofpr
oposal

5 Dat
a
col
l
ect
ion

6 Datacoding
andedit
ing
 BSTLCOLLEGEHAWASSA

DEPARTMENTOFACCOUNTI
NGANDFI
NANCE

ASSESSMENTOFCREDI
TMANAGEMENTFI
NANCEI
NTI
TUTI
ONS:

ACASESTUDYACCOUNTI
NGONAWACHCREDI
TANDSAVI
NGSHARE
COMPANYONHAWASSABRANCH
RESEARCHPROPOSALSUBMI
TTED TOTEACHERMOHAMEDALI

FORTHEPARTI
ALFULFI
LMENTOFTHEREQUI
REMENTOFBACHELER
DEGREEOFARTI
NACCOUNTI
NGANDFI
NANCE(
BA)

BY:

NATNAELSOLOMON.E/
159/
14

SUBMI
TTEDTOMOHAMEDALI

Febr
uar
y-2024

HAWASSA/
ETHI
OPI
A

I
 Tabl
eofcont
ent
Chapt
erone.
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
(1)
1.I
NTRODUCTI
ON.
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
.1

1.
1Backgr
oundoft
hest
udy _
___
___
___
___
___
___
___
___
___
___
___
___
___
___
_1

I
___
___
___
___
___
___
___
___
___
___
_I_
___
___
___
___
___
___
___
___
___
___
___
___
II

1.
2.St
atementoft
hepr
obl
em _
___
___
___
___
___
___
___
___
___
___
___
___
___
___
_2
1.
3.Obj
ect
iveoft
hest
udy _
___
___
___
___
___
___
___
___
___
___
___
___
___
___
_3

1.
3.1.Gener
alobj
ect
ive_
___
___
___
___
___
___
___
___
___
___
___
___
___
___
___
_3

1.
3.2.Speci
fi
cobj
ect
ives_
___
___
___
___
___
___
___
___
___
___
___
___
___
__3
1.
4.Si
gni
fi
canceoft
hest
udy
___
___
___
___
___
___
___
___
___
___
___
___
___
___
3

1.
5.Scopeoft
hest
udy _
___
___
___
___
___
___
___
___
___
___
___
___
___
__3

1.
6.Or
gani
zat
ionofst
udy_
___
___
___
___
___
___
___
___
___
___
___
___
___
___
__3

Chapt
ert
wo
2.LI
TERATUREREVI
EW_
___
___
___
___
___
___
___
___
___
___
___
___
___
___
___
___
___
___
4

2.
1.Pov
ert
yinEt
hiopi
a__
___
___
___
___
___
___
___
___
___
___
___
___
___
___
___
___
_4

2.
2.Mi
crof
inancei
nEt
hiopi
a__
___
___
___
___
___
___
___
___
___
___
__5

2.
2.1.Mi
crof
inanceasAnt
i-Pov
ert
yst
rat
egy_
___
___
___
___
___
___
___
___
5

2.
2.2.Theconceptofmi
crof
inanci
ngandi
t’
sobj
ect
ives_
___
___
___
___
_6

2.
2.3.Mechani
sm f
orscr
eeni
ngdef
aul
ti
ngdef
aul
ti
ng_
___
___
___
___
___
___
7

2.
3.Cr
edi
tmanagementanov
erv
iew_
___
___
___
___
___
___
___
___
___
___
___
9

2.
3.1.Pr
esent
ati
onappr
aisal
___
___
___
___
___
___
___
___
___
___
___
9

2.
3.2.Postsanct
ioncont
rol_
___
___
___
___
___
___
___
___
___
___
___
10

I
II
2.
4.Cr
edi
tpol
i
cysy
stem andpr
ocedur
es_
___
___
___
___
___
___
___
___
___
_10

2.
5.Repay
mentEt
hics_
___
___
___
___
___
___
___
___
___
___
___
___
___
___
___
_12

2.
5.1.Ov
erdoesmanagement_
___
___
___
___
___
___
___
___
___
___
___
___
12

2.
5.2.Ext
ernal
fact
ors_
___
___
___
___
___
___
___
___
___
___
___
___
___
___
___
_12

2.
5.3.I
nter
nal
fact
ors_
___
___
___
___
___
___
___
___
___
___
___
___
___
___
___
__13

Chapt
ert
hree I
___
___
___
___
___
___
___
___
___
___
__ I
II

3.METHODOLOGY_
___
___
___
___
___
___
___
___
___
___
___
___
___
___
___
___
___
___
13

3.
1.St
udyar
ea_
___
___
___
___
___
___
___
___
___
___
___
___
___
___
___
___
___
___
___
13

3.
2.Ther
esear
chDesi
gn_
___
___
___
___
___
___
___
___
___
___
___
14

3.
3.Sour
ceofdat
a__
___
___
___
___
___
___
___
___
___
___
__14

3.
4.Sampl
etechni
quesandsampl
esi
ze_
___
___
___
___
___
___
14

3.
5.Met
hodofdat
acol
l
ect
ion_
___
___
___
___
___
___
___
___
___
_14

3.
6.Met
hodofdat
apr
ocessi
ng_
___
___
___
___
___
___
___
___
___
14

3.
7.Met
hodofdat
aanal
ysi
s__
___
___
___
___
___
___
___
___
___
__15

Chapt
erf
our

4. n2024_
1WORKPLANi ___
___
___
___
___
___
___
___
___
___
___
15

4.
2BudgetPl
an_
___
___
___
___
___
___
___
___
___
___
___
16

REFERENCES__________________________________17

I
V
 ABTRACT
Thepur
poseoft
hisst
udyi
stoi
nvest
igat
ethecr
edi
tmanagementofi
nfi
nance
i
nst
it
uti
onson Awach cr
edi
tand sav
ing Shar
eCompanyi
n Hawassabr
anch.The
gener
alobj
ect
iveoft
hisst
udyi
stoexami
ningt
hecr
edi
tmanagementofi
nfi
nance
i
nst
it
uti
onsonAwachecr
edi
tandsav
ingShar
eCompanyi
nHawassabr
anch.I
nor
dert
o
achi
evet
his obj
ect
ive,t
he r
esear
cher empl
oys mi
xed r
esear
ch met
hods (
Bot
h
quant
it
ati
veandqual
i
tat
iver
esear
chmet
hodswi
l
lbeused)
.Descr
ipt
iver
esear
chdesi
gn
wi
l
lbeused. I
nor
dert
ogetsuf
fi
cientandr
elev
anti
nfor
mat
ionf
ort
hest
udyt
he
r
esear
cherwi
l
lusebot
hpr
imar
yandsecondar
ydat
a.Pr
imar
ydat
awi
l
lbecol
l
ect
ed
usi
ngst
ruct
urali
nter
view f
rom cr
edi
tmanger
sbecause,t
ogetr
elev
antdat
aandby
usi
ngquest
ioner
sfr
om cust
omer
sandempl
oyees.I
nthequest
ioner
s,t
her
esear
cher
wi
l
lusebot
hcl
ose-endandopen-endquest
ionsi
nsuchawayt
hatt
heyshoul
d
gener
atei
mpor
tanti
nfor
mat
iononcr
edi
tmanagementsy
stem ofAwachcr
edi
tand
sav
ingi
nst
it
uti
on.Thecol
l
ect
eddat
awi
l
lbeanal
yzedbyusi
ngdescr
ipt
iveanal
ysi
s
met
hodaccor
ding,per
cent
ageandf
requencycountwi
l
lbeanal
yzedandi
nter
prett
he
dat
acol
l
ectf
ormt
hesampl
erespondent
.

KEYTERMS:Cr
edi
tmanagement
,fi
nance,
Inst
it
uti
ons

I
I
1.
3.Obj
ect
iveoft
hest
udy

1.
3.1.Gener
alobj
ect
ive
Themai
nobj
ect
iveoft
hest
udyi
stoex
ami
net
hecr
edi
tmanagementi
nfi
nancei
nst
it
uti
onsi
nthecase
ofAwachcr
edi
tandsav
ingShar
eCompanyonHawassabr
anch.

1.
3.2.Speci
fi
cobj
ect
ives
Toassesst
heact
ivi
ti
espr
act
icedcr
edi
tmanagementoft
hei
nst
it
uti
on.
Toassesst
heef
fect
ivenessofpol
i
cesandpr
ocedur
ethei
nst
it
uti
onf
oll
owsi
npr
ovi
dingl
oans.
Toassesst
hemet
hodsoft
hei
nst
it
uti
onusest
ofol
l
owupl
oan.
Toi
dent
if
ythemoni
tor
ingmechani
sm usedbyt
hei
nst
it
uti
onst
ocol
l
ectcr
edi
t.

1.
4.Si
gni
fi
canceoft
hest
udy
Thei
mpor
tanceoft
hisst
udyi
stoenhancet
hecompet
it
iveposi
ti
onofAwachcr
edi
tandsav
ingf
inance
i
nst
it
uti
onbyf
indi
ngway
sthati
mpr
ovet
hecr
edi
tmanagementsy
stem oft
hei
nst
it
uti
ons.Ther
esear
cher
wi
l
lal
sobel
i
evest
hatt
her
esul
toft
hisst
udywi
l
lpav
ethewayf
ort
hecl
i
ent
soft
hei
nst
it
uti
ons,al
sof
or
t
hei
nst
it
uti
onsandaddi
ti
onal
l
yser
vesasr
efer
encef
orot
herr
esear
cher
.Al
sot
hest
udywi
l
lpr
ovi
des
addi
ti
onalknowl
edge t
ocr
edi
tmanager
sindesi
gni
ngnew cr
edi
tmanagementandf
orpl
anni
ngand
cont
rol
l
ingpr
ocedur
esi
ncr
edi
tact
ivi
ti
esandi
thel
pst
hecl
i
ent
soft
hei
nst
it
uti
onbyi
nfor
mingnecessi
ty
ofpay
ingcr
edi
taccor
dingt
oagr
eement
s,i
npr
event
ingunnecessar
ypay
ment
s.Fi
nal
l
y,t
hest
udywi
l
l
hel
psf
orf
urt
herr
esear
cher
sasr
efer
encewhowantt
oconductst
udyont
hear
eaofcr
edi
tmanagement
off
inanci
ali
nst
it
uti
onspar
ti
cul
arl
ymi
crof
inancei
nst
it
uti
ons.

1.
5.Scopeoft
hest
udy

Becauseofnosuf
fi
cientt
imeandnoenoughbudgett
oconductst
udyonwi
dear
eat
hest
udyi
sli
mit
edt
o
AwachMi
crof
inancei
nst
it
uti
onofHawassabr
anchgeogr
aphi
cal
l
y.

1.
6.Or
gani
zat
ionofst
udy

Thi
sresear
chcont
ainsf
ivechapt
ers.Thef
ir
stchapt
ercont
ainsani
ntr
oduct
iont
othest
udywhi
chas
di
ff
erentpar
ts.Backgr
oundoft
heor
gani
zat
ionandt
hest
udy
;st
atementoft
hepr
obl
em obj
ect
ivesoft
he
st
udy
;si
gni
fi
canceoft
hest
udy
;scopeoft
hest
udy
;li
mit
ati
onoft
hest
udyandor
gani
zat
ionoft
hepaper
.
The second chapt
ercont
ains l
i
ter
atur
erev
iew on cr
edi
tmanagement
.The t
hir
d chapt
ercont
ains
met
hodol
ogyoft
hest
udy
.Thef
our
thchapt
ercont
ainsdat
aanal
ysi
s,i
nter
pret
ati
on,

(
3)
Theboar
dofdi
rect
orsshoul
dhav
eresponsi
bil
i
tyf
orappr
ovi
ngandper
iodi
cal
l
yrev
iewi
ngt
heCRst
rat
egy
andsi
gni
fi
cantCRpol
i
ciesoft
hei
nst
it
uti
on.Thest
rat
egyshoul
dref
lectt
hel
ender
stol
ear
nedf
orr
isk
andt
hel
evel
ofpr
ofi
tabi
l
ityt
hei
nst
it
uti
onexpect
stoachi
evef
ori
ncur
ri
ngv
ari
ousCR.
Seni
ormanagementshoul
dhav
eresponsi
bil
i
tyf
ori
mpl
ement
ingt
heCRst
rat
egyappr
ovedbyt
heboar
d
ofdi
rect
ors and f
ordev
elopi
ng pol
i
cies and pr
ocedur
es f
ori
dent
if
ying measur
ing moni
tor
ing and
cont
rol
l
ingCRsuchpol
i
ciesandpr
ocedur
esshoul
daddr
esscr
edi
tri
ski
nal
loft
hel
ender
sact
ivi
ti
es.
Lendershoul
dident
if
yandmanageCRi
nher
enti
nal
lpr
oduct
sandact
ivi
ti
esnewt
othem ar
esubj
ect
sto
adequat
epr
ocedur
esandcont
rol
sbef
orebei
ngi
ntr
oducedorundert
akenandappr
ovedbyot
herboar
d
ofdi
rect
ion.

2.
5.Repay
mentEt
hics
I
nacount
rywher
eal
argepr
opor
ti
onofpeopl
ear
ever
yconser
vat
iveandor
thodoxi
nthei
rthi
nki
ng,
taki
ng
l
oanf
orm moneyl
ender
s.Banksi
sconsi
der
edt
obegr
aver
isk.I
fper
sondi
eswi
thoutr
epay
inghi
sdebt
s,
hi
ssonsandhei
rsf
eelt
hei
rdut
ydosoort
hef
ather
ssoulwi
l
lnotr
esti
npeace.Al
so,t
hef
atherofnon
r
epay
mentofdebt
sduet
oexor
bit
anti
nter
stat
es,
coul
dleadt
oal
i
enat
ionofpr
oper
tyr
ight
s(Dani
elk,
2010)

2.
5.1.Ov
erdoesmanagement
Ov
erdoesar
iseduet
ononpay
mentofl
oani
nst
all
ment
sonduedat
eswi
l
lfuldef
aul
tismai
nlyduet
othe
i
nadequat
eandi
nef
fect
iveor
gani
zat
ionef
for
tsofbankst
orecei
vedues.Cl
ear
lyov
erdoes,canr
esul
t
f
orm ext
ernal
ori
nter
nal
fact
ors.(
IBI
D)

2.
5.2.Ext
ernal
fact
ors
Ther
ear
efact
orsov
erwhi
cht
hebankshav
enooper
ati
onalordemonst
rat
ivecont
rol
,suchas:(
Dani
elK,
2010) .
.
Nat
uralcal
ami
tesl
i
kef
oods,
droughtandear
thquakes. .
.
Pol
i
tical and gov
ernment i
n i
nter
fer
ence cr
oppi
ng pat
ter
n changes not
adopt
edbyf
armer
s.

.Cr
oppi
ngpat
ter
nchangesnotadopt
edbyf
armer
s.
.
Cost
sofi
nput
sandpr
icesoff
arm pr
oducewi
thoutpr
icesuppor
t.

2.
5.3.I
nter
nal
fact
ors

Ther
ear
efact
orsr
elat
edt
oor
gani
zat
ional
def
ici
enci
esandadmi
nist
rat
ivei
nef
fect
iveness,
suchas(
Dani
ek,
2010)
.
ref
lect
ivel
oani
ngpol
i
ciespr
ocedur
es.
i
nef
fect
ivesuper
visi
onmachi
ner
yov
erl
oabut
il
izat
ion.
Lackofef
for
tsf
orr
ecov
eryandi
nadequat
esy
stem f
orr
ecov
ery
Ther
ear
eot
hercausesl
endi
ngt
oloanov
erdoes,
suchas:
l
l
l .
Underf
inanci
ng/
overf
inanci
ng. .
Inf
ruct
uousi
nvest
ment
s
h (
12)
LI
STOFACRONOMY

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