Banks and international financial institutions are increasingly basing their aids and loans on condition

that reforms that ensure” good governance” is undertaken. The concept of” good governance” is not new.
It is as old as human civilization. Governance means: the process of decision making and the process by
which decisions are implemented (or not implemented). Governance can be used in several contexts such
as corporate governance, international governance, national governance and local governance. Since
governance is the process of decision making and the process by which decision is implemented, an
analysis of governance focuses on the formal and informal actors involved in decision making and
implementing the decision made. In recent years World Bank has been a prolific producer of
documentation discussing governance as general tool in the international development process. However,
during the course of Twelfth Replenishment discussion for the international development association
(IDA12), the concept of good governance was specifically mentioned in the context of institutional
assessment criteria. In 1992 report entitled ‘‘Governance and Development “is the manner in which
power is exercised in management of countries economic and social resource for development”. The
concept of good governance in Ethiopia also started in 1995.Especially in private banks including Awash
Bank (AB), Oromia International Banks (OIB), Bank of Abyssinia, (BoA). Awash Bank is one of private
Banks in Ethiopia, which is going to assess the performance of good governance. Awash bank was
established as pioneer private bank by 486 funding share holders with a paid up capital of birr 24.2
million and started banking operation on February13, 1995. By now the number of share holders and paid
up capital reached to over 3,500 and birr 3 billion respectively. According to world banks definition
good governance, good governance was described as enlightened policy, predictable and open, together
with bureaucracy imbued with a professional ethos and executive arm of government accountable for its
action.