Table of Contents

Table of Contents
Table of Contents.........................................................................................................................................................i
List of tables and character........................................................................................................................................iv
Declaration..................................................................................................................................................................v
Approvals...................................................................................................................................................................vi
Acknowledgment......................................................................................................................................................vii
List of Acronyms.....................................................................................................................................................viii
ABSTRACT..............................................................................................................................................................ix
CHAPTER ONE.........................................................................................................................................................1
1. INTRODUCTION............................................................................................................................................1
1.1 Back of ground of the study.................................................................................................1
1.2 Profile of the Organization...................................................................................................2
1.3 Statement of the problem...................................................................................................2
1.4 Objective of the study..........................................................................................................3
1.4.1 General objective of the study........................................................................................3
1.4.2 Specific objectives of the study.......................................................................................3
1.5 Research Questions.............................................................................................................3
1.6 Significance of the study......................................................................................................4
1.7 Scope of the study...............................................................................................................4
1.8 Limitation of the study.........................................................................................................4
1.9 Organization of the study....................................................................................................4
1.10 Definition of key terms........................................................................................................4
CHAPTER TWO........................................................................................................................................................6
2. RELATED LETRATURE REVIEW...............................................................................................................6
2.1 Micro finance in Ethiopia.....................................................................................................6
2.1.1 The policy and regulatory practices of Micro finance in Ethiopia....................................6
2.1.2 Characteristics of Micro Enterprises................................................................................6
2.1.3 Term and conditions for Micro Enterprises loan.............................................................7
2.2 Overview of credit...............................................................................................................7
2.2.1 Advantage of credit..........................................................................................................8
2.2.2 Disadvantages of credit.....................................................................................................................8

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 2.2.3 Features of credit...............................................................................................................................8
2.3 Credit period.............................................................................................................................9
2.3.1 Factors affecting credit period..........................................................................................................9
2.4 Credit instruments.............................................................................................................10
2.5 Credit Policy.......................................................................................................................11
2.5.1 Components of credit policy..........................................................................................11
2.5.2 Credit policy effects.......................................................................................................12
2.6 Credit Analysis...................................................................................................................12
2.6.1 Analysis of credit file.....................................................................................................12
2.7 Credit information.............................................................................................................13
2.8 Credit evaluation and scoring............................................................................................13
2.9 Screening and Monitoring..................................................................................................14
2.10 Collection policy and procedures.......................................................................................15
CHAPTER THREE..................................................................................................................................................17
3. RESEARCH DESIGN AND METHODOLOGY..........................................................................................17
3.1 Introduction.......................................................................................................................17
3.2 Research Design................................................................................................................17
3.3 Research Approach............................................................................................................17
3.4 Source of Data...................................................................................................................17
3.4.1 Primary Source.............................................................................................................17
3.4.2 Secondary Source........................................................................................................17
3.5 Data Collection Techniques................................................................................................17
3.6 Target Population, Sampling Techniques, sample size.......................................................18
3.6.1 Target Population........................................................................................................18
3.6.2 Sampling Techniques.................................................................................................18
3.6.3 Sampling Size...............................................................................................................18
3.7 Method of data analysis and Interpretation......................................................................18
3.8 Ethical Consideration.........................................................................................................18
CHAPTER FOUR....................................................................................................................................................20
4. Data Presentation, Analysis and interpretation..............................................................................................20
4.1 Introduction.......................................................................................................................20
4.2 Analysis of Data................................................................................................................20
CHAPTER Five........................................................................................................................................................29

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 5. Summary, Conclusion and recommendation..................................................................................................29
5.1 Summary............................................................................................................................29
5.2 Conclusion.........................................................................................................................29
5.3 Recommendation..............................................................................................................30
BIBLOGORAPHY.......................................................................................................................................................
BIBLOGORAPHY.......................................................................................................................................................
APPENDIX...................................................................................................................................................................

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List of tables and character

Table 4.1Demographic Characteristics of respondents………………………………….……21

Table 4.2 Credit collection effort of the institution………………………………………...…22
Table: 4.3 Credit provision requirements of the institution……………………………………
23

Table: 4.4 Borrowers delay in returning credit taken on time at maturity………………..…...23

Table 4.5 Credit management problem of the institution……………………………………...24
Table 4.6Transaction recording system of the institution……………………………..………24
.
Table 4.7 maximum and minimum limit of credit the institution provides……………..…..…
25
Table 4.8 supervision and Follow up of client operation ………………………………….….25
Table 4.9 Evaluation of clients history……………………………….……..............................26
.
Table 4.10 Credit beneficiary of the institution………………………………………….…….26
Table 4.11 The role of the institution in financing small and micro
enterprises………….........27
Table 4.12 The time of providing financial service to
agriculturalists………………………....27
Table:4.13 Availability of finance the institution provides to small
enterprises…………........28

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Declaration
We, the undersigned, declare that this senior essay is our original work and has not been
presented for a degree in any other University and that all sources of materials used for the paper
have been duly acknowledged.
Declared by: Group members:

Group Members Name Signatures

1. Ketema Asfaw ___________

2. Mekonnen Worku ___________

3. Mergo Mulugeta ____________

4. Magarsa Daraje ____________

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Approvals

Advisor Name: -
Signature: -
Date: -

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Acknowledgment
“If you find something very badly, you can achieve it. It may take patience, very hard work, a
real struggle, and a long time but, it can be done. That much faith is a prerequisite of any
undertaking.” Margo Jones (1913-1955).
First, of all we would to say, thanks ours almighty God, Secondly, we would like to express our
profound thanks our advisor for his intensive and extensive assistance, patience and for his
unreserved and valuable advice on every step of the research paper. We would like to extend our
thanks to Oromia Credit and Saving association Burayu branch particularly the branch manager
and loan officials who have presented all the necessary information about the credit
management.

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List of Acronyms
MFIS=Micro finance institutions
OCSSC=Oromia credit and saving share company
WEDP =Women Entrepreneurship Development Program

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ABSTRACT
The major purpose of the study is to assess credit management of Oromia credit and saving
Share Company: in case of Burayu branch. Credit management is the process of controlling
and collecting customer payment and a credit management system is a system for handing
credit accounts from assessing risk and determining how much credit to offer to send out bill to
collect payments. Credit management systems are available through a number of companies,
and they can be necessary in cases where a system needs to communicate with a financial
institutions existing computer network, or in other situations in addition to this, the study has
tried to dig out major areas of problems in relation to credit management & challenges
tpertaining to credit provision as per the company. For this study, sample respondents were
selected judgmentally from the total of 15 employees (15) of the branch institution to provide
the researcher accurate information about the institution. The researcher has used up more of
primary and less of secondary source of data to analyze the stated problems in the branch in
order to arrive at possible conclusion and recommendation. The question type elected for this
study is closed ended question type to collect the data. The scope of the study is delimited to
Oromia credit &saving Share Company of Burayu branch. For this study, qualitative and
quantitative research design were elected. Finally, the researcher has used descriptive data
analysis to analyze and present the data and recommended the institution to correct the
discovered problems for future effective performance of the branch institution.

KEY WORDS: - Credit management, MFI

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CHAPTER ONE
1. INTRODUCTION
1.1 Back of ground of the study
In developing countries, including Ethiopia, Micro Finance Institutions (MFIs) emerged with
unique opportunity to poor people who do not have access to commercial Banks. Microfinance
involves the provision of micro-credit, savings, and other services to the poor that are excluded by
the commercial banks for collateral and other reasons. Microfinance is relatively new to Ethiopia
and came to appear in1994/95 with the government’s Licensing and Supervision of Microfinance
Institution Proclamation.
Most of the time economic problems are common to all poor society in the world even if its type
and degree differ from time to time (Begley Brigham, 2008). Economic problems are present in
both urban and rural areas. However, people may take different mechanisms to overcome this
problem. Credit is one mechanism of overcoming economic problem for society (ibid).

Micro Financial Institution is type of banking service that is provided to unemployed or low-
income individuals or group who would otherwise have no other means of gaining financial
services (Begley Brigham, 2008). Ultimately the goal of micro finance is to give low-income
people an opportunity to become self-sufficient by providing a means of saving money,
borrowing money and insurance (ibid).

To undertake proper mobilization of funds, financial institutions practices credit management.

Credit management means the total process of lending starting from inquiring potential
borrowers up to recovering the amount granted. In banking sector and other financial
institution, credit management is concerned with activities such as accepting application,
loan appraisal, loan approval, monitoring, recovering of non-performing loans (Charles
Smithson, 2003)

Credit Management is extremely important as granting credit is considered to have equivalent

of investing in a customer. However, [payment of debt should not be postponed for too long
as delayed payments and bad debts are a cost to the company. Thus, efficiency and
effectiveness in performing each step of loan processing using various parameters has
significant effect on performance of credit management (Hettihewa, 1997,).

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 Currently, there are many licensed MFI in Ethiopia and around 305 micro finance intuition
branches in Oromia regional state operating in both rural and urban areas. Oromia credit and
saving share company was founded in 1995in the Oromia regional state (OCSSC manual,
2015). Therefore, this study was conducted on Oromia credit and saving share company of
Burayu branch which was founded in 2007G.C to assess credit management system in the
branch.
1.2 Profile of the Organization
As of 2010, there were 30 MFIs operating in the urban and rural parts of the country and have
tried to reach more than 2.3 million poor clients. Indeed, the figure seems large in absolute
term; however, it is small in relation to the potential poor clients (OCSSC manual, 2015).
Oromia Credit and Saving Share Company /OCSSC/ is one of the largest Micro financial
institutions in Ethiopia. It has been providing MFI services mainly in Oromia National
Regional State. Besides Oromia, it has branches in Harari National regional state and Addis
Ababa City Administration. OCSSC also opened branches in Dire Dawa City Administration
particularly to provide loan for women entrepreneurship in collaboration with Women
Entrepreneurship Development Program /WEDP/. The number of full-fledged branches of the
company reached 606 in 2020. Out of 606 branches, OCSSC of Burayu branch is one of a
successful self-sustained MFI which is recently providing financial services to farmers, women,
and Entrepreneurs’ (business man’s). OCSSC of Burayu branch was founded in 2007 having a
distance of 15km from Addis Ababa in the Oromia regional state Finfinnee special zone
(Oromia credit and saving share company manual, 2015).
1.3 Statement of the problem
Credit plays an important role in the lives of many people and in almost all industries that
involve monitory investment in some form. When credit is allocated poorly it raises costs to
successful borrowers, erodes the fund, and reduces financial institutions flexibility in redirecting
towards alternative activities. More over the more credit the more the higher the risk associated
with it (Charles Smithson 2003).

The problem of loan default, which is resulted from poor credit management, reduces lending
capacity of financial institutions. The issue of credit management has a profound implication
both at the micro and macro level. It also denies new applicants' access to credit as the MFIS’s

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cash flow management problems augment in direct proportion to the increasing default (Shekhar
K.C. ,1985)

In the case of developing countries such as our country Ethiopia, most of the population
depends on traditional agriculture practice (hand to mouth farming) with very low know how
on returning the credit taken MFIS on time and with few or no income generation on their
activity. Besides of this, there might be arise various reasons such as lack of good credit
management policy, difficulties of determining the credit worthiness or gathering of
information about the debtors by the creditors to extend credit, Creditors weak supervision
process, weak collection efforts after loan by creditors may arise in most MFI (OCSSC manual,
2015).

The factors listed above initiated or motivated the researcher therefore, the researcher tried to
identify the problem and finding possible solution for those problems in the studies of assessment
of credit management over Oromia credit and saving (S.C) in case of Burayu branch. However,
many researchers have conducted their assessment on this title, they did not consider assessing
credit worthiness of the borrower and transaction recording system of micro finance
institutions yet. Therefore, it makes this research to differ from other researches done on the
same title.

1.4 Objective of the study

1.4.1 General objective of the study
 The main objective of this study is to assess credit management and to identify the
major challenges and to provides appropriates recommendation in OCSSC of Burayu
branch.
1.4.2 Specific objectives of the study
1. To assess the measures taken by the branch institution to collect credit default.
2. To understand credit provision requirements(criteria)of the branch institution
3. To assess the reason for delaying of customers to pay the credit taken.
4. To know the major problems related to credit management in the branch
institution

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 1.5 Research Questions
1. What measures are taken by the branch if there is a problem with collection of the
credit at maturity?
2. How suitable are criteria are demanded by the institution to provide credit?
3. What are the main reasons for delaying to return the credit taken?
4. What are the major challenges related to credit management in the branch
institution?

1.6 Significance of the study

The importance of this study is to narrow the interest gap between the borrower and lender in
pay the credit on time. It helps the party that lends its money to the borrower not to fall under
the punishment of credit default by receiver. In addition to this, it serves as a source of
information for further research. It relates the theory with practice provides knowledge
and information about the issues of credit management and provides valuable information to
decision maker including the institution.
1.7 Scope of the study
Geographically the study is conducted on OCSSC of Burayu branch. It is also conceptually
delimited on the assessment of credit management policy, procedures and system of credit
management in this branch. The time coverage of this study was from 2010-2012 Eth.c.
1.8 Limitation of the study
This study was faced by some constraints in collecting of the data. Some of the constraints
when collecting the data by the researcher were: - Shortage of previously conducted researches
related to credit management in the branch institution for reference and unwillingness of
respondents to provide information as needed, there lack of enough time and expensiveness of
material required.
1.9 Organization of the study
This research paper incorporated five chapters. The first chapter contains background of the
study, back ground of the organization, statement of the problem, objective of the study,
significance of the study, scope of the study limitation, organization of the paper and definition
of key term. Chapter two deals with the literature review. The third chapter is about research
methodology and it include research design, data type, method of data collection and source,

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 sampling techniques and size and method of data analysis. The fourth chapter is about data
analysis and presentation. The final chapter is conclusion and recommendation of the study.
1.10 Definition of key terms
Credit management means the total process of lending starting from inquiring potential
borrowers up to recovering the amount granted.
MFI is type of banking service that is provided to unemployed or low-income individuals or
group who would otherwise have no other means of gaining financial services.

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CHAPTER TWO
2. RELATED LETRATURE REVIEW
2.1 Micro finance in Ethiopia
Banking service started in Ethiopia since 1905 and a lot of development has taken place in the
financial Sector. However, none of these financial institutions has provided services to majority to
the poor community in the Ethiopia. The main reasons for such inaccessibility to these formal
banks are: -
The terms and conditions of the banks particularly the issues of collateral and equity contribution
are way beyond the reach of the poor and small loans are often characterized by high transaction
costs making difficult to the banks to make profits.
Despite the above situation, lots of efforts are underway to serve the financial needs of the poor
through the government and non-government organizations. It is even interesting to see number
of cases where micro financing activity becoming a strategic component in the overall poverty
alleviation programs of many government offices, national and international NGOs.
According to micro finances development review, vol. No. 2, 2000, the operation of micro finance
activities in Ethiopia was came into existence in earlier times by NGOs, and they were delivering
relief and development services such as emergency food, water, health and education facilities, etc.
Later on, its operation is carried on by government and non-government institutions and extending
their services by providing micro credit to the informal sector (small and micro enterprise)
activities for the rural and urban poor in order to improve their lives and to create employment
opportunities.
2.1.1 The policy and regulatory practices of Micro finance in Ethiopia
The steadily growing demand of the poor for credit services has resulted in the emergence of
number of micro-finance organizations in the country. The government has recognized the
situation ad issued a micro-financing policy that went into effect on July 5, 1995 under
proclamation No. 40/1996. The policy, which is known as the Licensing and supervision of micro-
financing institutions, establishes a close partnership between micro-finance institutions and the
National Bank of Ethiopia (NBE). It states the purpose and objectives of such institutions should
be in delivering credit and saving services to rural and urban poor.

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 2.1.2 Characteristics of Micro Enterprises
It has been suggested by Gebrehowt Ageba (2002) “The micro enterprise is characterized by small
scale production and service activities that are individually or family owned and use labor intensive
and simple technology. They usually self-employed workers, have little formal education
(generally unskilled,) and lack access to financial capital.” Most members of microfinance are lack
of minimal public services such as electricity, water, transportation, educational and health
services. Micro enterprises require not a large sum of startup capital and usually involve the
marketing of homemade food stuffs and handicrafts.
According to Rainbow Development Consult and Training services (2000), micro-enterprises have
the following characteristics: - the working capital is individual or house hold; knowledge and skill
are required through enterprises, mainly use local inputs and local market for their product and
have very low educational background.
2.1.3 Term and conditions for Micro Enterprises loan
So far concerning the terms and conditions for micro-enterprise loan, there is no available material
and information on it. According to DBE report (June, 1997), there are some major and common
terms and conditions entered into micro-enterprises loan agreement. These are presented below: -
the loan shall be extended to very poor household for income generation activities, at least 50
percent of the loan should be extended for women entrepreneurs, since the beneficiaries are very
poor, they are not required to pledge collateral. Instead, in case of default, the group will be
responsible to settle the debt, the maximum credit limit is birr 5000 per head. The payment period
could be from one to three years, the loan will be repaid within a week for
one year loan term and within a month for the three-year loan term, the interest rate has been
waived and MFls are now free to set their own interest rates ceiling and the loan is tied with a
compulsory saving scheme that is 10 percent of the total amount of the loan should be deducted
and saved in the bank account.
2.2 Overview of credit
The term credit comes from Latin word credo meaning; I believe and usually defined as the ability
to buy with a promise to pay. Credit is contractual agreement in which borrowers receives
something of value now and agree to pay the lender of some later date. When a customer purchase
something using a credit card, they are buying on credit (receiving the item at that time and paying
back the credit card company month by month) any time when individual finance something with a

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loan (such as an automobile or a house they are using credit in that situation as well and it is the
borrowing capacity of individuals or companies. (Prasanachandra, 1988)
In other words, credit is sale goods, service and money claims in the present in exchange for a
promise to in a money in the future. The debtor and creditor can agree, of course to settle their
transaction in something else of value. (Begley Brigham, 2008)
2.1.1 Advantage of credit
The credit system benefits both society and individuals for idle goods and services are transferred
from creditor to debtor and put to work increasing business and national income, Specialization
and division of labor stimulated by already flow of goods and services from creditor to debtor, and
Consumptive credit broadens in industry market, increase production and so help reduce and raise
the general living standard. (Richard A. and Stewrat C. ,1996)

2.2.1 Disadvantages of credit

Perhaps the greatest disadvantage using credit is the temptation to overspend, especially during
periods of inflation it seems easy to buy today and pay tomorrow using cheaper dollars. But
continual over suspending con lead to serious treble whether or not credit involves security (sum
thing of value to back the loan), Failure to repay a loan may result in loss of income, valuable
property, and your good recitation. It even led to court action and bankrupts, misuse of credit can
create serious long term financial problems damage to family relationship, and slowing of progress
towards financial goals (Ross, westorfield, Jordan,1998)

2.2.2 Features of credit

The followings are the essential Features of credit:
 Trust and confidence- Trust is the fundamental element of credit the lender will leaned his
money or good on the at least and confidence that the borrower or buyer will pay back the
money or price in time.
 Time element- All credit transaction involves time element. Money is borrowed or goods are
brought with a promise to repay the money or pay the price on some future data.
 Transfer of goods and services- credit involves transfer of goods and service by the seller to
the buyer on the pay- back promise of the buyer on some future date.
 Willingness and ability- credit depends in a person willingness and ability to pay the
borrowed money. In fact, credit of a person depends on his character, capacity and capital. It is

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 these three C’s on which a man credit depends, a person who is honest and fair in his dealings
possesses the capacity of making his business and success such a person can get credit easily.
Purpose- Bank and financial institutions gives large amount of credit for productive purpose rather
than for consumption purposes (Charles Mensah ,1999).
2.3 Credit period
The credit period refers to the basic length of time for which credit is granted to the customers. The
credit period varies widely from industry to industry, but it is almost always between 30 & 120
days. If cash discount is offered, then the credit period has two components. These are the net
credit period and the cash discount period. The net credit period is the length of time the customer
has to pay. The cash discount period is the time during which the discount is available. With 2/10,
net 30, for example, the net credit period is 30 days and the cash discount period is 10 days
(Charles Smithson, 2003)
If a firm allows credit for 30 days, with no discount to induce early payments, its credit terms are
stated as net 3. Lengthening of the credit period pushes sales up by inducing existing customers to
purchase more and attracting additional customers. This is how ever: accompanied by a larger
investment debtor and high incidence of bad debt loss shortening of credit period would have
opposite influences: it tends to lower sales decrease investment in debtors and reduce the incidence
of bad debt loss (Hettihewa S., 1997).
Since the effects of lengthening the credit period are similar to that of relaxing the stand order, we
may estimate the effect on profit of change in credit period in a similar manner.
(prasanaChandra,1988).

2.3.1 Factors affecting credit period

 Perish ability and collateral value: -perishable items have relatively rapid turnover and low
collateral value. Credit period are thus shorter for such goods. Examples of perishable goods
are foods, fresh fruits, etc…
 Consumer demand: -products that are well established generally have more raped turn over.
Newer or slow moving products will often have longer credit period associated with them to
entice buyers.
 Cost, profitability and standardization: -Relatively in expensive goods tend to have shorter
credit period. These all tend to have lower mark ups and higher turnover rates.
 Credit risk; -The greater credit risk of the buyer, the shorter credit period is likely to be.

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  Size of the account: -If the account is small, the credit period may be shorter because small
accounts are costlier to manage and the customers are less important.
 Competition: -When the seller is in highly competitive market, longer credit period may be
offered as a way of attracting customers (Horne V. ,1995)
2.4 Credit instruments
The credit instrument is the basic evidence of indebtedness through which most trade credit is
offered. This means that the only formal instrument of credit is invoice, which is sent with the
shipment of goods and which the customer signs as evidence that the goods have been received.
After wards, the firm and its customers record the exchange on their book of account (Lawrence J
Gitman,2009)

At times the firm may require that the customer sign a promissory note, this is the basic IOV and
might be used when the order is large, when there is not cash discount involved, or when the firm
anticipate a problem in collections promissory note are not common, but they can eliminate
possible controversies later about the existence of debt. One problem with promissory notes it that
they are signed after the delivery of the goods one way to obtain a credit commitment from a
customer before the goods are delivered is to arrange a commercial draft. Typically, the firm draws
up a commercial draft calling for the customer to pay a specific amount by specified date.

The draft then sent to customer’s bank with the shipping invoice. If immediate payment is required
on the draft is a time draft when the draft is presented and the buyer “accept” it meaning that the
buyer promise to pay it in the suture, then it is called trade acceptance and is sent back to the
selling firm. The seller can then keep the acceptance or sell it to someone else (Lawrence J Gitman,
2009)
If bank accept the draft meaning that the bank guaranteeing payment, then the draft become a
banker’s acceptance (Prasanna Chandra, 1988)
Sure, the discount is not regarded as a means of cutting price and by previous loan and other
services naturally expected to have their loan approved more readily than application and
continued relation with a customer gives that bank information about the borrower that is not easily
available to others. The cost of obtaining and verifying such information makes it impractical for
little known firms to public security offering and make it economical to maintain ongoing relation
with banks (Richard A. and Stewrat C. 1996)

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No matter conscientious the loan evaluation process is there is always the possibility of that an
expected development the illness of key person, an earthquake and unfavorable legislation will
undermine the financial viability of a company or household. When substantial sums involve the
bank may try to identify the most important risk and take measures to protect its loan. It may insist
an adequate insurance against natural disasters and on the development of strategic plan to
response to changes in customer tests to congressional (Ross A., et al, 2000).
Legislation to competition from other companies, if the business depends on the single supplier,
purchase or product, the bank may encourage it to diversify. If the company business is vulnerable
to technology change, the bank may insist that more effort may be spent on the research and
development (Ross A., et al, 2000)
2.5 Credit Policy
Credit policy often referred to as a standing decision made in advance to cover a prescribed set of
condition. It provides guidelines to select the customers and how much credit to extend. A bank
may adapt either liberal or sight credit policy. Liberal credit policy involves extending credit to
riskier class whose credit worthiness is not known exactly (Shekhar K.C. ,1985)
This policy increase profit by increasing the level of loans extended to customers but in cur’s high
risks of bad debt losses and faces the problem of liquidity. Tight credit policy involves extending
credit to those who have proven credit worthiness. This policy is very selective in extending credit
and results a low profit but it has maximum cost and chance of bad debt losses. Thus, managers
should develop credit policies which make tradeoff between risks and return (Begley and Brigham,
2008)
2.5.1 Components of credit policy
If a firm decides to grant credit to its customer than it must establish procedures for extending
credit and collecting. In particular, the firm will have to deal with the following components of
credit policy:
 Terms of sale: the terms of sale establish how the firm proposes to sale its goods and services.
A basic decision is whether the firm will require cash or will extend credit. If the firm does
grant credit to customer the terms of sale will specify (perhaps implicitly) the credit period, the
cash discount and discount period and the type of credit instruments.
 Credit analysis; in granting credit a firm determines how many efforts to expend trying to
distinguish between customers who will pay and customers who will not pay. Firms use a

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 number of devices and procedures to determine the probability that customers will not pay and
put together those are called credit analysis.
 Collection policies: after credit has been granted the firm has the potential problem of
collecting the cash when it becomes do for which it must establish a collection policy (Stanley
B. and Geoffrey A. ,1996)
2.5.2 Credit policy effects
In evaluating credit policy, there are five factors to consider:
Revenue effect: If the firm grants credit than there will a delay in revenue collections as some
customers take advantage of the credit offered and pay later. However, the firm may be able to
charge a higher price if edit grant credit and it may be able to increase the quantity sold. Total
revenue may then increase.
 Cost effects: Although the firm experience delayed revenue if it grants credit, it will still have
to incur the cost of sales immediately. Whether the firm sales for cash or credit, it will still have
to acquire or to produce the merchant descend pay frit.
 The cost of debt: When firm credit, it must arrange to finance the resulting receivables. As a
result of firms cost of short-term borrowing is a factor in decision grant credit.
 The profitability of nonpayment: If the firm grants credit some percentage of the credit
buyers will not pay. This cannot happen of course, if the firm sells for cash.
 The cash discount: When the firm offers a cash discount as a part of its credit terms, some
customers will choose to pay early to take advantage of the discount (Ross,westorfield
,Jordan,1998)
2.6 Credit Analysis
Thus, for we have focused on establishing credit farms once a firm decides to grant credit to its
customers, it must then establish guidelines for determining who will and who will not have
allowed buying on credit. Credit analysis refers to the process of deciding whether to extend credit
to a particular customer, it usually involves two steps; gathering relevant information and
deforming credit worthiness. Credit analysis is important simply because potential losses on
recordable can be substantial (Ross et al, 2000).
2.6.1 Analysis of credit file
The firm should maintain a credit file for each customer. It should up date with the information
about the customer collected from the report of sales man, bankers and directly from the

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customers. The firm’s trade experience with the customer and his performance report based on
financial statement submitted by him should also record in his credit file. A regular examination of
credit file will reveal to the firm credit standing of the customer. Whenever the firm experience’s a
change in the customers paying habit or receive a request for extended credit terms or large order
on credit, his credit file should thoroughly have scrutinized. The intensity and depth of credit
review investigation will have deepened up on the quality of customers account and the amount of
credit involved. A litter review will be required in case of the customer who has had clear deals
with the firm in the past (Ross et al, 2000).
2.7 Credit information
In affirm does want credit information on customers, there are a number of sources. Information
sources commonly used to assess credit worthiness includes the following:
 Financial statement: A firm can ask a customer to supply financial statements such as balance
sheet and income statements, minimum standards and rules of thumb based on financial ratios.
 Credit reports on the customer’s payment history with other firms: Duties a few
organizations sell information on the credit strength and credit history of business firms. The
best known and largest firm of this type is Dun and Bradstreet, which provides subscribes with
a credit reference book and credit reports on individual firms. TRW is another well-known
credit reporting firm. Ratings and information are available for a huge number of firms
including very small one.
Banks: generally, provide some assistance to their business customers requiring information on the
credit worthiness of other firms.
 The customer’s payment history with firm: The most obvious way to obtain information
about the livelihood of a customer’s not paying is to examine whether they have settle past
obligations and how quickly met these obligations (Ross,westorfield ,Jordan,1998)
2.8 Credit evaluation and scoring
There are no magical formulas for assessing the probability that the customer will not pay.in every
general terms the classic five c’s of credit are the basic factors to be evaluated. These are: -
 Character: -customers’ willingness to meet credit obligation. banks want put their money with
clients who have the best creditable and references. The way you treat your employees and
customers and the way take responsibility, your time lines in fulfilling obligation that is called
character.

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 Capacity: -The customers’ willingness to meet credit obligation out of operating cash flows.
What is your company’s borrowing history and track recorded of repayment. How much debt
you can company handle? Will your able honor the obligation and repay the debt?
There are numerous financial bench marks such bas debt and liquidity ratios that banks use
before advancing loan.
 Capital: -The customers financial reserves. How well capitalized is your company? How
much money has invested in the business?
 Conditions: -General economic conditions in the customers line of business. What are the
current economic conditions and how does your company fit in? If your business is
sensitive to economic down turns, the bank wants to know that you are good at managing
productivity and expenses.
 Collateral: -Asset pledge in case of default. Collateral represent assets that the company
pledges as an alternative repayment source for loan. Most collateral is in the form of real
estate and office or manufacturing equipment’s. Your accounts receivable and inventory can
also be pledge as collateral. Unless you are a business a proven repayments track record, you
will at most always be required to pledge collateral.
 Character: banks want put their money with clients who have the best creditable and
references. The way you treat your employees and customers and the way take
responsibility, your time lines in fulfilling obligation that is called character.
As Ross (1998), Credit scoring is the process of quantifying the probability of default when
granting customer’s credit. Credit scoring involves calculating a numerical rating for customer
based on information collected. Credit is then granted or refused based on the result.
2.9 Screening and Monitoring
As Walter Winston stated systematic information is a common problem in the loan market because
lenders have less information about the investment opportunities and activities of borrowers do.
The business of banking is the production of information banks engaged in to the information
producing activity, screening and monitoring. Credit risk form the good ones, so that loans are
profitable to perspective borrowers the principle of credit risk management requires effective
screaming and information collection (Prasanna Chandra ,1988).
The information requires for consumer and commercial loans are almost similar I.e. the accessory
occupation bank account material statues and sailors to business information asset and liabilities.

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The information can be gathered through different about personal information, it may also gather
information the collected information so judge whether the borrower is good credit risk or not on
the decision process the loan officer may use some personal judgments even by the observing the
borrower appearance (Richard A. and Stewrat C. ,1996).
Specialization in leading: most of the banks specialize leading of local firms or to firms in
particular industries. In one sense, this behavior seems surprising because it means that the bank is
not diversifying its portfolios of loan and that is exposing itself to more risk, but from another
perspective such specialization makes perfect sense, it is easy to collect information about loan
firm then. Firms that are for always to determine their credit worthiness. The same is true for
specialization in leading to specific firms, since the bank becomes more knowledgeable about these
firms and able to predict the repayment capacity of the firm (Shekhar K.C. ,1985).
Monitoring and enforcement of restrictive, covenant once a love has been made the borrower has
an intensive to engage in risky activities that make it less likely that the will be repaid off. To avoid
this moral hazard banks should try restrict borrowers to engaging in risky activities to see wither
they are complying with the restrictive covenants and by enforcing the covenants if they are not,
leader con make sure that borrows are not taking on risks at their expense. The accedes of banks to
engage in screeching and monitoring explains why they are seed too much money on auditing and
information collection activities (Richard A. and Stewrat C. , 1996).
2.10 Collection policy and procedures
A collection policy is needed because not all customers pay the firms bills in time; some customers
are slow payers while some are non-payers. The collection effort should, therefore, aim at
accelerating collections from slow payers deducting bad debt losses. A collection policy should
ensure and promoted collection needed for fast over working capital, keeping collection costs and
bad debts with in limit and maintaining collection efficiency. Regulatory in collections keeps
debtors alert and they tend to pay dues promptly. The collection policy should lay down clear-cut
collection procedures for past dues (Hettihewa S., 1997)
A firm usually goes through the following sequence of procedures for customers whose payments
are overdue. These procedures are:-
 It sends out a delinquency of letter informing the customer of past due status of account.
 It makes telephone call to the customer
 It employs a collection agency

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  It makes legal action against customer. At times, a firm may refuse to grant additional
credit to customers until past over dues are cleared up.(Ross,westerfield,Jordan,1998).

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CHAPTER THREE
3. RESEARCH DESIGN AND METHODOLOGY
3.1 Introduction
Research Methodology: is the way to systematically solve the research problem. It may be
understood as a science of studying how research is done systematically (Lawrence Neumann
4 edition, 2004)
3.2 Research Design
The major purpose of this study may to conduct or to assess the credit management of Oromia
Credit and Saving share company in the case of Burayu branch. To attain this purpose,
descriptive research design used by intention to gather a large variety of data related to the
problem under this study and because of having characteristics of qualitative phenomenon.
3.3 Research Approach
The researcher used both qualitative and quantitative approach according to Bryman, (2008)
states that qualitative research has as its strength the effective obtaining of a complex specific
description of how people experience a given research issue regarding values, opinions,
behaviors, emotions and relationships of individuals and the researcher used table to analyze
the respondent’s opinion.
3.4 Source of Data
In this Study the researcher has used both Primary and Secondary data: -
3.4.1 Primary Source
Primary data was collected by using data collection tools like interview and questionaries to
employees of the branch institution.
3.4.2 Secondary Source
Secondary data was collected from the document that provides statistical information and
explanation such as: credit manual (credit providing manual) of the institution, and operational
reports (financial statements) of the branch institution.
3.5 Data Collection Techniques
Regarding sampling method, for this study the researcher has elected purposive sampling or
judgmental sampling. Purposive sampling is one type of non-random sampling which is also
called judgmental sampling. In this method of sampling; the researcher does not need to consider

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all the entire population to obtain the needed information. For this study, the researcher was
elected subjects from the branch employees to ask them for provision of information.
3.6 Target Population, Sampling Techniques, sample size
3.6.1 Target Population
The target populations of this study are employees and management of Oromia credit and
saving Share Company in Case of Burayu branch. Criteria of representative’s selection are:
consideration of employee’s professional career (professional experience) in the branch,
consideration of position (for those personnel’s having administrative power) starting from the
vice manager to top manager in the branch, and consideration of employee’s level of formal
education in that branch. The above all criteria were drawn for selection of representatives in a
sense that everyone who employed in the branch has his/her own potential knowledge about
the branch to provide accurate information that enables the researcher has given effective
conclusion and recommendation.
3.6.2 Sampling Techniques
The selection of the Criteria respondents is carried out by using non probability sampling
technique. Among the various non- probability sampling techniques accidental or convenience
sampling is used to contact customers. According to Anol, (2012: 70) convenience sampling also
called accidental or opportunity sampling, is a technique in which a sample is drawn from that part
of the population that is close to hand, readily available, or convenient.
3.6.3 Sampling Size
In order to determine the sample size, the model proved by Malhotera, (2006:339) were used. For
this purpose, the researcher takes sample of population then summarized the sample in the way
that it can reflect the whole population.
3.7 Method of data analysis and Interpretation

After gathering all required qualitative and quantitative information, the researcher has had
analyzed the collected data and presented it through tables, percentages and frequencies.

3.8 Ethical Consideration

The researcher has addresses ethical considerations of confidentiality and privacy. A guarantee has
given to the respondents that their names should not be revealed in the research report.

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Participation in the study was voluntary, and all participant responses are confidential and can
quiet to respond the question anytime they like.

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CHAPTER FOUR
4. Data Presentation, Analysis and interpretation
4.1 Introduction
After the relevant data is collected then analysis must be made in the form of meaning full
manner so, in this section the researcher’s present finding concerning the study. The results
presented in this chapter are based on the response obtained through the primary data
gathering tools. The researchers have been also tried to analysis available data in the form of
statement, percentage and table the target group of the study were currently employees and
management of Oromia credit and saving Share Company Burayu Brach
4.2 Analysis of Data
The following data show characteristics of the respondents that were collected to have a clear
picture about personnel involved in the study. The following table deals with these issues in
categories of gender, age, educational level, and position of the staff members in the branch
institution and each of sub categories were expressed in percentages.

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Table 4.1Demogrraphic characteristics of the respondents

No Item Alternatives Frequency Percentage

1 Male 10 66.67%
Sex Female 5 33.33%
Total 15 100%
2 Age 20-25 4 26.67%
26-30 10 66.67%
31-35 1 6.66%
>35 - -
Total 15 100%
th
3 Education 12 completed 3 20%
Diploma 4 26.67%
BA Degree 8 53.33%
Others - -
Total 15 100%
4 Position Manager 1 6.67%
Vice manger 1 6.66%
Accountants 6 40%
Others 7 46.67%
Total 15 100%
Source: questionnaire, 2021 (primary data)

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According to the above table the personal data regarding sex of the employee, 5(33.33%) of the
respondents are females and 10(66.67%) of them are males. Concerning their age, item of the
above table shows that the majority of employees 10(66.67%) are between the range of 26-
30years,
4(26.67%) are found between 20-25 years, &1(6.66%) of them is found between 31-35 years.
Regarding to their educational status the majority 8(53.33%) are respondents are graduate of
degree, 4(26.67%) of them diploma and 3(20%) are 12th completed and the manager and vice
manager of the branch institution holds 1 frequency each. accountants of the branch
possessed
40% and others have 46.67% each in the branch.

Table 4.2: - Credit collection effort of the

Institution

No Item Alternative Frequency Percentage

5 How do you describe High 3 20%
Collection of loans back Medium 4 26.67%
at maturity by the Poor 8 53.33 %
institution? None - -
Total 15 100 %
2

Source: questionnaire of 2021(primary data)

From the above table 4.8, 3(20%) of the respondents replied that the collection of loans back at
maturity is high, 4(26.67%) of them have said that the collection is medium and 8(53.33%) of
the respondents expressed that the collection of credit back at maturity is poor. Depending on
majority’s point of view the researcher concluded that the institution collection of credit after
granting is poor. For instance, the company’s cash collection out of disbursed cash for the three
consecutive years were:4896747/5784867 (84.6%) in 2010 E.C,5475432/7985642 (69%) in
2011 E.C, 6547865/9764532 (67%) in 2012 respectively (source: annual report of the branch
institution).

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 As the report indicates the collected cash from the total disbursement (loan) made had been
reducing. dramatically This reduction in collection was resulted from under application of
collection procedures such as: assigning collection agency, sending delinquency of letter
informing the customers of past due status of account and making telephone call to the
customers by the company as most respondents view point.
Table: 4.3 Credit provision requirements (criteria) of the
institution

No Item Alternatives Frequency Percentage

6 Does the Institution Yes 9 60%
effectively apply No 6 40%
credit provision
requirements to provide
credit service to Total 15 100%

borrowers?
2

Source: primary source of data (questionnaire, 2021)

As the above table indicates, most of the respondents 9(60%) of them replied that that the
institution does not effectively apply credit provision requirements to provide credit service.
However, 6(40%) of them answered that the branch institution applies effectively credit
provision requirements to prove loan. Depending on majority’s point of view, the researcher
concluded that the branch institution does not effectively apply credit provision requirements.
In order to provide credit service, the institution needs only simple necessities such as: personal
behavior, reputation, ID card. This means that there is no further study of borrower’s working
capital.

Table: 4.4 Borrowers delay in returning the loan received on time

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 7 Item Alternative Frequency Percentage
Do borrowers of the Yes 15 100%
company make delay in
returning the loan received NO - -
at maturity?
Total 15 100%

Source: questionnaire 2021 (primary data)

All, 15(100%), of the sample respondents stated that there are some reasons for clients that
obliged them not to return their loan on time. those are: -non standardized interest rate imposed
on all borrowers. For instance, the interest rate that the institution expects on its loan annually
from small enterprise is 17%, 13% for women’s and 15% for farmers. The reason for
imposition of varied interest rates on each borrower is resulted from their difference in
generating income. Additionally, the death, fluctuation of market affairs or market seasons
(related to inflation), bankruptcy (if business), negligence (most of time the debtors make the
borrowed money for their personal consumption are assumed to be the main reasons for
delaying of the borrowers to return back the borrowed funds on time as the views of selected
respondents show.

Table 4.5 Credit management problem in the

institution.

No Item Alternative Frequency Percentage

8 Is there any challenge related Yes 15 100%
to Credit management in
the institution? No _ _

Total 15 100%

Source: primary source of data (questionnaire 2021)

As indicated in the above table, all 15(100 %) of the sample respondents replied that the
institution has credit management problem because of no periodic training to employees
and imbalance number of existing employees and customers.

Table 4.6 Transaction recording system of the institution

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 9 Item Alternatives Frequency Percentage
Does the branch institution Yes 9 60%
use computerized transaction No 6 40%
recording system?
Total 15 100%
Source; primary source of data (questionnaire of
2016)

From the above table, 9 (60%) respondents justified that the branch institution use computer to
record its transactions and 6(40%) were used manual system.

Table 4.7 maximum and minimum limit of cash amount the institution
provides for a single new client.
No Item Minimum cash Frequency Percentage

10 How much cash 8,000.00 15 100%

amount the
institution Total 15 100%
provides for a
Maximum cash Frequency Percentage
single client?
5,000,000.00 15 100%
Total 15 100%

Source: major source of data (credit manual of the institution)

As the above table indicates that 15(100%) of the respondents justified that the minimum cash
the institution offers for one client is birr 8,000.00 and the maximum cash given for one client
is 5,000,000.0 but the maximum cash balance that allowed for client is differed based on the
nature activity or business which can reach until birr 6.5million in some case.
Table 4.8 supervision and follow up of client
operation
No Item Alternatives Frequency Percentage
11 Does the institution Yes 5 33.33%
conduct supervision
and follow up to

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 review the operation No 10 66.67%
of its customers after
granting credit?
Total 15 100%
Source: primary source of data (questionnaire of 2021)
From the above table indicate that 5 (33.33%) of the sample respondents justified that the
institution conducts supervision and follow up and 10 (66.67%) of them replied that the
institution does not conducts the supervision and follow up after granting loan to review of its
customers operation. From this the researcher analyzed that the institution does not conduct
supervision and follow up to review its customers operation from majorities’ points of view.
Table 4.9 Evaluation of client’s history
No Item Alternative Frequency Percentage
12 Does the institution evaluate client Yes 2 13.33%
history before granting credit?
No 13 86.67%
Total 15 100%

Source: primary source of data (questionnaire of 2021)

The above table shows that 13(86.67%) of the respondents replied that the institution does not
evaluate client history before grant credit, but 2(13.33%) of them have said the institution does
evaluate the client history before granting credit. From the majority point of view, the
institution does not evaluate the client history before granting credit and this may affect the
general activities of the branch institution even can enforce it to liquidate.

Table: 4.10 Credit beneficiary of the institution

13 Alternatives Frequency Percentage

Entrepreneurs
7 46.67%
Farmers 5 33.33%

Women’s 3 20%

Total 15 100%
Source: questionnaire (primary source of data 2021)

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As the above table indicates the institution provides credit service to women, entrepreneurs, and
farmers. 7(46.67%) of respondents replied that the institution in maximum amount provides
credit service to entrepreneurs, 5(33.33%) of respondents replied that the institution gives credit
service to farmers and the rest 3(20%) of respondents assured that the institution fund goes to
women.

The major disparities in the percentage each group hold is that more loans are provided to
entrepreneurs since their returning ability of the credit is high as a result of their business size
and earning ability. Therefore, the researcher concluded that the institution serves more the
entrepreneurs in expecting its loan not be tied up because there is high probability that women’s
and farmers are unable to return the loan on time.
Table 4.11Role of the institution in financing small and micro enterprises.
No Item Alternative Frequency Percentage
14 As compared with other intuitions do Yes 13 86.67%
you
No 2 13.33%
Think that Oromia credit and saving share
Total 15 100%
company of Burayu branch micro finance
is playing a significant role in financing
the small and micro enterprises?
Source: questionnaire, 2021(primary
data)

From the above table 13(86.67%) of the respondents replied that micro finance institutions has
a significant value to finance or in financing small, and micro enterprises. however ,2(13.33%)
of the respondent said that the institution has no significant value in financing small and micro
enterprises.
Table 4.12Thetime of providing financial services to agriculturalists
(farmers).

No Item Alternative Frequency Percentage

15 When does the institution Yearly - -
provides financial service Semi annually 2 13.33%
to rural areas particularly Quarterly - -

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 To agriculturalists or Throughout the 13 86.67%
Farmers)? year (Continuously)
Total 15 100%
Source: primary source of data (questionnaire 2021)

In the above table , 2(13.33%) of the respondents said that the organization provides financial
service semiannually to the rural areas especially for small agriculturalists to improve their
living standards, and increase their productivity, 13(86.67%) of the respondents replied that the
institution provides financial service to rural areas especially for small agriculturalists
continuously(throughout the year).From this, since majority of the respondents replied that
the institution provides financial service to small(poor)agriculturalists continuously, the
researcher concluded that the institution is giving financial service to agriculturalists
continually(throughout the year).The reason of providing credit service to farmers throughout
the year is related to financial incapacity of most farmers to do their best on time.

Table 4.13Availability of finance amount to small enterprises to start their business

No Item Alternative Frequency Percentage

16 Does the amount of Strongly agree 3 20%
finance the institution
provides to small enterprise Agree 8 53.33%
is available to start their Disagree 4 26.67%
business?
Strongly disagree - -
Total 15 100%
Source: primary source of data (questionnaire 2021)

From the above table 3(20%) of the respondents were strongly agree to the amount of finance
that small enterprises get from the institution is satisfactory and majority of respondents i.e.,
8(53.33%) of the respondents agreed to the amount of finance that small enterprise get from the
institution is Satisfactory and the left 4(26.67%) of respondents disagreed to it. From this,
the researcher concluded that the amount of finance that the enterprises get from the institution
is satisfactory somewhat. Even though there is a maximum and minimum limit to borrow, it is
enough for small enterprises at least to start their business and the institution needs not to
liquidate as a result of default pertaining to over loan.

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General comment

CHAPTER Five
5. Summary, Conclusion and recommendation
5.1 Summary
In today competitive financial market, micro finance and financial institution building strong credit
management. The Oromia credit and saving share company is responsible to implement best credit
management to minimize the past weakness and failure. In general, the summary, conclusion and
recommendation as follow.
5.2 Conclusion
 As it can be seen from the analysis, the loan collection effort of loans back at maturity by
the institution has been poor. This is related to negligent providing of funds by the
institution without carefully observing client’s monthly salary (if government employee),
the wealth (capital on hand of the client whether in cash or in kind), productivity ( if
farmers), profit ( if entrepreneurs),etc in advance before granting a loan and under
application of credit procedures such as: assigning collection agency, sending delinquency of
letter informing the customers of past due status of account, and making telephone call to the
customers at maturity(after credit).
 The institution only requires Id card of the client, reputation of the client and provide the
loan as a criteria to the one who lacks fund and ask for it without a thorough study of
clients beginning capital on hand whether in cash or in kind i.e. no further need beyond
simple necessities to provide the loan as per the institution.
 The branch institution has a credit management problem pertaining to no periodic training
given to employees and imbalance number of customers and employees. Still now, the
branch institution is using manual and computer system but they are not online (digital)

29 | P a g e
 system of recording transactions even though it has many customers and economic events.
This headed the institution not to provide flexible and quick services to its customers. The
branch institution provides the loan not as per the need of the clients. Rather, it limited the
amount of loan each new client can access between two thousand and thirty thousand except
in special case up to 6.5 million likewise, the institution does not make supervision and
follow up control system after granting credit.
General comment
5.3 Recommendation
 Possible suggestions and recommendations for identified problems are as follows:
 To improve poor collection of loans back at maturity, the institution should carefully see
the client’s monthly salary (if government employee), the wealth (capital on hand of the
client whether in cash or in kind), productivity (if farmers), profit (if entrepreneurs), etc in
advance before granting a loan. furthermore, it should perform/apply collection policy
procedures such as assigning collection agency, sending delinquency of letter informing the
customers of past due status of account, and making telephone call to the customers beyond
single procedure of making legal action against customers at maturity/when collection.
 The institution uses reputation (good name), behavior and ID card of the new clients
as criteria to accept them for a loan. But the company doesn’t consider working capital
(whether in cash or in kind) of the new clients as a criteria for loan. Therefore, it should have
to scrutinize wealth of the clients in advance to make loan to them beyond simple necessities
of ID card, reputation, and behavior of new clients should be taken in to account.
 In order to reduce the borrowers, delay to return the loan received so far at maturity,
the institution had better to impose standardized interest rate on its loan as much as possible
on every borrower to enable them to be ready for payment at the same time and should
inform them in advance strictly to repay back the amount on time rather to rely on existence
of court of law for nonpayment.
 To improve credit management problem in the branch, the institution should give periodic
training to its employees and should additionally hire employees since the existing employees
and the customer number is imbalance. Likewise, to provide a flexible &quick service to its
large number of clients, the branch institution is recommended to introduce computerized
system of recording transactions. It is better for the institution to provide the loan as per the

30 | P a g e
 need of the clients rather than limiting amount of the loan each new client can access between
specified intervals. Concerning to poor supervision and follow up control system, the
institution should conduct proper supervision and follow up to review its customers operation
after granting the loan to the clients. if it needs not to shut down as a result of credit default
by debtor.
 Finally, we recommend that the institution must increase computerized system rather than
manual, since computerized system is more advantages in handling more data, save time and
increase efficiency and effectiveness of our activities with less cost. And also further research
must be done since our research paper doesn’t meet all challenge of the branch institution
problem on credit management due to lack of enough time and unwillingness respondents to
provide necessary information freely.

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BIBLOGORAPHY

Begley Brigham,(2008) Essentials of Managerial Finance, 12 editions, University of Florida.

Charles Mensah (1999) Financial Management Analysis, U.S.A., CARLOS.

Charles Smithson, (2003) Credit Portfolio Management, Canada: John Wiley & Sons, Inc.

Hettihewa S., (1997) Introduction to Financial Management, Oxford University, Uk.

Horne V. (1995), Financial Management and Policy: 10th edition Simon & Schuster

Lawrence J Gitman (2009), Principles of Managerial Finance, 11th edition, United States,

Prasanna Chandra (1988) Financial Management: Theory and Practice, New Dehli: Tata

McGraw-Hill Publishing Company Limited.

Richard A. and Stewrat C. (1996) Principles of Corporate Finance, 5th edition, London,

McGraw-Hill

Ross A., et al (2000), Fundamentals of Corporate Finance, 5th edition, New York, McGraw-Hill.

Shekhar K.C. (1985) Banking Theory and Practices, New Delhi: Vikas Publishing house pvt,Ltd.

Stanley B. and Geoffrey A. (1996) Foundations of Financial Management, 8th edition, USA.

Ross,westorfield,Jordan(1998). Corporate finance .7th edition, New York, McGraw-Hill.

Oromia credit and saving share company manual, 2015

32 | P a g e
 BIBLOGORAPHY
1. Budget
To prepare the research in efficient and effective manner the researcher has to prepare the cost
budget.
No Materials/Activities Unit Quantity Unit cost Total cost
1 Note Book for Data Collection Number 4 25.00 100.00

2 Pen Number 4 10.00 40.00

3 Internet cost for the purpose Mint 100 0.50 50.00
of Reference Reading

4 Transport and taxi - - - 100.00

5 Mobile card &Tel. - - 100.00 100.00
6 Binding and Printing Page 350 2.00 700.00
7 Entertainment (Coffee and Month 2 100.00 200.00
Tea) at the time of group
discussion
8 For Adviser Fees Group 1 400.00 400.00

Total Birr 0.00

2. Tentative Budget
This research will expect to finalize from July 15/2021 – August 20, 2021 according to the
following time schedule.
Description of Time Frame
main activities July 15-25 July 25-31 August 1-5 August 6-10 August 10-15 August 16-20
Proposal
Preparation and
defense

33 | P a g e
Reviewing of
related literature
Distribution and
collection of
questionnaire
Data analysis and
interpretation
Preparing
Summary,
Conclusion and
Writing up the
Recommendation
final paper
Preparing for
defense

3. Source of Budget

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The research will be done for academic purpose, the source of budget will be covered by the
researcher in group and some equipment used for the research like Laptop Computer are owned by
the researcher and not included in the Budget

Appendix

This questionnaire is designed to collect data on the in Oromia credit and saving Share
Company of Burayu branch. Your cooperation in providing genuine answers to the
following questions is highly important for the success of this study. I care for your opinion!
Please, take a few minutes to answer the questions. Your responses will be kept confidential. It
is only for academic purpose. Thank you for your response in advance

Instruction

 There is no need to write your name

 Please put a tick on appropriate blank
I. Personal data

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1. Sex : Male Female
2. Age: 20-25 25-30 31-35 above 35
3. E d u c a t i o n level 12th completed Diploma BA degree M.A
4. Position manager vice manager accountants others
II. Topic related to educated respondents

5. How do you describe collection of loans back at maturity by the institution?

High Medium poor none

6. Does the institution effectively apply credit provision requirements (criteria) to provide
credit service to borrowers? Yes NO

7. If your response to the above question #6 is no why you have said that it does not
apply effectively credit provision requirements? list the reasons below

8. Do borrowers make delay in returning the loan received on time at maturity?YES NO

9. Is there any problem related to credit management in the institution?

Yes NO

10. What kind of transaction recording system the branch institution uses?

Manual system computerized system both

11. How much cash amount the institution provides for a single client?

(Minimum maximum )

12. Does the institution conduct supervision and follow up to review the operation of its
customers after granting credit?

Yes No

13. Does the institution evaluate client’s history before granting credit?
Yes No

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 14. To which group of society the institution makes credit service provision?

Farmers Women entrepreneurs all

15. As compared with other institution do you think that Oromia credit and saving Share
Company of Burayu branch micro finance institution is playing a significant role in financing
the small and micro enterprise?
Yes No
16. When does the institution provides financial service to rural areas particularly to

Agriculturalists /Farmers? Annually semiannually thought the year

Quarterly

17. Does the amount the institution provides to small enterprise is available to start their
business?
Yes No

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