Determinants of Credit Management Practices In Commercial Banks: The Comparative Study Between Public and Private Banks in Dire Dawa

This study compared credit management practices in public and private commercial banks in Dire Dawa. The descriptive and explanatory research method was used, as well as primary and secondary data sources. It was also used mixed research method that included both quantitative and qualitative data. As a data collection method, a structured, self-administered questionnaire was used in the study. The study's was including 106 participants from commercial bank personnel who are directly or indirectly involved in credit processing and administration departments at the branch and district levels. Purposive sampling was used to choose research participants, and questionnaires were returned with a response rate. The data collected through questionnaires were analyzed with descriptive statistics using the Statistical Package for Social Science (SPSS)-20. Respondents reported that the process for a given loan application takes an average of 30 days. Only 59.1% of public bank respondents and 65.5% percent of private bank respondents in the study reported that they strongly agreed that the bank's loan approval procedure was satisfactory, among the respondents said that the bank used an extension of the life of the loan in order to collect the loan. The bank faced problems with credit management practices, including non-performing loans at various levels, and identified the causes of NPLs. The researcher came to the conclusion that the bank used various credit management tools, techniques, and assessment models to manage credit risk and reduce loan defaults. It is recommended that the bank have credit management policies and strategies that incorporate the ideas of clients and employees to become more competitive in the banking industry and meet its vision.