Published November 30, 2025 | Version CC-BY-NC-ND 4.0
Journal article Open

Factors of Credit Risk Handling in Selected Microfinance Institutions of Ethiopia

Authors/Creators

  • 1. Scholar, Department of Accounting and Finance, Wolkite University, Ethiopia.

Description

Abstract: This study examined how certain Ethiopian microfinance institutions manage credit risk. Microfinance institutions are a crucial means of raising substantial funds 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 were analysed using a 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-todeposit ratio, average loan balance per borrower, company development, managerial performance, and total assets. Credit risk is positively correlated with total assets, the loan-to-deposit ratio, management performance, and average loan balance per borrower, as indicated by a regression analysis in EViews 8. The study also recommended that companies enhance their overall asset value and management performance by implementing training and other strategic measures.

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Additional details

Identifiers

DOI
10.54105/ijef.B2636.05021125
EISSN
2582-9378

Dates

Accepted
2025-11-15
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.

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