Assessment of Credit Management in Case of Awash Bank
CHAPTER ONE 1. Introduction 1.1. Background of the study
The word credit has been derived Latin word “credo” which means I believe or I truest which signifies at trust of confidence reposed in another person. The term credit thus means reposing trust of confidence in some body. Credit is purchasing power not derived from income but created by financial institution either as an offset to idle income held by deposition in the bank or as a need addition to the total amount purchasing.
By credit we mean the power which one person has to induce another to put economic good at this disposal a time on promise or future payment. Credit is thus, an attributed of power the borrower (Thomas 1999).
Credit is exchange function in which creditor gives some good or money to debtor with a belief that after sometimes he/she will return it. In other word trust is a credit (Anderson 2001).
Credit exploitation and banking Industry is go side by side. Granting credit is making an investment in customers, an investment tied to the sale of product or service, firm offer credit to customer for a number of reasons: the obvious reason is that offering credit is way of stimulating sales. There are costs associated with offering credit to customer. First granting credit exposes the firm to the possibility that the customer default on the payment, resulting in losses for the firm. The second cost is the interest forgone between the time of credit and the time of payment by customers.
In granting credit firms determine how much effort to pay and customers who would not pay after credit has been granted the firm has potential problem of collecting the cash. 1.2. Statement of the problem
In modern economic world business activity without the help of banking facility is impossible and unthinkable. Today the banking activities serve the business, banking service play a big role in economic growth and development of any nation regardless if the level of its growth.
Managing and
The word credit has been derived Latin word “credo” which means I believe or I truest which signifies at trust of confidence reposed in another person. The term credit thus means reposing trust of confidence in some body. Credit is purchasing power not derived from income but created by financial institution either as an offset to idle income held by deposition in the bank or as a need addition to the total amount purchasing.
By credit we mean the power which one person has to induce another to put economic good at this disposal a time on promise or future payment. Credit is thus, an attributed of power the borrower (Thomas 1999).
Credit is exchange function in which creditor gives some good or money to debtor with a belief that after sometimes he/she will return it. In other word trust is a credit (Anderson 2001).
Credit exploitation and banking Industry is go side by side. Granting credit is making an investment in customers, an investment tied to the sale of product or service, firm offer credit to customer for a number of reasons: the obvious reason is that offering credit is way of stimulating sales. There are costs associated with offering credit to customer. First granting credit exposes the firm to the possibility that the customer default on the payment, resulting in losses for the firm. The second cost is the interest forgone between the time of credit and the time of payment by customers.
In granting credit firms determine how much effort to pay and customers who would not pay after credit has been granted the firm has potential problem of collecting the cash. 1.2. Statement of the problem
In modern economic world business activity without the help of banking facility is impossible and unthinkable. Today the banking activities serve the business, banking service play a big role in economic growth and development of any nation regardless if the level of its growth.
Managing and