Factors of Credit Risk Handling in Selected Microfinance Institutions of Ethiopia
Idris Ali Yimer
Mr. Idris Ali Yimer, Scholar, Department of Accounting and Finance, Wolkite University, Ethiopia.
Manuscript received on 13 August 2025 | First Revised Manuscript received on 28 September 2025 | Second Revised Manuscript received on 25 October 2025 | Manuscript Accepted on 15 November 2025 | Manuscript published on 30 November 2025 | PP: 79-83 | Volume-5 Issue-2, November 2025 | Retrieval Number: 100.1/ijef.B263605021125 | DOI: 10.54105/ijef.B2636.05021125
Open Access | Editorial and Publishing Policies | Cite | Zenodo | OJS | Indexing and Abstracting
© The Authors. Published by Lattice Science Publication (LSP). This is an open-access article under the CC-BY-NC-ND license (http://creativecommons.org/licenses/by-nc-nd/4.0/)
Abstract: This study examined how certain Ethiopian microfinance institutions manage credit risk. Microfinance institutions are a crucial means of raising substantial sums of money in developing nations. Secondary data sources were collected from specific microfinance institutions for this investigation. The years 2010 through 2018 were consecutively included in the collected data. The data was analyzed using the balanced regression model. Purposive sampling was used to select the sample, and a quantitative research methodology was employed to achieve the study’s objectives. The study’s target population is the whole Ethiopian microfinance industry. An explanatory research design is used to achieve the study’s aim. For analytical reasons, credit risk management is measured as the dependent variable. Moreover, explanatory (independent) factors include the loan-to-deposit ratio, average loan balance per borrower, company development, managerial performance, and total assets. Credit risk is positively correlated with total assets, loan-to-deposit ratio, management performance, and average loan balance per borrower, as indicated by the results of the regression analysis conducted using EViews 8 software. The study also recommended that companies enhance their overall asset value and management performance by implementing training and other strategic measures.
Keywords: Factors, Handling, Credit Risk, Microfinance, Ethiopia.
Scope of the Article: Finance