Abstract:
Loans and advances form a greater portion of the total assets in Amhara credit and saving institution.
These assets generate huge interest income for the institution which to a large extent determines the
financial performance of Amhara credit and saving institution. However, some of these loans usually fall
into non-performing status and adversely affect the performance of ACSI. In view of the critical role ACSI
play in an economy, it is essential to identify problems that affect the performance of these institutions.
Non-performing loans is one of these problems. Therefore, a research on determinants of non-performing
loans, the case of Amhara credit and saving institution in north shoa debre berhan town was conducted on
four branches. The research seeks to find out the determinants of non-performing loans in the Amhara
credit and saving institution. Structured questionnaire was used to collect data for the study from four
ACSInorth shoa zonal office and debre berhan branches include; tebasie branch, atsezeriacob branch,
debre berhan zuriya branch and debre berhan branch. Research type was cross-sectional research and
the sampling technique was census sampling technique. The sampling size was 100 employees of ACSI
debre berhan branches and north shoa zonal office. The study found that poor credit analysis and
unsound lending practices, lack of focused loan monitoring and follow-up, lenient credit terms and
conditions, compromised integrity, covid-19, customer orientation/culture, non-collateralized loan and
fund diversion as the major factors that contribute to loan default/NPLs. Thus, it is suggested that Amhara
credit and saving institution debre berhan branches and zonal office should put in place a vibrant credit
process that ensures proper loan follow up, credit analysis, collateralized loan, credit monitoring,
customer selection, robust credit analysis, proactive monitoring, ethical standards, and prudent
application of polices that govern ACSI loans. To analysis the data, SPSS version 25, multiple linear
regression analysis and descriptive analysis were used and the.
