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CHAPTER ONE
INTRODUCTION
1.1 Background to the Study
The financial sector plays crucial roles in economic growth and development by virtue of its
financial intermediation roles which includes savings mobilization, risk management, project
evaluation among others. Channeling of funds from depositors (surplus units) to investors
(deficit units) is a key role played by banks(Negera,2012). Toensure sustainability and
profitability, banks procure cheaper loanable funds from customers‟ deposits, and lend these
funds to borrowing customers at a relatively higher rate of interest (lending rates) than that paid
to the depositors (deposit interest rates) (Warue, 2013). One of the difficulties in lending is the
precise prediction of whether a loan and interest will be paid back in full. This implies that
lending involves credit risk especially default risk. Banks use diverse internal techniques such as
client screening to minimize their l
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SIMILAR BUSINESS ADMINISTRATION FINAL YEAR PROJECT RESEARCH TOPICS
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