Credit Risk Management Practices in Global Bank Ethiopia S.C

Abstract This study examines credit risk management practices in Global Bank Ethiopia in response to the persistent challenge of credit risk exposure within the Ethiopian banking sector. Despite regulatory reforms and the adoption of international banking standards, Ethiopian commercial banks continue to experience nonperforming loans and credit concentration risks. The study aims to assess how effectively Global Bank Ethiopia identifies, appraises, monitors, and controls credit risk, and to institution-level empirical evidence that can inform managerial and policy decisions. A mixed research approach was employed to achieve the objectives of the study. Quantitative data were collected through structured questionnaires administered to 104 employees drawn from the credit department, branch management, and risk and compliance units, selected from a total population of 141 staff members. Qualitative data were obtained through semi structured interviews with selected credit, risk, and compliance officers to capture in depth insights into credit risk management policies and implementation challenges. In addition, secondary data were gathered from internal bank documents, annual reports, and regulatory publications. The quantitative data were analyzed using descriptive statistical techniques, including frequencies, percentages, means, and standard deviations, while qualitative data were analyzed thematically to complement and enrich the survey findings. The findings indicate that Global Bank Ethiopia has relatively strong pre lending credit risk management practices. Borrower screening, financial capacity assessment, and collateral evaluation are well established and consistently applied, contributing to improved loan quality at the approval stage. However, the study reveals notable weaknesses in post disbursement credit risk management. Early warning systems for detecting problem loans are limited, and credit monitoring and recovery mechanisms are less effective than pre lending controls. These gaps reduce the bank’s ability to respond promptly to emerging credit problems and increase exposure to nonperforming loans. The study concludes that effective credit risk management in Global Bank Ethiopia is characterized by strong risk identification and appraisal practices but constrained by weaknesses in monitoring and control mechanisms after loan disbursement. The findings are useful for bank management by highlighting specific areas that require improvement, particularly in early warning systems, credit monitoring, and recovery processes. For regulators and policymakers, the study provides institution specific evidence that supports the need for strengthened risk based supervision and capacity building within the banking sector. Academically, the study contributes to the limited literature on credit risk management in Ethiopia by providing bank level empirical evidence and integrating operational practices with regulatory perspectives. Overall, the study underscores the importance of strengthening post disbursement credit risk management to enhance financial stability and sustainable banking performance in Ethiopia. The results further emphasize that improving institutional risk governance can support credit allocation efficiency, enhance borrower discipline, and contribute to long term economic development. By strengthening internal systems and regulatory alignment, banks can improve resilience against future financial shocks while supporting sustainable growth objectives. The study therefore provides timely evidence that can guide strategic reforms, operational improvements, and future academic inquiry within Ethiopia’s evolving banking and financial system environment for practitioners regulators scholars and policy designers nationally and internationally.