ASSESSMENT OF LOAN POLICY AND PROCEDURE

(CASE STUDY IN CONSTRACTION AND BUSSINESS BANK OF ETHIOPIA ADDIS

ABEBA)

NAME: ASSEFA ALEHEGN

ID NO. BPR /4789/04

A RESEARCH PAPER IN PARTIALS FUILFILMENT OF THE SENIOR ESSAY

OF BACHLER OF ART (B.A) DEGREE IN ACCOUNTING AND FINANCE

ADVISOR: TEMESGN.W

ADDIS ABABA UNIVERSITY

COLLEGE OF BUSSINESS AND ECONOMICS

DEPARTMENT OF ACCOUNTING AND FINANCE

JUNE, 2014
 ADDIS ABABA

ADDIS ABABA UNIVERSITY

COLLEGE OF BUSSINSS AND ECONOMICS

DEPARTMENT OF ACCOUNTING

ASSESSMENTON LOAN POLICY AND PROCEDURE (ACASE STUDY IN

CONSTRACTION AND BUSSINESS BANK OF ETHIOPIA ADDIS ABABA MEXICO
MAIN BRANCH)

BY:ASSEFA ALEHEGN
ACKNOWLEDGMENT

No word of thanks and gratitude is enough to appreciate what the lord and his mother have done
for me

I am very much indebted to my advisor Ato Temesgen for his continues and regular
follow up without his untiring effort the completion of this paper would not have been
possible.
I would like to thank to construction and business bank officials especially to Muluken
Asmare.
My deepest gratitude goes to my family especially my sister Abaynesh, Mom and Dad
for their financial and moral support to preparing this paper.

Finally I would like to acknowledge who support me by typing this paper Amarech.
 Abstract

This study was aimed to asses loan policy and procedure in CBB. The main objective of the
study is to assess the requirement of bank to give credit and to assess the problem of un
collectability. To achieve this objective, both primary and secondary data sources are used. The
researcher used descriptive sampling technique in order to select the staff of the organization
that is directly responsible for the practice of loan policy and procedure. The researcher used
descriptive sampling technique in order to select Primary data are obtained by using
observation by destructing self-administered questionnaires, by face to face interviewing
whereas secondary data has been obtained from different reference books, research papers,
company record, magazines and different websites. The collected data were analyzed, processed
and interpreted by using tables and percentages.
Finally as a conclusion the bank policy and procedure is good but it is not enough because the
bank has some challenging requirement to give credit facility.
Acronym

ISMIOPA-institution the saving and Mortgage Corporation of Ethiopia share company and
imperial saving and home ownership public association.

HSB-housing and saving bank

CBB-construction and business bank

NBE-national bank of Ethiopia

OSC-original security certificate

IRR-internal rate of return

HOCC-head office credit committee

CHAPTER ONE

1.1 background of the study

Loan is out of giving money, property or other material goods to another party in
exchange for future repayment of principal amount along with interest other finance
charges. A loan may be for specific, one time amount can be available open-ended credit
up to specified amount (www.investopedia.com/terms/l/loan).

Term loan is method of financing, which are characterized by periodic repayments..

These repayments can be monthly, quarterly, semi-annual or on lump sum basis (balloon
repayments).
Term loan are classified as short, medium and long term. Short term loans have duration
not exceeding one year and are normally for working capital to meet financial
requirements of customers. In medium term loan have duration not exceeding five years
and for goods, light, vehicles, trucks, public transport vehicles, completion of building
purchase of residential buildings etc
Long term loan have duration exceeding five years. Such loans are normally granted for
the construction of residential houses, commercial and industrial building, and large scale
investments etc
The above mentioned types of loan are the way and the system how to give a loan to the
society in construction and business bank.
Therefore, the researcher was asses the way of granting loan and collecting (for both
long term and short term) and related problems.

1.2 Back Ground of the organization

Construction and business bank S.C (CBB) is wholly government and owned public
enterprise and sector of housing and saving bank.
Constriction and business bank evolved from the merger of two financial institutions, the
saving and mortgage corporation of Ethiopian Share Company and imperial saving and
home ownership public association (ISMIOPA) which were nationalized and formed
housing and saving banks at onset of the socialist era of Ethiopia. In November 1975, as a
result of merger, housing and saving bank assumed the assets and liabilities of the two
financial institutions. The main reason for the establishment of housing and saving bank
(HSB) was to encourage and further accelerate the rate of housing construction for the
improvement of living standards of urban dwellers. Due to change in national economic
police the housing and saving bank become construction and business bank in September
1994. By regulation number 203/94 with authorized capital of birr 71.8 million of which
63.9 million was paid-up. The regulation gave CBB mandate to provide universal
banking service, as focusing on construction financing in line with this, CBB has
ventured in to commercial banking operation stage by stage maintaining construction
financing as its core business.

Objective and Duties of CBB

The objective and duties of CBB provide loans for hotels, tourism, loan for construction
sectors, provide short term and medium term loan to all sectors of economy ,operate
foreign banking services, accept saving, demand and time deposit, outgoing fund transfer,
incoming transfer, and engage in such activities are customarily carried out by banks.
By these objective and duties CBB expand its service and it become profitable. By doing
so its branch reached 106 of which 40 are city branch and the remaining are out lined city
branch and the bank made unreserved effort to enhance its service through equipping
branches with the state of heart technology computers. Even though, CBB is one of the
profitable enterprises it is on the process of privatization. Consequently, the bank
becomes a share company as of September 2001.

Vision, mission and value statements

Vision: CBB vision to become customers first choice bank in Ethiopia.

Mission: CBB mission to render long term construction loans for residential and
commercial building, medium and short term loans and all other domestic and
international banking services by deploying honest and motivated staff and employing
state of art technology and thereby meet the interest of all shall holders.

1.3 Statement of the problem

Construction and business bank provides different types of loan and each types of
loan have its own collateral requirement, amount of loan allowed and duration of
loan. The basic requirement for loan provided to any sector the economy shall be high
collateral so the borrower far away from this bank, this leads to decrease the income
of the bank. In this bank there is a problem of uncollectable of money because
borrowers borrow money beyond their capacity .so there is repayment problem within
a given period.
At the time of giving the loan especially like to residential loans the bank asks
whether the construction is insured or not, if it is not insured the bank does not give a
loan to that person. This is useful, to the bank but not the people or the borrower
because most of the borrowers have not ensured and also if the bank asks a high
interest rates to the borrower because of this two reasons the number of borrowers
decrease.
 The research is designed to see the reason for the above problem and suggest solution
by giving recommendations.
This bank is generally a problem of un collectability and granting loan or
requirements of insurance of each customer to borrow money from CBB. Therefore
the researcher was interests how to assess the way of granting loans and collecting
(for both long term and short term and related problems).

1.4 Research Questions

What are the requirement that must be fulfilled by the customer in order to
borrow money and the bank to lend?
What is the bank contributes for any types of loan?
How to identify major problem in assessing loan on construction and business
bank?
What are the possible solutions for default loan?

1.5 objective of the study

To assess terms and conditions that must be fulfilled by the borrower in order
to borrow money.
To identify the major problems in assessing of loan on construction and
business bank.
To suggest a possible solution for the default of loan assessment system.
To assess their lending policy and procedure.
To assess the bank contribution for each types of loan.

1.3 Significance of the study

The study of loan assessment on construction and business bank is one way of getting
solution for the problem, in addition to the study may help in planning loan
assessment in better way for CBB, give additional information concerning the
development of loan system necessary for related society, it also provide insight for
further study and add new idea to existing knowledge of loan structure in the bank
and the above significance also give an overall idea over the issue to all reader.

1.7 Scope and limitation of the study

1.7.1 Scope of the study
This study is designed to evaluate the loan practicing construction and business bank
and the study is going to be made based on the information gained from this bank.

1.7.2 Limitation of the study

In preparing this paper the researcher was encountered the following limitations.
1. Much of the information that the bank researches to outsider are some way
restricted due to borrowers and lenders relationship.
2. The authorities did not allow taking the name of the borrower.
3. Financial constraint.
4. Lack of Basic engineering skills practice experience somewhat hindered my
ability to assess how the bank engineers estimate given project, just to point
out whether prospects as overvalued or undervalued.
5. Time given the preparation for this paper is limited.
1.8 Research design and methodology
The study under consideration has attempted to apply the research design and data
collection method which are suitable for successful accomplishment of the research.
1.8.1 Research methodology
Data source
The research type of methodology was applied purposive data. The research
methodology for this study begins with literature review; continue with document
analysis, interviewee and questionnaire. Both primary and secondary data sources
were used. The primary data is obtained through interviewee and questionnaire. The
interview is conducted to key sources of loan requirement procedure, interstate and
amount of loan and duration time was assessed. Questioner was designed to address
the possible detail practice of the bank to customers selected the CBB customers. The
number of questions is kept minimum to encourage respondents for the response.
Secondary data is collected by reviewing topic related books, unpublished
organization document and internet.

1.8.3 Research design

The type of research design used is descriptive study is a method which express the
characteristics of the population and respondents and data using central tendency.

1.9 Sample size and sampling technique

In determining sample size the sample was limit only to permanent employee or staffs
in construction and business bank. In order to more clarify the research use
interviewee the creditor manager and the customer concern on this construction and
business bank which is purposively selected that are suitable to the research.
1.10 Data analysis tool
 Since, the type of study is purposive and data was descriptive in nature. Purposive
means data was selected from CBB which can able to gate information suitable and
accessible to the research.
Descriptive study was used to express, descriptive any data will collect from it.

1.11. Organization of the paper

The research contains chapter one deals with study and its approach. Chapter two
consists of the review or related literature which is available in different sources.
Chapter three deals with finding and analysis of the data and chapter four presents the
summary, conclusion and recommendations. In addition to this reference was
attached as appendices to the last part of this paper.

1
CHAPTER TWO
Literatures Review

2.1 Introduction

In this chapter the researcher will explain about loan, term loan, sources of loan, secured and
unsecured loan, long term financing, and regulation of lending tools of financial analysis and
control and financial ratio analysis in detail.

2.2 Definition of loan

A loan is the act of giving money property or other materials goals to another party in exchange
for future repayments of principal amount along with interest or other finance charges. A loan
may be to specific one time amount or can be available as open ended credit up to specified
calling amount (www investopodio.com/terms/l/loan).

There are different types of loan:-open ended, closed ended, term loan etc.

Open ended loans: are loans that you can borrow over and over like credit cards and lines of
credit are the most common types of open ended loans.

Closed ended loans: cannot be borrowed once they have been repaid. As you make payments on
closed ended loans, the balance of loans goes dawn. However you dont have any available
credit you can use on closed ended loans (www.financialized.com/loans/).

2.3 Terms loans

Terms loan is method of financing which is characterized by periodic repayments. These

repayments can be monthly, quarterly, and semi-annually or on lump sum basis. (Ball on re
payments).

Term loans:-a term loan is a business loan with a maturity of more than one year. These loan are
negotiated directly between the borrower and lender and hence. No intermediary is involved. The
term lenders include commercial banks, insurance companies, suppliers, governmental agencies
and venture capitalists.

Types of terms loans

2.3.1. Short term loans:

Have duration not exceeding one year. Short term loan are normally for working capital to meet
financial requirement of customers.

Source of short term financing

To full fill financing needs, firms can draw up on a wide variety of short term financing methods.
Some of these financing opportunities arise spontaneously in the normal conduct of business,
while other sources must be negotiated. During period of high interest rates, firms often use short
term financing to avoid a long term commitment at high interest rate.

In this situation, the firm uses short term financing to bridge the period of high interest rates.
Short term financing /credit sources are usually grouped in to two categories: unsecured and
secured.

2.3.1.1 Unsecured loans

Unsecured credit is obtained without the borrowers pledge of specific assets to serve as
collateral. Dont have asset for collateral. These loans may be more difficult to get and have
higher interest rate. Unsecured loan closely on your credit history and your income to qualify
you for the loan if you default on a secured loan, the lender has to exhaust collection option
including debt collectors and law suits recover the loan (www.financialied.com/loans/unsecure).

Bank credit: bank may provide funds for the financing seasonal needs, product line expansion
and long term growth. The typical banker prefers a self-liquidating loan in which the use of
funds will ensure a built in or automatic repayment Scheme.

Actually two third of bank loan are short term in nature. Nevertheless, through the process of
renewing old loans, many of this takes the characteristics of longer term financing. Major
changes occurring in bank today are centered on the concept or full-service banking. The
modern banker function is much broader than merely accepting deposits.

Making loans and process checks banking institutions may be providing trust and investment a
banking services, a credit card operation, real estate lending, data processing service, cash
management service both domestically and internationally, pension fund management and many
other services for large and small business. Many of these services have been made possible
through the development of the bank holding company a legal entity in which one key bank
owns a number of facilities bank as well as other non-banking subsidiaries engaged in closely
related activities.

Banking deregulation has created greater competition among financial institutions such as
commercial banks, saving and loans, credit unions, brokerage houses and new companies
offering financial services. A look at a number of terms generally associated with banking (and
other types of lending activities) and considers the significance of each. Attention is directed to
the prime interest rate, compensating balance, the term loan arrangement and methods of
computing interest (Brigham et al 2011 P.160).

Accrued expenses: another source of spontaneous short term financing in the accrued expenses
that arises from the normal conduct of business. Accrued expenses is an expenses that has been
incurred but not yet been paid. For most firms one of the largest accrued expenses is employees
accrued wages and the firm has the use of wage the employee has earned up to the end of the
month.

While these accrued expense confer a benefit to the firm and are cheap source of financing. It is
very difficult to increase accrued expenses as financing sources (www.iadb.org).

A company line of credit:-is an arrangement under which a firm is authorized to borrow up to a

specific amount to ensure that the line is used for short term purposes. The borrower will
sometimes be required pay the line dawn to zero and keep it therefore some period during the
year typically 60 days.

Trade credit:-just as receivables arise spontaneously for each firm so do accounts payable and
just as receivables represents an extension of credit from another party an account payable means
that the firm has received credit from another party. Account payable often generated from trade
credit. Trade credit is a credit that a firm receives when it goods the time the goods is received
until final payment is made.

2.3.1.2 Secured loans

Are loans that rely on asset as collateral for the loan, In the event of defaults, the lender can take
possession of the asset and use it to cover the loan. Interest rate for secured loan may be lower
than thus unsecured loans.

Banks and other finance companies often require security for short term loan just as they do for
long term loan. Security for short term loans usually consists of account receivable inventory or
both. Secured bond can also be secured with a revenue stream that comes from the project that
the bond issue was used to finance

Account receivable financing:-involve either assigning receivables or forecasting receivables

under assignment the lender have the receivable as security but the borrower is still responsible if
receivable is discounted and sold to the lender. Once it is sold collection is the factor problem
and the bad debt accounts with manufacturing factoring the factor forwards the money on agreed
upon future date.

Inventory loans: -short term loan to purchase inventory come in three basics forms.
 1. Blanket inventory loans :-a blanket inventory lien gives the lender a lien against all the
borrower s inventories ( the blanket covers everything)
2. Trust receipt:-trust receipt is a device in which the borrower holds specific inventory in
trust for the lender. Trust example is automobile dealer finance through trust receipt.
3. Field warehouse financing:-in field ware house financing, a public warehouse company
acts as control agent to supervise the inventory for the lender (Block, 1994 p.214-217).

2.3.1.3 Other sources

There are a variety of other sources of short term funds employed by corporation: most of them
are commercial paper and foreign borrowing.

Commercial paper: an unsecured short term debt instrument issued by corporation, typically for
the financing of accounts receivable, inventory and meeting short term liabilities. Commercial
paper consists of short term notes issue by large and highly related firms. Typically these notes
are of short term maturity ranging up to 270 days.

Foreign borrowing:-as increasing source of fund for use of fire has been the largest euro dollar
market loans from foreign dominated in dollar are called euro dollar loans.

Foreign borrowing is an outstanding loan that one country owes to another country or institutions
within that country. Foreign debt also including due payments to international monetary funds
(IMF). Total foreign debt can be combination of short term and long term liabilities
(www.investopedia.com/terms/f/foreign.....).

Letter of credit:-a letter of credit is a common arrangement in international finance with a letter
of credit, the bank issuing letter of promise to make a loan if certain conditions are met.

Typically, the letter guarantees payment on shipment of goods provided that the goods arrive as
promised. A letter of credit can be revocable (subject to cancellation) or irrevocable (not subject
to cancellation if the specified conditions are met).

2.3.2 Medium term loans

Have duration not exceeding five years. Use for working capital requirements and for purchase
of capital goods, light, vehicles ,trucks, purchase of residential building, etc

Intermediate- term financing

The financial manager uses intermediate terms financing to finance permanent working capital
and fixed assets.

Intermediates- terms financing includes terms loans, equipment financing loans and leases.
Equipment financing loans: is a loan used to finance the purchase of new equipment in which
the equipment is used as collateral for the loan. The source financing equipment includes
commercial banks, equipment manufacturers, sales finance companies, insurance companies and
pension funds.

Lease: is a contractual garment in which the assets owners agrees to let another party use that
asset in accordance with the terms of contract. The lesser and lessee negotiation the terms of the
lease contract which is normally include the length of lease amount and frequency of lease
payments, covenants, cancellation provisions, renewal and purchase options, maintenance and
related costs provisions and property improvement and features. Lease can be either operational
or capital lease.

2.3.2 long term loans

Have duration exceeding five year. Such loans normally granted for the construction of
residential houses, commercial and industrial buildings large scale investments etc..

Long term financing:-to project against the danger of not being able to provide adequate short
term financing in tight money periods the financial manager may rely on long term funds to
cover some short term needs.

Long term capital is now used to finance fixed assets, permanent assets and temporary current
assets. Long term external financing consists of primary of bonds, preferred stocks, common
stocks. And bonds can be secured or unsecured.

Bond indenture-an indenture is a legal document that spells out the right of bond holders and
the issuing corporation and a trustee is an official (usually a bank) who represent the bond holder
and makes sure the terms of the indenture are carried out. A firm will have different indenture for
each of the major types of bonds it issues, but a single indenture covers all bonds of the same
type.

Unsecured bonds

Are bond, which are not backed by the pledge of collateral.

Secured bonds

Secured bond:-is bond backed by the pledge of collateral in order to decrease the investment
risk of the bond holder and to increase the marketability of the issue.

Mortgage bond:-are bonds backed by real property, some mortgage bonds are secured by
blanket mortgages in which all or most of the firms assets serve as collateral. Mortgage bonds
can pay interest tin monthly, quarterly or semiannually periods. In the event of liquidation, the
holders of those secured mortgage bonds would have claim against the property, but only after
the first mortgage are sometimes called junior mortgage.

Collateral trust bonds:-are debt securities backed by other severities which are usually hired by
trustee. It is a bond secured by financial assets such as stock or other bonds that is deposited and
held by trustee for the holders of the bond. If the issuing company were to default on the debt
obligation, the debt holders would receive the securities held in trust, like collateral for loan.
(www.investopedia.com/terms/c/collat.....)

Equipment trust certificate:-are bonds usually issued by Transportation Company. Such as rail
road line, use to pay for new equipment in case of default and trustee holds the title until the total
amount is paid.

Debentures:-are unsecured long term bonds backed only by borrowers credit worthiness and
are usually issued when the firm has a strong financial position and its property is unsuitable as
collateral or it is too weak to have other alternative. Debenture bond provides no lien against
specific property as security for the obligation therefore, general creditors whose claims are
protected by property not otherwise pledged.

Development bond-some companies may be in position to benefit from the sale of either
development bonds or pollution control bonds. State and local government may set up both
industrial agencies and pollution control agencies

Municipal bond insurance-municipalities can have their bond insured, which means that
insurance companys guarantees to pay the coupon and principal payment should the insurer
default. This reduces risk to investors, who will thus accept a lower coupon rate for the insured
bond than for comparable uninsured one.

Income bond:-are bonds that pay interest only income is earned by the issues. Thus the interest
rate is note affixed change, but the principal amount must be paid when due (Brigham et al 2011
p.173-180).

Warrants

A warrant is an option to purchase a stated number of shares common stock at a specified price
over a given period of time. Holders of warrants dont have the right of common stock holders
until they exercise their warrants. Generally warrants are issued along with debt, and they are
used to induce investors to buy long term debt with lower coupon rate than would otherwise be
required. There are three conditions that causes holders to exercise their warrants (1) warrant
holders will exercise and buy stocks if the warrants are about to expire and the market price of
the stock is above the exercise price . (2) Warrant holders will exercise voluntarily if the
company raises the dividend on the common stock by a sufficient amount no dividend is earned
on the warrant, so it provides no current income. However, if the common stocks pay a high
dividend, then it provides an attractive dividend yield but limit stock price growth. This induces
warrant holders exercise their option to buy the stock. (3) Warrant sometimes have stepped-up
strike price (also called stepped-up exercise prices).which prod owner in to exercising them.

Convertible securities

Convertible security is a bond or preferred stock that may be converted in to common stock at
the holder specified price over specified of time. Unlike, the exercise of warrants which brings in
additional funds to the firm, conversion doesnt provide new capital; debt (or preferred stock) is
simply replaced on the balance sheet by common stock. Of course, reducing the debt or preferred
stock will improve the firms financial strength and make it easier for raise additional capital, but
that requires a separate action.

Preferred stock

Preferred stock is a class of capital stock that pays dividend at specified rate and that has
preference over commons stock in the payment of dividends and the liquidation of assets.
Preferred rate is hybrid security because it has characteristics of both debt and equity. It is
similar to bonds in some respects and to common stocks in other ways. Accountant classifies
preferred stock as equity; hence they show it on the balance sheet as an equity account. However,
from finance perspective preferred stock lies somewhere between debt and common equity; it
imposes a fixed charge and thus increases the firms financial leverage, yet omitting the
preferred dividend does not force a company in to bankruptcy. Also unlike interest on debt,
preferred dividend are not deductible by issuing corporation, so preferred stock has a higher cost
of capital than does debt.

Common stock

Common stock is expected to provide a stream cash flow, and a stock value is found the same
way as the value of other financial assets; namely, as the present value of its expected future cash
flow stream. The expected cash flow consists of two elements. (1) The dividends expected in
each year and (2) the price investors expect to receive when they sell the stock. The expected
final stock price includes the return of the original investment plus an expected capital gain.

Retained earning

Retained earnings are a corporate earning that is not paid out as dividends. Thus sum of the par
value capital in excess of par and accumulated retained earnings is the common equity, of the
firm which is usually referred to the firm book value represents the amount contributed directly
and in directly to the cooperation by equity investors( Brigham,2011 p. 750-760).
2.4 Regulation of lending

The loan portfolio of any bank is heartily influence by regulation, because the quality of banks
loan portfolio has more to do with risk and safely than any other aspect of the bonding business.
Some loans are restricted or prohibited from making loans collateralized by their own stock
(Rose1999 p. 522).

2.5 Tools of financial analysis and control

2.5.1Financial ratio analysis

Financial ratio analysis:-the type of analysis varies according to the specific interest rate of the
party involved. Trade creditors are interested in the liquidity of the firm. Their claims are short
term and the ability of a firm to pay these claims is best judged by means of a thorough analysis
of liquidity.
The long run financial ratios are yardstick to evaluate the financial condition and performance of
accordingly they are more interested in the cash flow ability of the company to serve debt over
the company. Financial ration can be derived from the balance sheet and the income statement.
Financial ratio (or accounting ratio) is relative magnitude of two selected numerical values taken
from an enterprises is financial statements. Often used in accounting there are many standards
ratios used to try to evaluate he over all financial condition of a corporation or other
organization. Financial ratio may be used by managers within a firm, by current and potential
shareholders (owners) of a firm, and by creditors. Financial analyst use financial ratios to
compare the strengths and weaknesses in various companies. If shares in accompany are traded
in a financial market, the market price of the shares is used in certain financial ratios. Ratios can
be expressed as decimal value, such as 0.1, or given as an equivalent percent value, such as 10
%.

2.5.2 Sources of data for financial ratios

Used in calculating financial ratios are taken from the balance sheet, income statement,
statement of cash flow or (sometimes) the statement of retained earnings. These comprise the
firms accounting statements or financial statements. The financial statements data is based on
the accounting method and accounting standards used by the organization.

2.5.3Purpose and types of ratios

Financial ratios quantify many aspects of a business and are an integral part of the financial
statement analysis. Financial ratios are categorized according to the financial aspects of the
business which the ratio measures.

Potential financial ratios are categorized in to various types according to the financial aspects of
the business which the ratio measures. That includes activity, liquidity, debt, coverage,
profitability, and market value. Each type has a special use for the financial or security analyst.
Liquidity ratio: - are used to judge a firm ability to meet short term obligations. It can measure
the availability of cash to pay debt.

Current ratio (working capital ratio) =current assets/current

Liabilities

Cash ratio =cash and marketable securities/current liabilities

Debt ratio: - reflects the relative proportion of debt funds employed. It can measure the firms
ability to repay long term debt.

Profitability ratios:-are designed to relate the financial change of a firm to its ability to serve
them. Profitability measures the firm uses of its assets and control of its expenses to generate an
acceptable rate of return.

Profitability ratios are of two types. These are showing profitability in relation to sales and to
showing profitability in relation to investment. Together these ratios indicate the firms
efficiency of operation.

Gross profit rate =gross profit/net sales OR

(Net sales-cost of good sale)/net sales

Operating profit or margin =operating income/net sales

An operating income is the difference between operating revenues and operating expenses.

Market value ratio: - are those ratios that relate the market value of companys stock to
profitability, to dividend and to book equity, measures investor response to owning a companys
stock and also the cost of issuing stock. These are concerned with the return on investment for
shareholders, and with the relationship between return and the value of an investment in
companys shares.

Financial ratio allow for comparisons between companies, industries, different time periods for
one companies, between a single company and its industry average. Ratios generally are not
useful unless they are bench marked against something else, like past performance or another
company. Thus, the ratios of firms in different industries, which face different risks, capital
requirements, and competition, are usually hard to compare.

However the usefulness of the ratio depend on the indignity and experience of the financial
analysis that employ them, by themselves, financial ratios are fairly meaningless they must be
analyzed on a proportional basis (www wikipwdia.org/wiki/financial).
CHAPTER THREE

Data Presentation and Analysis

3.1 Construction and Business Bank Credit Policy

I. Primary data collection from interviewee

The bank credit policy is based up on council of minister regulation no.43,
2011 which is provided for the establishment of construction and business
bank S.C.

Construction and business bank provide different types of loans and in order to
simplify the loan procedure the bank has categorized the types of loans and
each type of loans have its own collateral requirement, amount of loan allowed
and duration of loan. Construction and business bank also have different types
of interest rate on each loan.

3.1.1 Requirement of Loan on Construction and Business Bank

3.1.2 Collateral Requirement

The basic requirement for loans provide to any sector of the economy shall be
the capacity of the borrower to repay. Furthermore, the bank shall hold as a
security the project to be financed and also the bank has the right to make
periodic inspections of such collateral and the project offered for security. A
loan shall be appraised by the bank engineers. The bank engineers appraised
the collateral requirement for each type of loan especially for construction of
building related.

3.1.3 Security and Insurance

Security is a term used by the bank to represent the collateral regulated in

order to offset some unforeseen weakness or some unusual condition that
happen during the life of a loan. The bank accepts various types of securities.

3.1.3.1 Types of Securities

1. Residential or commercial building

Security for residential or commercial buildings are own or third partys
property. Their third parties including both husband and wife must put
signature on own property contract. This contract must be registered at the
municipality.

2. Blocking or deposit account

The procedure for block or deposit account110% of value of credit granted.

Block amount should be segregated with 1:1.1 ratios according to the CBB
principle. I.e. in order to borrow 100 birr from CBB the customer should be
deposit 110 birr in this bank.

Business mortgage

1. Business mortgage may include tangible assets as machinery and

equipment and intangible assets as goodwill and trade mark.
2. Letter of undertaking from a state enterprise, cooperative or association.
3. Personal guarantee
4. Treasury bill
5. Insurance bond

3.1.4 Insurance

Insurance is defined as coverage by contract where by party undertakes to

indemnity or guarantees another against loss by a specific contingency or peril.

3.1.4.1 Properties which Must have Insurance under Construction and

Business Bank

1. Pledge merchandise against fire, lighting burglary and house breading for
full value.

2. Mortgaged building against fire storm earth quick and impact vehicles and
air craft

3. Mortgaged plant, machinery and equipment against fire

4. Chattels mortgaged vehicle against all risks and

5. Stock against fire and burglary

I.e. All properties that insured the damage must be incidentally not purposively
occurred.

3.2 Amount of Loan on each Type of Loans

3.2.1 Amount of Loan

A magnitude of credit facility extended by the banker according to levels of

income generated by the borrower and the type of loans made available of
them. The amount of loan is based on the borrowers capacity, character,
capital, credit worthiness and collateral.

3.2.2 Type of Loans

The types and requirement for each types of loan is clearly stated:

3.2.2.1 Business Construction and Purchase Loans

The project so financed shall constitute a security for these types of loans. The
maximum limit of such borrowing is to be determined by borrower capacity for
repay the loan with in specified period of time and in this case the bank will
finance 70% and the rest 30% will be owners contribution and the duration
period should not exceed 10 years including grace period.

Relevant document in loan assessment and approval for business construction:

1. Written application and bank standard application.

2. Trade license, certificate of registration and memorandum of registration
(as application)
3. Article of association power of attorney feasibility study and audited
financial statement.
4. Land lease holding certificate and lease agreement.
5. Statistical calculation specification and bill of qualities and contract
agreements (it construction is done by contractor).
6. plan

3.2.2.2 Residential Construction Loans

A. Salaried people and housing cooperative societies: There is no ceiling for

such types of loan but it depends on the capacity of borrower and in this
 case the bank will finance 95% project cost and the remaining will be own
contribution but duration date s up to 20 years.

B. Business men: The limit for the construction of residential buildings is birr
1,000,000.00 provided their repayment capacity allows and the bank will
finance up to 70% and the rest of 30% will be owners source. However, the
extent of financing will depend up on the type and value of the building,
location site development, marketability of building and quality of building.
When we see the duration period is based on the borrower age but shall not
exceed 10 years.

Relevant document in loan assessment and approval for residential

construction:

1. Written application and bank standard application form.

2. Trade license and power of attorney.
3. Under taking letter from employee (if salaried).
4. Land/lease holding certificate and lease agreement.
5. Construct permit and specification and bill of quantities.
6. Rent agreement (if repayment is from rent income).
Source: (construction and business bank published document and from
interview credit manager)

3.2.2.3 Loans for Construction of Service Quarters and Fences

The main house shall be hold as a security wherever loans are extended for
construction of fences and service quarters. The duration period of loan for
fences shall not exceed one year years and 10 years for quarters.

3.3.2.4 Loans for Renovation, Extension, Improvement, Completion

Captive of Building etc.

Under such scheme the project is properly financed shall some as collateral for
securing loan

Purpose of loan Extent of loan Period of loan in % value to be

year financed
Residential No limit 20 70%
Commercial No limit 15 25%
Fencing 50,000 Birr 1 30%
Completion - - -

3.2.2.5 Residential Construction or Purchase of Loan for Nonresident

Ethiopians

The maximum loan to be made valued under such scheme shall not exceed
500,000 birr or 70% of the cost of the house whichever is less and the duration
period is extended up to maximum of 10 years with age limit of 60 years.
Under such scheme the security for such borrowing is the house financed by
the bank and the lease holding certificate.

3.2.2.6 Loans for Lease Holding in Conjunction with Construction of

Premises

Under this scheme the extent of financing shall be 30% of the value of land
leased and 70% of total cost of construction of intended project.

In this case there is not ceiling but depend up on his/her ability to repay the
loan and duration period shall up to 15 years. Security for such loan is the title
document of lease holding and other properties as needed.

3.2.2.7 Loan against Deposit

The collateral offered so such loan is the borrower third party blocked deposit
account in the bank and the release of such loan depend upon the settlement
of the borrowed money and the settlement of such loan should not exceed 3
years. Accordingly the bank shall give birr 100 loan for every 110 birr
maintained in the blocked account.

3.2.2.8 Package Loan

Package loans are a type of credit facility provided by the bank to promote
legally permitted business starting from construction of premise to providing
working capital requirement to operate the business. The duration for
constructing of business premises remain unrelated and for purchase of
machinery and furniture is extend 5 years where working capital portion may
extend up to 12 months. Such bank loan contribute 70% and the rest will be
own sources and the collateral should be one to one proportion.

Grace Period

Grace period refers to a fixed time allowed by the bank to a borrower before
starting his loan repayment so as to enable him completed the construction
work. Until such time it will be ready or shall depend upon the site and
complexity of the construction.

3.3 Repayment of Loan

According to internal regulation all loans shall be repayable first into equal or
unequal monthly installments. The borrowers can repay once without
installments.

Monthly repayment for any type of loan shall be applied first to the repayment
of interest and then to the principal until the loan is fully settled. The
installments shall be applied first to the repayments of cost and interest
accrued to the loan and the remainder shall be used to reduce principal
amount of loan. The bank is following the borrower in order to reduce the non
performing (Default) loan as contract is made.

3.4 Interest Rate and Charges

The limit of interest rate presented and transmitted to CBB through directive
2012/2013 is as follows the present loan interest rate of CBB.

A. Short term 10.5

B . Medium term 11.5

C. Long term 12.75

Banks may impose a maximum of 3% monthly over and above the lending
interest rate on loans and advance for non compliance with the terms and
conditions under which they are generated such penalty apply for all loan
contractors.

Charges

In addition to interest rate, the bank charges administration and other services
not exceeding 2% of the approval loan to gain over the life of such loans
granted to construction industries. The bank require to deposit sum amount of
birr so as a commitment charge which is to be refunded on first disbursement
of the approval loan.

3.5 Lending Procedure

The interview is not only the above loan policy, requirement loan, amount of
loan interest rate and charges but also it includes the following lending
procedures

- Purpose of the loan

- The applicants commitment else where
- The applicant despots deposit account another branch
- The applicant business experience
- How the intended to pay off the loan
- The business plan etc
- Amount of loan
- The collateral afforded
- Duration of the loan in which the borrower intends to pay the debt
- The installments if monthly, quarterly in one lump sum etc

Opening an account: it is found out that the applicant is new to the branch he
should be requested to open deposit account.

A. Relevant document
In case of business enterprise the articles of memorandum association should
be requested to submit.

- Photocopy of his trading licenses

- Power of attorney (it applicable)
- Feasibility (in case of new project)
- Original security certificate (OSC)
- Financial statement audited or provisional
II. Analyses from Questioners
Due to difficulty to get borrower in the business the researcher used 10
borrowers from construction and business bank credit customer. The
respondents (borrowers) give some procedures and policy on the bank. Out of
total creditors the first (50%) told the overall policy procedure of CBB are good
or reasonable but there is some problem to get loan, among the difficulty are :

1. Usually financial institutions are credit risk for their outstanding loan
due to the fact that high competition practice and long time collateral
assessment and feasibility and liquidity
2. They need many times efforts to borrow.
3. They did not give loan at a time
4. They need documentation requirement
5. It needs you to have insurance

The remaining 4 respondents (40%) said that the overall policy and procedures
of this bank is good and they didnt have any problem or challenge to borrow
money from CBB. According to the respondents 60% of the borrower borrowed
greater than 100,000 for the purpose of large scale constructions and repay the
loan within 30 days.

The 90% of the borrowers said the bank need collateral requirement to get loan
and 70% says the repayment schedule is suitable.

The 60% of the borrower do not get undersigning about the loan policy and
procedure or the bank doesnt give training. The 80% of the borrower said the
collateral requirement is estimated fairly collect data from the respondents in
questioner.
III. Analyses from Secondary Data
3.6 Loans or Advance

The bank shall classify all loans and advances whether such loans or advance,
have reestablished repayment programs or not. The following five categories
using the criteria presented below.

1. Pass loans or advances in this category are fully protected by the

current financial and paying capacity of the borrow and are not subject
to criticism. In general any loan or advance and interest by cash or cash
substitutes shall be classified this category.
2. Special mention- any loan or advance past due 30 days or more but less
than 90days shall be classified special mention.
3. Doubtful nonperforming loans or advance past due 180 days or more but
less than 360 days shall be classified at minimum so doubtful.
4. Loss- non performing loans of advance past due 360 days or more shall
be classified as loss
5. Substandard- no performing loans or advances past due 90 days or more
but less than 160 days shall at a minimum be classified as substandard.
In general the bank is give credit operation for each types of loan

3.6.1 Loan Approval

Based on the source of annually report of loan approval on CBB the following
data was presented in million birr for the past 5 years.

Types of loan 2005/06 2006/07 2007/08

Building construction 451.4 240.5 154.7
Residential 122.7 158.2 94.2
Commercial 328.6 82.3 60.5
Business loans 70.2 67.6 45.7
Short term 18.4 8.6 4.7
Medium term 51.8 59.0 41.0
Long term 52.8 18.7 27.2
Total 574.4 326.7 227.5
(Source: From annual report on CBB on past years)

For the year 2009/10 from the total loans and advance approved (48.5 birr in
million, 35% was for the purpose of residential construction or purchase and
29% of the total approval was for construction of different business promises,
and the remaining 36% went to short term, medium term and long term
business loans but in 2011/12 out of the total loan and advance approved
(birr 463.6 million) 31.3% was long term loans for construction. Purpose of
different residential and business premises and the remaining 68.7% want to
short term (38%), medium term (31%) and long term business loans.

In the fiscal year under review after 2006 the total approved loans was slight
decrease. This is mainly because of the measures taken by national bank of
Ethiopia (NBE) to mitigate the inflations by reducing the money supply of the
economy through restricting commercial banks not to approve loan beyond
their capacity.

3.7 Loan Disbursement

Performance of loan disbursement for the fiscal year 2005/06 to 2011/12 is
given below based on the source of construction and business bank statistical
data in million birr.

Types of 2005/06 2006/07 2007/08 2008/9 2010/11 2011/12

disbursement
loan
Residential 101.5512 132.101 96.575 113.75 169.520 152.3
construction
loan
Commercial 249.095 145.602 98.490 105.97 195.352 287.3
building
construction
loan
Business 70.242 67.55 45.685 177.44 158.980 160.8
loan short
medium and
long term
loan
Total 420.849 345.258 230.75 397.26 526.852 650.4
(Source: From CBB annual report for the past years)
From the above source out of the total loan disbursed the large amount allowed
for commercial building and residential construction and the minimum
amounts is disburse to business loan (short term, medium and long term
loans.)

Loan disbursement varies from year to year. Example, during the period
2009/10 the performance was boasted by 32.7% from the previous year
balance of birr 397.2 million. The reason for this is huge loan approval during
the first and second quarters and resulting huge disbursement together with
undrawn balance loans transferred from 2008/09 disbursement were the main
factor behind this recommendable performance. But for the year 2011/12
when performance compiled to previous fiscal year achievement of birr 620.2
million, it depicted a decline 73.3%.

3.8 Loan Collection

The loan collection construction and business bank out of loan disbursement
are explained in the following. There are different factor for increment and
decrement of loan collection amount.

1. Approval and disbursement performance

2. Credit follows up efforts of the bank

Performance of loan collection for the fiscal year 2005/06-2011/12 based on

the source of construction and business bank annual report from past years.

Types of 2005/06 2006/07 2007/08 2008/09 2009/10 2011/12

loan
Residential 46.289 64.877 85.198 109.734 132.353 331.4
construction
loan
Commercial 95.129 158.087 157.428 193.985 191.805 147.3
building
construct
loan
Business 38.55 50.394 53.368 79.791 184.950 82.2
loan
Foreclose 18.327 21.007 27.429 17.174 13.380 6.2
Total 198.3 294.365 323.423 400.6 522.485 567.2

From the above the collection of loan was increase due to improvement of bank
credit follow up effort.

3.9 Outstanding Loans and Advances and Non Performing Loans

For the following years the outstanding loans advance of bank is given and the
non performance loan also followed.

Sector of 2011/12 2012/13

economic Outstand in NPL in m Outstanding NPL in
million birr million
Import 139.19 - 34.16 0.43
Export 20.56 - 9.91 -
Education 29.1 0.79 28.68 0.54
Health 41.15 - 58.29 14.02
Other domestic 305.89 6.20 26.17 5.79
trade
Hotel and 253.74 6.24 224.11 4.25
tourism
Transport and 152.51 - 154.22 0.09
communication
Manufacturing 54.43 1.33 38.11 11.01
Construction 1006.34 35.78 958.99 27.25
Agriculture 7.39 - 1.12 -
Personal 14.32 1.12 21.48 1.44
Others 10.16 0.58 7.34 0.52
Total 1934.798 52.04 1763.00 65.35
NPL % 2.69% 3.706%
3.10 International Banking Operations

International banking operation i.e. letter of credit and other related service is
managed bank managed to generate foreign exchange in flow (Financing
export) like western union money transfer and foreign exchange transaction
totally during the fiscal year under consideration, the bank managed to
mobilize USD 53.6 million in different currencies denominator during the
2009/10 and 2011/12 fiscal year the bank generated a total revenue of birr
94.3 and 100 birr and from international banking transaction birr 4.0 million
and 44 birr from western union money transfer service and birr 122,773.8 and
1333.5 million from FOREC bureau. Thus the bank has totally birr 98.5 million
and 109million birr from international banking operations.

The business visit

The branch manages and the credit investigation will to visit the working place
of the applicant personal guarantor.

Credit information

Credit information is based five Cs. Capital, capacity character, credit

worthiness and collateral. Credit information can be contained from internal
and other branch customer accounts, past repayment habits of customers and
form other banks.

3.11 Financial Statement and Property Estimation

Financial statement should be analyzed to measure the liquidity and

profitability of the business and to know the amount and type of loan to be
granted and properties offered as security must be estimated by the bank
engineers. The major source of financial statement includes balance sheet,
income statement and cash flow. Income statement is analyzed revenue and
expense.
Major source of revenue on CBB

- Interest income
- Rental income
- Other income
- Gain on foreign currency transaction and translation

Major expenses of CBB

- Salaries and allowance

- General expenses
- Rent selected expenses
- Deprecation
- Importation
- Audit fee
- Director fee. Etc
Summary of Financial Assessment in Million Birr

Income 2011/12 2010/11 2009/10 2008/09 2007/08

statement
Total income 419.5 315.3 266.3 227.5 220.5
Total expense 256.9 192.9 135.4 121.8 105.184.1
Net profit 115.8 85.9 91.5 105.7 2393.9
Total asset 5646.6 3504.9 3161.7 2588.00 2198.00
Liability 5467.7 3141.8 2841.5 2373.8 2198.00
Total equity 478.9 363.1 320.2 214.2 195.9
According to annual report from CBB in the above table ,the percentage
growth of Average annual profit after tax , asset ,capital and liability are
37.7%, 48%,144% and 148% respectively.

The CBB bank profitability ratio is explained based on liquidity ratio, debt
ratio, coverage ratio and net profit margin. The liquidity ratio, debt ratio,
Coverage ratio and net profit margin are 10%, 8%, 6% and 15%respectively.

(Source: From CBB annual report for the past year financial statement)

3.12 Organizational, Management and Personnel

The original structure of the center would have the following standards
 Qualified administrative state would be assigned to the real state of the
company so the multi commercial center would be efficiently organized.
The real estate co shall be provided with skilled and unskilled manpower
and managerial staff to assure proper care of residents.
The management would be the dept, supervisor of the company.

3.12.1 Submission of Loan Application

The borrower may submit the application to the lending institution. The
borrower is required to fill out a common application from which seeks
comprehensive information about the project. Specifically the common
application form covers the following aspects.

- Promoters background
- Particulars of the project (capacity technical arrangements,
management, location and buildings, raw materials, labour housing
and schedule of implementation.
- Cost of the project
- Means of finance
- Marketing and selling arrangement
- Profitability and cash flow
- Economic consideration
- Government consents

i.e. All the above lists can be done through technical study (reasonable choice
have been made with respect to location, size process etc), supply and demand
analysis (market planning, demand forecasting by studying a serious shortage
of housing and other facilities due to increase in urbanization. Addressing such
problems call for private investment in real estate development.

The bank engineer analysis the site building type, propose of building flour,
area, rental charges and occupancy real of the two buildings in order to
evaluate the marketability of new building which is under construction.

Procedure of requirement to process and approve loan

- Tax clearance
 - Warranty document
- Trade license and power and attorney
- Marriage certificate
- Memorandum association
- Written application and bank standard application form
On construction and business bank loan approval from LAT no.
CBB/CD/133/2009 main branch
No Husband Wife
1 Name of applicant Mr. Y MIs. X
2 Age - -
3 Occupation Real estate developer -
4 Applicants monthly - -
Salary - -
Other source - -
Total income - -
5 Loan applied for birr - -
6 Purpose completion of - -
commercial building
7 Proposed repayment - -
birr
8 Engineers appraisal of - -
project (property
a. Already invested - -
work done and birr
expected to be
constructed
material on site of
birr.
b. To be invested birr - -
c. Estimated cost of - -
project birr
d. Detail and value of - -
security
9 Direct/indirect - -
liability with our bank
10 Direct/indirect - -
labiality with other
banks
 General remarks
The loan application of Mr. Y was supported by the branch and
recommended to head office credit committee (HOOC). And the applicants
have now qualified the requirement and thus the case is presented for
approval and the approval of loan will be in sequential manner. First to
these loan office branch manager (Branch loan committee, head office
credit committee, top management and finally approving by board of
directors)

CHAPTER FOUR

Conclusion and Recommendation

4.1 Conclusion

From the preceding evaluation results of the case study the following
conclusion can be draw.

The background information required from the applicant is the data that it
provides an insight for the bank to evaluate the personal conditions of the
applicant.
The bank authorities focused only on liquidity and profitability ratio
analysis to analyze the financial aspects of the project and IFF to evaluate
the investment decision.
Even through government investment policy is conductive for private
investment, it is not the only factor for the development of the private
investments in the country. Therefore it is impossible to generate accurate
demand forecasts concentrating only on the attractiveness of the
government policy.
 The types of loan default in literature review are the same with the analysis
or practical experience. Construction and business bank provides most on
the loans that we know theoretical to customers.
The construction and business bank require high collateral by this reason
the borrower far away from this bank. This leads to a loss to the bank.
This bank asks whether the construction is insured or not especially like
the residential construction loans. If it is not insured the bank doesnt give
loan.
The construction business bank takes money to approve loan and give
credit to customers.
CBB gives credit facility the borrower occurred challenges or problems.
The repayment period of loan is not much suitable it needs some
arrangement.
4.2 Recommendations

Based on the above conclusion and findings the following

recommendations are made.
In providing loans for projects like the bank should exclusively evaluate
the feasibility of the project using all appropriate measures of success.
For example the bank uses liquidity and profitability ratio analysis but
there are other methods that the bank uses to analyze the financial
aspects like debt ratio, coverage ratio and market value ratio. In addition
the bank uses IRR to evaluate the proposal however IRR is not the factor
that should be consider.
So the bank should see other methods like net present value and par
bank methods. Because sometimes IRR might have short comings..
Construction and business bank should permit single guarantee as
collateral and entertaining modalities that fit into single model.
The bank should extend their repayment period of time and schedule its
repayment period and loan disbursement according to the type of
business.
The bank should not always ask whether the resident construction is
insured rather has to use another method to give loan to the borrower
that is by asking collateral.
The bank should credit and approve loan in short period of time as much
as possible.The CBB should avoid any challenges on credit facility by
approving policy and procedure
Interviewee For bank staffs
List questions presented for the interviewee
 1. What are the procedure or requirement to process and approve loan?
2. What is the maximum amount of birr lent to customer in each types of loan?
3. What is the required relevant document to process loans?
4. How the banks follow repayment of loan?
5. Does the borrower apply the approved loan for the intended purpose?
6. What is the interest rate charges and applied in each types of loan on constriction and
business bank?
7. What are the penalties for non compliance with terms and conditions?
8. What is the lending procedure is used in CBB?

Questionaries to customers

To be completed by customer of construction and business bank

Dear respondent

I kindly request to you respond the following question, honestly and in full
participatory manner for the study of assessment on loan policy and procedure in
construction and business bank for partial fulfillment of B.A degree in accounting and
finance at Addis Ababa university college of business and economics. Your response
for the question will be kept confidentially and it will be consumed only for this paper.
I thank you for cooperation in advance.

1. How long is your business stayed in the business environment?

1-4 years

4-7 years

Above 7 years

2. please specify the number of times that you have taken a loan from construction
and business bank
1-2 times more than times

More than two times

3. What are the maximum amount that you borrow form construction and business
bank?
Up to 5000

10,000-50,000

50,000-100,000

100,000-500,000

500,000-1,000,000

Above 1,000.000

4. From the above question number 3 if you borrow money for what purpose is it?

5. how many day you stayed to pay the borrowing money

1 year
 1-5 years

5-1- years

Above ten years

6. Do you believe the criteria set by construction and business bank to get loans is
reasonable?
Yes

No

7. Do you think that the overall policy and procedure of construction and business
bank is good?
Yes No

If no, why?

8. Do you face any problem in getting loans form this construction business bank?
Yes

No

If yes what are the difficulties?

9. How many times does the bank take to process loan applicant?
1 to 6 days

6 to 10 days

10 to 20 days

20 to 30 days

More than 30 days

10. Does the bank need collateral to give credit?

Yes

No
11. If the answer is yes why?
Yes

No

12. Is the repayment of schedule suitable to you?

Yes

No

13. Does the bank give you training on loans policy and procedure
Yes

No

14. Do you have any other comments on construction and business bank over all
policy and produce and activities of loans? If yes, please describe here under?
BIBBLOGRAPHY

Rose waster field Jordan (1995), fundamentals of corporate finance 3rd,

RICHARDD.IRWIN

PETER S. ROSE, commercial banking management; 4thed

BRIGHAM, corporate financial management;13thed

Internet: http:/www.investopedia.com/term/l/loan
http:www.financialized.com/loans
http:www. Iadb.org
http:www.investopedia.com/terms/f/foreign.
http:www.investopedia.com/terms/c/collate
En.Wikipedia. organ /wiki/finance