Factors Affecting Non-Performing Loan in the Case of the Development Bank of Ethiopia

Research Paper (undergraduate) from the year 2018 in the subject Business economics - Banking, Stock Exchanges, Insurance, Accounting, , language: English, abstract: This study is attempted to examine factors affecting non -performing loan of development bank of Ethiopia. The main objective is to examine the factors affecting nonperforming loans in DBE central region. After problem identification, research hypothesis was developed which inquires the relationship and effect of non-performing loans on development bank of Ethiopia. Both secondary and primary data were used in the research. The data is then analyzed using descriptive, correlation and regression techniques through SPSS and Stata software program.

The findings of the study revealed that gross domestic product has a positive impact on the occurrence of non-performing loans while other model variables unemployment, inflation rate and exchange rate have no impact on the occurrence of non-performing loan in which negatively affect non-performing loan. according to my study result. Also the result of the primary data indicated that in regarding about customer's specific causes, the result showed that credit culture of customers, lack of business knowledge, delayed approval, profit of the business, business location were determinants of non-performing loan while bank specific factors include poor credit assessment, poor customer selection, aggressive lending policy, borrowers culture, credit size affected non-performing loan.