Effects of banks credit processes on the quality of loan assets- case study of Cal Bank Ltd

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The purpose of this study is to explore the effects of banks credit processes on the quality of loan assets and to give recommendations aimed at enhancing the credit processes using CAL Bank Limited as a test case. The sampling technique adopted for the study was purposive sampling technique. Questionnaires and unstructured interviews were the main research instruments used in this study in collecting primary data. The questionnaire was structured to elicit information about banks credit processes with respect to CAL Bank. A total of thirty- five (35) questionnaires were issued out to the respondents out of which thirty-two (32) responded representing about 91%. This data was analysed using Excel software and the results were exhibited as charts. It was revealed that the main credit processes adopted by the bank which impacts on the quality of loan assets which included business initiation, credit request, and credit appraisal or processing, approval seeking, disbursement, monitoring and control and repayment. It was recommended that the banks credit processes needed to be enhanced in order to impact positively on the quality of loan assets and some of the recommendations included the use of benchmarks in credit assessment criteria, Credit Officers with special backgrounds should be matched with similar specialized ventures, both on-site and off-site post finance monitoring activities should be enhanced, enhancement of relationship banking and the empowerment of the various business units of the bank. Limitations associated with this study included the use of only one bank for the study mainly due to time and resource constraints.
A thesis submitted to the Board of Postgraduate Studies, Kwame Nkrumah University of Science and Technology, Kumasi, in partial fulfilment of the requirements for the award of the Degree of Master of Business Administration, 2008