Determinant Of Nonperforming Loan (The Case Of West Shoa Zone Ocssco,Oromia Regional State, Ethiopia)

Abstract

The main objective of OCSSCO is to operate profitably in order to maintain its stability and improve growth and sustainability by supporting small and micro level enterprises to reduce unemployment rate in the country. However, West shoa Zone credit and saving Share Company experience high levels of non-performing loan threatens viability and sustainability of the institution and hinders the achievement of its goals. This study was aimed at assessing the level of of non-performing loan growth rate and the related causes for the occurrence of NPL. Hence, the study was conducted to assess non-performing loan in West Shoa Zone Oromia credit and saving Share Company. To this end, the researcher has consentrat on borrowers,credit officers and management of the institution to conductquestionneries, interview and collect data through structured and semi structured questionnaire. This study used primary and secondary sources of data, which is the data from the period 2020-2021 in comparison with the branches. This research applies descriptive research design that describes the cause of nonperforming loan and also possible challenges and corrective measures for the NPLs in the institution. As well as explanatorty research design to explain the relation ship of the variables The finding of this study shows the increment of NPL rate in the institution from time to time and this is because of factors like types of loan in which the institution mainly focuses on, low level of segregation of duty, inefficient analysis of collateral and business plan of customers, lack of independency in credit provision process and appraisal. Despite of the fact that increase in the level of NPL, the institution also take different measures to minimize the level of NPL such as arranging training, applying different credit follow up techniques and awareness creatio