Determinants Of Loan Collection Performance In Commertial Bank Of Ethiopia: Evidence From Head Office Employees

Abstract

This study aims to assess the determinants of loan collection performance at the Commercial Bank of Ethiopia (CBE), based on data from head office employees. Primary data were gathered using self-administered questionnaires and analyzed using descriptive statistics, frequency distributions, and ordered logit regression techniques. The findings from the ordered logit model revealed that loan documentation quality, technology support, training programs, loan monitoring practices, and employment skill level all have a positive effect on loan collection performance. A total of 180 employees were selected from 327total population through simple random sampling from the bank's loan staff at the head office. It is recommended that the Commercial Bank of Ethiopia (CBE) improve loan collection performance by standardizing loan documentation procedures, investing in digital systems to increase efficiency and accessibility, and providing regular training to minimize errors. The bank should also optimize technology support by adopting intuitive systems and conducting regular evaluations to ensure alignment with employee needs. Strengthening training programs tailored to loan collection staff, focusing on skill development, negotiation, and borrower engagement, is crucial. Enhancing loan monitoring practices with clear guidelines, performance metrics, and data analytics will enable proactive risk management. Lastly, prioritizing employee skill development through capacity-building initiatives and rewarding top performers will enhance overall loan collection effectiveness