Comparative Analysis of Loan Disbursement And Collection Among Selected Commercial Banks in Ethiopian

Abstract Economic growth is difficult to sustain without a solid and sound financial system. Banks are among the largest lenders to retail, commercial, and corporate sectors. When loan disbursement controls are weak, the reliability of the loan management process is significantly compromised. Therefore, the objective of this study is to compare and contrast the loan disbursement and collection practices of selected commercial banks in Ethiopia using secondary data collected from the National Bank of Ethiopia for the period 2002–2017. To analyze the data, an exponential growth rate model was employed. The results indicate that the Commercial Bank of Ethiopia ranked first in both loan disbursement and collection during the study period. This performance may be attributed to increased credit demand driven by the expansion of both existing and new investment ventures in the country. Furthermore, variability in loan collection growth was highest for United Bank (CV = 93%), followed by Nib International Bank (CV = 84%), while Wegagen Bank showed the lowest variability (CV = 59%) during the same period. To improve loan disbursement and collection performance, banks should conduct thorough assessments of borrowers’ backgrounds and credit histories.