Assessment Of Credit Risk Management The Case Of Oromia Credit And Saving Share Company (OCSSCO)

Abstract

is study focused on assessment of credit risk management in Oromia Credit and saving Share Company. The purpose of this study was to examine how far the MFI’s under study has organized its operation and service provision to manage credit risk and assesses the status of the MFI’s in terms of both quantitative and qualitative indicators of credit risk. Purposive sampling method is used to select respondents located in the headquarters of OCSSCo in order to gather qualitative data on credit risk factors. Primary data is collected through questionnaires administered to a purposively selected senior management staffs of OCSSCO. Quantitative data is collected from the financial statements of OCSCO covering the period between 2010 up to 2014. The Morgan Stanley credit risk assessment methodology which uses descriptive statistics is used to analyze the data. The quantitative data analysis result showed that, OCSSCo has underscored in Loan Portfolio, Profitability, Sustainability and Operating efficiency, Assets and Liability Management credit risk factors. The result of the qualitative data collected through structured questionnaire when graded with Morgan Stanley’s credit risk assessment scales also showed OCSSCo’s underscoring in the qualitative credit risk factors. The study suggests that OCSSCO and other MFI’s institutions in Ethiopia needs to reorganize and strengthen their operations and service delivery in order to minimize their level exposure to credit risks and better manage credit risk factors. Key Words: Credit risk, Credit risk management, OCSSCO, Microfinance Institutions