Risk Assesment and Handling in Ethiopian Banking: A Comparative Study in Public and Private Sector

Abstract

In recent times Ethiopian economy is one of the booming countries in Africa. In modern business world operating banking business is a challenging one, especially developing country like Ethiopia. At this juncture researcher tries to find how both public and private sector banks are performing in risk assessment and handling/managing risks effectively to overcome their problems and evaluate their impact on their operating efficiency. By applying Statistical Package for Social Sciences (SPSS) tools, through data analysis, came to know that there is approximately similar extent of credit risk exposure between state owned and private banks for all attributes of credit risks, operating efficiency is good in public sector than private sector and better risk management environment could find in private banks compared to state owned banks.  All banks are influenced by many factors such as credit risk, liquidity risk and operational risk. Hence, it is recommended for banks’ management to effectively assess and handle risks during these typical times.

Key words: Risks, banking, assessment, handling, public and private sectors