ASSESSMENT OF CREDIT PROVISION MECHANISM AT COMMRCIAL

BANK OF ETHIOPIA IN CASE OF BURIE DAMOT BRANCH

DEBREMARKOS UNIVERSITY BURIE CAMPUS

DEPARTMENT OF ACCOUNTING AND FINANCE

A RESEARCH REPORT SUBMITTED TO THE DEPARTMENT OF

ACCOUNTING AND FINANCE FOR PARTIAL FULFILLMENT OF THE
REQUIREMNET OF BACHELOR OF ARTS (BA) IN ACCOUNTING AND
FINANCE

BY: WUDNESH ZEMENU

ID-NO: 3902

ADVISOR: YESUF A.

MAY, 2024
BURIE DAMOT, ETHIOPIA
 Table of contents

Contents Page
CHAPTER ONE.....................................................................................................................................................1
1. INTRODUCTION.............................................................................................................................................1
1.1. BACKGROUND OF THE STUDY................................................................................................................1
1.2 Back ground of the organization...................................................................................................................2
1.3. Statement of the Problem.............................................................................................................................2
1.4 Knowledge Gap............................................................................................................................................3
1.5. Research Questions......................................................................................................................................3
1.6. Objective of the study..................................................................................................................................3
1.6.1 General objective of the study................................................................................................................3

1.6.2 Specific Objectives................................................................................................................................4

1.7 Significance of the Study..............................................................................................................................4

1.8 Scope of the Study........................................................................................................................................4
1.9 Organization of the study..............................................................................................................................4
CHAPTER TWO....................................................................................................................................................5
REVIEW OF RELATED LITERATURE..............................................................................................................5
2. THEORETICAL LITERATURE REVIEW.....................................................................................................5
2.1 Definitions of Loan.......................................................................................................................................5
2.2. Steps in lending process...............................................................................................................................5
2.3. Borrowing Requirement...............................................................................................................................7
2.3.1 Application Form...................................................................................................................................7

2.3.2. 5 C’S of credit analysis.....................................................................................................................7

2.3.3. Accounting information and credit worthiness analysis..................................................................8

2.3.4 Documentary Requirement.................................................................................................................9

2.4. Credit Investigation....................................................................................................................................10

2.5 Loan Disbursement.....................................................................................................................................10
2.6 Recovery of loan disbursed.........................................................................................................................11
2.7. EMPIRICAL LITERATURE.....................................................................................................................11

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CHAPTER THREE..............................................................................................................................................12
3. RESEARCH METHODOLOGY......................................................................................................................12
3.1. Study Area.................................................................................................................................................12
3.2. Research Design........................................................................................................................................12
3.3 Target population........................................................................................................................................12
3.4. Data Type..................................................................................................................................................12
3.5. Source of Data...........................................................................................................................................12
3.6. Sampling Techniques.................................................................................................................................13
3.7. Method of Data Collection.........................................................................................................................13
3.8. Study Variables..........................................................................................................................................14
3.9. Method of Data Analysis and Presentation................................................................................................14
Tentative work Plan..........................................................................................................................................15
Budgeting (Financial Allocation)......................................................................................................................16
REFERENCE.......................................................................................................................................................17

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 CHAPTER ONE

1. INTRODUCTION

1.1. BACKGROUND OF THE STUDY.

Credit provision is the process through which banks avail credit to borrowers in order to contribute for
the growth of economies. One of the major financial institutions that play a vital role in mobilization of
funds is Commercial bank of Ethiopia. Commercial bank of Ethiopia provides different types of loans
such as real estate loans, residential & nonresidential loans and business loans to its customer. (Rogger
& Miller, 1993).

Credit facility should be arranged to meet the Requirement of borrower. There are different types of
loan facilities designed to meet different customer requirement and their circumstances. Important
factor in deciding what types of facility may be most appropriate are: What is the loan facility for, why
does the borrower want money? How does the borrower expect to repay the loan (Coyle, 2002).

Before providing credit the banker should insure that borrower has ability and willingness to repay
advances as per agreement. That means the bank should consider margin of safety offered by security
concerned and possibility of fluctuation. Repayment of loan provide depends on credit worthiness of
borrower such as cardinal principle which is the banker should consider in case of unsecure advances
are character, capacity, capital or Reliability, responsibility, resource (3C’s&3R’s)(Shekhar,2005).

Lack of financial resources usually regarded as a major bottleneck to the development of many
developing countries. The government has set policies and strategies to extricate the country from
poverty, backwardness, and anti-domestic practices (Shekhar, 2005).

Among the policies and strategies adopted by the government, civil service reform program is one of
them. Civil service reform program (CSRP) is devised to investigate and examine the status and
competence of public institution. The program ascertains compatibility to effectively and efficiently.
Civil service reform program in general and financial sector reform program in particular is believed to
provide good opportunity for smooth credit operation of Commercial bank of Ethiopia (Aklilu, 2002)

Providing credit to business, government and individuals is one of the most important service banks
and their competitor provide and it has its own risk, however the main reason that financial firms issued

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a characteristics of incorporation by state and national Government is to provide credit to customers.
Banks and financial lenders are expected to support their local communities with adequate supply of
credit for all legitimate business and customer financial needs and price that credit reasonably in line
with comparatively determined market interest rate. Commercial banks and their competitors provide
credit to land development process, for planting & harvesting crops, for insurance companies, for
financial companies and other small business in local areas (Befekadu, 2008).

Our country Ethiopia is characterized by underutilization of land, capital and abundant man power
resources. There is scarcity of capital, lack of investment opportunity and unemployment (Aklilu,
2002). Considering this fact, commercial bank of Ethiopia provide credit for establishment and
expansion of industrial and other services with the objective of economic development in the country.
Thus the researchers want to assess credit provision mechanism of commercial bank of Ethiopia in case
of Bure damot Branch.

1.2 Back ground of the organization

The history of Commercial Bank of Ethiopia dates back to the establishment of state bank of Ethiopia
in 1942.It is legally established as a share company in 1963.Commercial bank of Ethiopia has more
than1284 branches stretched across the country and four branches in south Sudan that has been in the
business since June 2009.

CBE has reliable and long standing relationships with many internationally acclaimed banks throughout
the world. It is the leading African bank with assets of 485.7 billion birr as on June 30 th 2017.
Specifically commercial bank of Ethiopia Mankusa Branch is established with the aim of providing
Banking service to its customer and lending money to firms ,customers and homebuyers nowadays this
bank is in operation with 20 total numbers of employees.

1.3. Statement of the Problem

Credit is recognized as the important financial services that contribute to the success of business
venture. This success in turn, believed jot contribute towards economic development, however the
existence of credit facility alone does not necessarily result in supporting economic development unless
and otherwise it is combined by the existence of factors conducive to the efficient utilization of credit
funds. For instance, if the abdicative of making loan able funds available to these who want them for
productive purpose on continuous basis to be met, a loan has to be repaid on time, chronic overdue
becomes irrecoverable as a result of the next worth of the lending institution will be eroded and it will
have a serious impact of the volume of lending activity (Bekele and Wolday, 2002).

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The study undertaken on problems of credit provision mechanism by Rose and Hudgins, (2008)
identified the problems may arise in most banks due to poor selection risks among borrowing
customers(risk assessment), incomplete credit files, large proportion of loan beyond borrowers
capacity.

In the light of above factors, researcher Coyle, (2002), recommended that financial institutions should
evaluate some dimensions and suggest suitable remedies to help credit provision mechanism
performance.

1.4 Knowledge Gap

Based on authors recommendation’s the researchers initiated for it is very important to identify various
factor that lead to poor performance of the commercial bank in investigation of credit provision
mechanism. Thus knowing credit provision mechanism and the difficulties in achieving objectives
related to adequate and timely credit provision of commercial bank of Ethiopia Mankusa Branch as
well as limited loan amount, repetition of documents during renewal, time taking and misunderstanding
with the customer and also lending procedures problem is the gap that is going to be filled by the study.
Although so many researches are does on credit provision mechanism of commercial banks there is no
research that is does on commercial bank of Ethiopia Mankusa Branch regarding this title recently.
Hence the study will attempt to assess credit provision mechanism in commercial bank of Ethiopia
Mankusa Branch . The prior researchers were used judgmental sampling but, this sampling method is
some limitations to get full information; so, will use census method to get full information through by
direct interview and Questionnaires of the bank manager and its employees.

1.5. Research Questions

On the above points the study would answer the following basic Research questions.

1. What are problems faced by the bank relating to existing credit provision Mechanism?
2. What factors are considered by the bank to grant different kinds of loan to the customer?
3. What supervision and follow up procedures are implemented by the bank after giving credit?

1.6. Objective of the study

1.6.1 General objective of the study

The General objective of the study is to assess credit provision mechanism of commercial bank of
Ethiopia in case of Mankusa Branch.

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1.6.2 Specific Objectives
The specific objective of the study is:
1. To identify problems faced by the bank relating to existing credit provision mechanism.
2. To identify factor that are considered to grant credit.
3. To assess the bank supervision and follow- up implemented after granting credit for customer.

1.7 Significance of the Study

The provision of credit is organized as essential elements in reducing and eliminating poverty, and
improves individual wellbeing, group and organization performance in a country. During the time of
credit provision for the customers there will be so many significance such as on the side of creditors
(commercial bank of Mankusa branch to get profit and rise the capital and on sides of customers to
development of investment through the credit .Therefore the study will have the following importance
to bank and outside bodies. The study is supposed to create good understanding about credit provision
mechanisms of the bank our researchers and other bodies. The researchers will develop knowledge
about credit provision system. It will have an advantage for other researcher by locating hint to work
more. Finally the study will forward some essential Recommendation in the area of credit provision
mechanism that will benefit the bank.

1.8 Scope of the Study

Commercial banks of Ethiopia have many branches and districts. However due to cost and budget
constraint the study delimited to commercial bank of Ethiopia Mankusa Branch. The study focus on the
assessment of credit provision mechanism of commercial bank of Ethiopia Mankusa Branch The study
used both primary and secondary data. Necessary information is collected from the response of credit
administrators of commercial bank of Ethiopia Mankusa Branch through questionnaires

1.9 Organization of the study

The research paper contain four chapters, the first chapter includes, back ground of the study,
statement of the problem, background of the organization objectives of the study including of general
objective and specific objectives the scope of the study significance of the study, knowledge gap .The
second chapter includes theoretical literature review and empirical literature review where the
researchers intend to review the research areas like bank procedures and written documents. The third
chapter involves Research Methodology includes the study area, reseach design, data type, source of
data, methods of data collcetion, sampling techniques etc. Chapter four is working of cost and time
budgets.

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 CHAPTER TWO

REVIEW OF RELATED LITERATURE

2. THEORETICAL LITERATURE REVIEW

2.1 Definitions of Loan

Loan is the amount of money provided by the bank to the firm or individual investor in a credit basis to
as is repaid in the future the interest charged for the use of that money plus the principal amount. It is
the largest source of income for banks. Most bank loan involves personal relationship between banker
and borrower (Rosier and miller, 1993) The division of department reasonable for making
recommendation on the fate of most loan applications is the credit department (Rose and Hudgins,
2008).Loan has three terms which can be classified as short term, loan agreed to be repaid within one
year, medium term, loan agreed to be repaid in one to five years, and long term, loan agreed to be
repaid in one to fifteen years. There are different types of loans including real estate loan residential
and non-residential mortgages, business loans (commercial and industrial loans) and consumer loans
(Roger and miller, 1993).

Loan is an arrangement in which lender gives money or property to a borrower and the borrower agrees
to return the property or repay the money, usually along with interest, at some future points in time.
There is a predetermined time for repaying a loan, and generally the lender has to bear the risk that the
borrower may not repay a loan (through modern capital markets have developed many ways of
meaning this risk) (Aklilu, 2002).

An amount of money is advanced to a borrower to be rapid at a later date, usually with interest. Legally
a loan is a contract between a buyer (a borrower) and a seller (a lender) enforceable under the uniform
commercial code. The term and conditions for repayment of a loan including the finance charge or
interest rate are specified in a loan agreement. A loan may be payable on demand (a demand loan) in
equal monthly installments (an installments a loan) (Bekele, 2002)

2.2. Steps in lending process

1. Find prospective loan customer
Most loans to individuals’ arise from direct requests from a customer who approaches a member of the
lenders staff and asks to fill out a loan application. Business loan requests, on the other hand, often arise
from contract of the loan officers and sales representative makes as they solicit new account from firms

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operating in the lenders market area. Increasing the lending Game is becomes sales position sometimes
loan officer will call on the same company for months before the customer. Finally agree to give the
lending institution try by filling out loan application. most loan department personnel fill out customers
contract report when they visit a prospective customers place of business .This report is updated after
each subsequent visit, giving the next loan officer crucial information about prospective client before
any other personal contract is made. (Rose and Hodgin, 2000)
2. Evaluating a prospective customer character & sincerity purpose.

One’s a customer request loan; an interview with loan officer usually follows; giving the customer the
opportunity to explain his /her credit needs. That interview is particularly important because it provides
opportunities for the loan officers to assess customers’ character and sincerity purpose. If a customer
lacks sincerity in acknowledging the need to adhere to the terms of loan this must be recorded as a
strong factor weighting against approval of loan request. (Ibid)

3. Making sit visit and evaluating a prospective customer Record

If a business as a mortgage loan is applied for loan officer often makes a sit visit to asses’ customers’
location and conditions of property and ask clarifying questions. The loan officers may contact other
creditors who have provisory loaned money to those customers to see what their experience has been.
Did the customer fully adhere to previous loan agreement and where require, keep satisfactorily deposit
balance? A previous payment record often ravels much about the customers’ character, sincerity of
purpose and sense of responsibility in making use of credit extended by lender (Ibid).
4 Valuation of prospective customers financial conditions
All is favorable to this point, the customer is asked to submit several crucial document the lender needs
in order to fully evaluate loan request including complete financial statements in case a corporation
board of director`s resolution authorizing the negotiation of loan with lender .
5 Assessing possible loan collateral & sinning loan agreement
If loan committee approves customers request the loan officer or the credit committee will usually
check on the property or other assets to be pledged as collateral to insure the bank has immediate access
to collateral or can a quire title to property involved if the loan agreement is defaulted.

6 Monitoring compliance with loan agreement & other customer needs

The new agreement must be monitored continuously to insure that the terms of the loan are being
followed and that all required payment of principal and interest are being made are compromised For
larger commercial credits the loan officers will visit the customers’ business periodically to check the
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firm progress and see what other service the customer may need usually officer or other staff member
enters information about new loan customer un a computer file known as customer profile.(Rose, etal
2008).

2.3. Borrowing Requirement

Borrowing requirement and procedures vary from bank to bank but the procedure described here
illustrate what can generally be expected when an entrepreneur approaches a bank to obtain credit i.e.
get a loan (James, 2002).

2.3.1 Application Form

The loan application form is the instrument through which a client formally applies for a loan. The
application form serves for several purposes. First it is an expression of the clients desire to borrow
from Commercial banks and it is an expression of the Commercial banks acceptance of the application.
Finally as accounting documents, it is both a requisition for payment and an acknowledgment of
payment. When applying for a loan you must prepare a written loan proposal make you best
presentation in the initial loan proposal and application you may not get a second opportunity (Lakew,
1998).

Always begin your proposal with a cover letter or executive’s summary clearly & briefly explain who
you are. Application form should include, your business background, the nature of your business, the
amount and purpose of your loan request, your requested terms of repayment, how the funds will
benefit your business, and how you will repay the loan keep this cover page simple and device.

Many different loan proposal formats are possible you may want to contact your commercial lender to
determine which format is best for you were writing your proposal don’t assume the readers failure
with your industry or your industry business. Always it include, industry specific details so your reader
can understand how your particular business is run what industry trends affect it.

2.3.2. 5 C’S of credit analysis

The bank should undertake detailed study of the following aspects.

1. Character; the loan officer must be convinced the customer has a well-defined purpose for
requiting credit and serious attention to repay it. The loan officer must determine if the purpose
is consistent with the lending institution`s loan policy.
With a good purpose However the loan officer must determine that the borrower has a
responsible attitude towards using borrowed fund is truth full in answering question and will

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 make every effort to Repay what is owed Responsibility, truth fullness, serious purpose and
serious intention to repay all movies make what loan officer calls character.
2. Capacity: - The loan office must be sure the customer has authority to request loan and the legal
standing to sign a binding loan agreement this customer characteristic is known is the capacity
to borrow money, for example, in most areas a minor (e.g. under age 15 or 21) cannot legally be
held responsible for a credit agreement .
3. Collateral: - In assessing the collateral aspect of loan request, the loan officer must ask does the
borrower possess adequate new worth or own enough quality assets to provide adequate support
for loan. The loan officer is particularly sensitive to such features as the age, condition. And
degree of specialization of borrower assets. Technology plays an important role here three as
well. If borrower assets technologically obsolete, they will have limit value as collaterals
because of difficulty of finding a buyer for those assets should the borrowers in come flatter.
4. Conditions: - the loan officer and credit analyst must be aware of recent trades in the borrower’s
line of work or industry and haw changing economic condition might affect the loan. A loan can
be look very good on payer only to have is value recorded by declining sales income in
recession or by high interstate occasioned by inflation. To asses industry and economic
condition most lender maintain file of information newspaper clippings, ,magazines, articles and
research report on the industries represented by their major borrowing customers.
5. Control: - The last factor in assessing borrowers’ credit worthiness status is control. This factors
centers on such questions as whether changes in law and regulation could adversely the
borrower and whether loan request meet the lenders and the regulatory
Authorities’ standards for the loan quality (Gup and kolari, 2005)

2.3.3. Accounting information and credit worthiness analysis

Accounting information has the highest relatives hare in total value of this information. However, is not
sufficient. It is necessary to point out range of the needed and sufficient accounting information for
needs of credit analysis. The minim as required number of accounting reports, presented by the loan
applicant is as follows: Accounting balance sheet, Profit and loss account, Statements of liability on
pervious credit and their serving, Statement of changes in equity, Statement of cash flow, Audit report
on the company’s financial position. To these accounting documents we can add comparative report on
a number of balancing position of loan applicant. It is recommended that this combative report shows
the respective balancing passion in absolute and value terms. Along these lines a comparative report on
the position from the profit and loss account will be use full, as well as detailed analysis of financial

8
situation of credit applicant and the tendencies in the development over the last accounting periods
(Daniela, 2008).

In general, the following information is usually asked when entrepreneurs apply for a loan Name,
Address, Telephone No, regal form of and nature of the business, registrations with government
business registries such as the security and exchange commission (SEC). The department of trade and
industry, or the city of municipal government, product lines, amounts of capitalization. Name of owners
(partners) stock holders, type, amount purpose of loan applied for and description of collateral offered
(Demergian, 2007).

2.3.4 Documentary Requirement

The request papers should preferably be prepared for before applying for a bank loan, incomplete
documents can cause delays. The following documents are commonly asked for.

Residence certificates tax payers’ identification number.

BIR stamped tax declaration for the past three years, financial statement for the past three years,
bank & grade references.
Mini-business plans or projects feasibility study;

Especially for borrowers who are just starting in business. The business basically contains for cast in
term of money of what the business is going to be like for each month of a given year. It gives
estimates of production expenses and expected sales revenues.
Business registration papers for single proprietorship, registration with the department of trade and
industry and with the municipal office. For partnerships, articles of partnership and joint resolution to
borrow-for corporations, security and exchange commission critical articles of incorporation with by-
laws, boar resolution to borrow and stock holder bio data for corporative, registration with the because
of cooperative department.

Paper pertaining to collateral: for real estate mortgage copy of location plans with vicinity map, tax
clearance, tax receipts, tax declaration, insurance floor plan or pictures. For chattel, registration
certificates, insurance loan (credit) evidencing payment in the case of important equipment for
exporters’ letters of credit, confirmed purchase orders and sales contracts.

9
2.4. Credit Investigation
While investigating credit, the company’s background and history covering the date of registration (in
corporation), the type of business organization, records of registration name of incorporators, and a
summary of operating records should be considered (Demergian, 2007)..

During providing credit the following points should be assessed by the bank.

Financial condition: the current break down of financial statement reflecting the result of
operations for the past three years. It also includes schedules, explanation of extra ordinary items,
break down of merchandise and receivable and full explanation of all inter-company loans, and
merchandise transactions.
Dealing with government agencies; the lending bank checks on the credit availed of by the
applicant form lending government agencies, the nature of the loan. Collateral offered, and
installment payment, including arrear ages if any.
Banks experience with the borrower if the applicant is old client.
Court asset; The bank check on civil and criminal case involving credit applicants. It also obtains
information of the applicant from competitors. After the credit investigation and supporting have been
accomplished and evaluated, a recommendation for approval is prepared and the release of the loan is
facilitated.

2.5 Loan Disbursement

It is the process which comes after loan approval through which to reality of loan is carried out after
verification by the bank if borrowers full fill all requirements. Before disbursing the loan, credit
analysis is important aspects and difficult talk indifferent banks professional employees should be
assigned to make such tasks and the management of banks more than anything should do in accordance
with these Responsible employees’.
Follow up and supervision of borrower is necessary to minimize risk arising from misappropriation
and misuse of borrowed funds. An effective supervision should take care of the following.
1. End use of fund, first of all the bank should sure that fund lent are used for the purpose of which
they have been lent in case of term loan end use of fund can be insured by disusing the money
directly to supplies of the fixed asset rather than to borrower ensuring proper end use of capital
advances is comparatively difficult.
2. Progress or unit once the borrowing starts production the bank should monitor its sales and
profitability. Inter firm comparison may be made to managerial.

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 3. Parts ledger accounts care full and consistent what should be kept over barrower account with
the bank?

2.6 Recovery of loan disbursed

1. In order to insure timely of loans and advances banker should take due precautions both at appraisal
stage and after disbursement of loan precaution of appraisal stages:- select borrower properly, ensure
that the projects are visible, make proper assessment of borrowers financial needs, projects are visible,
make proper assessment of borrowers finical needs, fixed are visible , make proper assessment of
borrowers financial needs, fixed repayment after providing loan consumption etc. After disbursement
of loan the banker should carry out effective follow –up and supervision.

2.7. EMPIRICAL LITERATURE

Research made in Dominican Republic about the provision of loans by developing countries specialized
lender indicated that borrower characteristics, loan characteristics, regulatory instruments can affect
efficient provision of loans (k.c.sharma,p.josh 2010)

According to C.chris & R Santos,(2013) study on credit rating and loan provision performance
indicated that years of experience in running, the project age, credit rationing, loan diversion, business
management skills, alternative sources of income, un favorable weather condition are among factors
which influence effectiveness of loan provision and its repayment

The research on loan provision for customers indicated that education, income, loan supervision,
suitability of repayment period, availability of other credit source are important factors that enhance the
loan repayment performance Jamal(2003)

A research also made on challenges of loan provision indicates that, lack of in-depth knowledge of
employees, in adequate project monitoring, uncontrollable factors such as economic down turn, change
in taste and preference, natural hazards and in adequate planning by credit customers are the major
challenges that affect credit provision and its repayment Muluken(2014)

What i have learnt from the empirical evidence are: as central policies, regulations and directives
different from country to country, banking laws, and regulations are also different from one another
thereby every bank of the countries is highly influenced by the government regulatory bodies. When i
come to the empirical evidence of our country, particularly in connection with commercial bank of
Ethiopia, diversification of loans, lack of managerial skills, in adequate follow up coverage &
unsuitable loan repayment periods are played the major role in affecting the loan.

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 CHAPTER THREE

3. RESEARCH METHODOLOGY

3.1. Study Area

This study is conduct in Mankusa town, West gojam zone Amahra region, which is 170km from Bahir
Dar on assessment of credit provision mechanism (in a case study of commercial bank of Ethiopia
Mankusa branch). The major components of the city inhabitants are small scale merchants, civil
servants, and daily labors (Mankusa town Administration, 2019).

3.2. Research Design

So as to put the objective of the study into effective, descriptive research method is conduct on
assessment of credit provision mechanism (a case study of commercial bank of Ethiopia Mankusa
Branch). Under this study the researchers used descriptive type of research design to describe the
characteristics of the study. Descriptive research aims at defining or describing the sample or
population and social situation being studies.

3.3 Target population

The target population of this study will the whole employees (i.e 17 male and 3 female ) total of 20 of credit
provision mechanisms of commercial bank of Ethiopia in case of Mankusa branch in Mankusa Town.

3.4. Data Type

Both quantitative and qualitative data collect from different sources are organize and present in the way
that it gives answer to the research question. Quantitative data in this study are helping to know the
numbers of size and amount of employees who participate in credit provision mechanism of Bure
damotbranch and also, Quantitative data gather from the distribute questioners are expressed in terms of
numbers and percentages. And Qualitative data are helping to know the attitude, knowledge, skill and
belief of employees to ward performance of credit provision of mechanisms.

3.5. Source of Data

The researchers use both primary and secondary source of data. Primary data is obtained through
questionnaires. The secondary data are collect from manuals and publish & unpublished documents
relating to banks credit provision mechanism.

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3.6. Sampling Techniques
Census sampling is an attempt to gather information about every members of the population .census
method is that process of the tactical list where all member of a population of are analysis.

The sample techniques of this study are conduct based on census sampling on non-probability samples
techniques. The researchers use census sampling techniques is the total population of the Bure damot
bank branch of organization are small so that the researchers to are to collect data very easily.

For this study the researchers will use census sampling method in order to get reliable and accurate data
collect in the respondents.

The purpose of this study, the researchers will take only employees working on credit provision to
obtain adequate information. From 20 employees of the bank the total numbers of employees working
in credit provision department/sector in Bure damot Branch commercial bank are 20(17 males and 3
females). Thus 20 credit providers in commercial bank of Ethiopia in Bure damot Branch including
credit manager and 2 auditors. Thus 20 Employees will participate in the study.

3.7. Method of Data Collection

This research proposal the researcher’s data collect two methods through interview and Questionnaires,
why the researchers select use interview and Questionnaire? The researchers use interview because
from the respondents more information and that too in greater depths can be obtain and the second
methods Questionnaires are why use because the respondents have adequate time to give well thought
out answers.

From the primary data sources the researchers use face to face interview with managers and others
employees of the organization scatter/distribute Questionnaire will be also use both open ended and
closed ended type which is administer to the respondents of the study area and From the secondary
sources the researchers use publish and unpublished documents relating to banks credit provision
mechanism.

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3.8. Study Variables
While conducting the study the following variables are seriously reflected.

Variables Operational Measurements

Loan Repayment Time Requirement
Collateral List real property
Documentary Requirement Projects feasibility study
Financial condition Financial statement reflecting the result of operations

3.9. Method of Data Analysis and Presentation

After data has been collect, data analysis is made. The researchers use the data to describe, analyze and
examine the finding of the study. The data collect are organized, summarized, and describe by using
words, numbers and percentages. After the data have been collect and analyze, the researchers present
the data by using percentages

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 Tentative work Plan
Starting from the beginning to the end the research takes various procedures and stages .The researcher
shall consider this procedures and design the following tentative work schedules.

No. Activities Months in 2015 E.C/ 2024 G.C.

1 Title Submission, Verification and Advisor x

placement

2 First proposal submission x

3 Second & final proposal submission x

4 proposal Defense x

5 Research data collection x

6 Research data analysis x

7 Research first draft submission x

8 research returning & 2nd round submission x

9 Final Thesis Submission x

10 Final thesis submission to department x

11 final thesis presentation x

12 Graduation x

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 Budgeting (Financial Allocation)

The task of accomplishing this research will be cover by the own financial supply of the researcher.
Thus, the cost and quantity of the necessary materials in the ongoing process of the research can show
in the following financial breakdown table.

NO. Activities & Quantity Price/unit Total

facilities price

1 pen 1 pack 15 750

2 paper 3 pack 550 1650

3. typing 4 times 1,000 4,000

4. transport 10 times 50 500

5. Editing and 3 times 1000 3,000

printing

6. internet cafe and Minute & 1,500 1,500

mobile internet hour

7. Miscellaneous - 2,000 2,000

8. Total 13,400

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 REFERENCE

 Akililu “The importance of finance institutions in developing economies: country

experience and policy implications to Ethiopia”, NBE staff working paper,
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