Credit Risk Management Practices of Micro Finance Institutions in Ethiopia– A Brief Literature Review

International Journal of Economics and Management Studies

© 2017 by SSRG - IJEMS Journal

Volume 4 Issue 1

Year of Publication : 2017

Authors : Pagadala Suganda Devi

10.14445/23939125/IJEMS-V4I1P102

How to Cite?

Pagadala Suganda Devi, "Credit Risk Management Practices of Micro Finance Institutions in Ethiopia– A Brief Literature Review," SSRG International Journal of Economics and Management Studies, vol. 4,  no. 1, pp. 10-16, 2017. Crossref, https://doi.org/10.14445/23939125/IJEMS-V4I1P102

Abstract:

In this study an attempt has been made to gather relevant literature in the area of credit risk management practices of micro finance institution with special reference to Ethiopia. Micro finance provides financial help to the unbanked sections of the society. Since microfinance is a system that distributes small loans to poor people in order for them to generate income and start their own small businesses, it has the ability to lessen poverty as well as promote entrepreneurship, social and economic development in poor communities. At the same time microfinance portfolios are exposed to various kinds of risks due to their inherent characteristic especially credit risk. The Ethiopian Microfinance sector is one of the fastest growing financial institutions in the world today serving about 2.7 million borrowers with portfolio of Birr 9.2 Billion(AEMFI performance analysis report, 2014). The sustainability of Micro Finance Institutions(MFIs) that reach a large number of rural and urban poor who are not served by the conventional financial institutions, such as the commercial banks, has been a prime element of the new development strategy of Ethiopia (Wolday 2010). With this scenario as a background, the currents study attempts to bring together available literature on credit risk management in microfinance institutions with special reference to Ethiopia.

Keywords:

Credit risk, Credit risk management, Microfinance.

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