Abstract:
This study presents a comprehensive assessment of credit risk management practices within the Commercial Bank of Ethiopia Ambo district and branches in Ambo town, focusing on internal and external sources of credit risk, employee training and development, credit policies and guidelines, and challenges hindering performance. The objective of this research is to assess the credit risk management practice in the case of commercial bank of Ethiopia Ambo district and branches in Ambo town. 115 samples were involved at district offices and branches who work on credit to get reliable and valid information about the study subject. Census sampling technique is employed in which all population is involved in the study. Descriptive design was used to meet the specified objective and quantitative methods of research approach were employed and data was collected through the use of questionnaires, descriptive analysis were done through the use of statistical packages for social sciences version 26. The findings reveal moderate levels of satisfaction across various domains, as indicated by the grand mean values derived from survey responses. For internal and external sources of credit risk, the grand mean value was 3.13, reflecting a moderate level of satisfaction overall, with notable variations in responses. In other way, the grand mean for employee training and development was 2.94, suggesting a low satisfaction level, and highlighting areas for improvement. Additionally, the grand mean for credit policies and guidelines was 3.73, indicating a balanced perspective among respondents regarding the effectiveness and clarity of credit policies. Based on the results, several recommendations are proposed to enhance credit risk management practices within the organization. These include implementing comprehensive training programs to address skill gaps among staff involved in credit assessment and management, leveraging technology to improve the accuracy and efficiency of credit risk monitoring processes, and enhancing communication and coordination among departments to streamline workflows. Furthermore, there is a need for regular reviews and updates to credit policies and procedures to ensure alignment with changing market conditions and regulatory requirements
