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Please use this identifier to cite or link to this item: http://hdl.handle.net/123456789/4146

Title: Factors Affecting Profitability: An Empirical Study on Ethiopian Banking Industry
Authors: Amdemikael, Abera
Advisors: Wollela Abehodie Yesegat (PhD)
Keywords: accounting
Copyright: Jun-2012
Date Added: 29-Nov-2012
Publisher: AAU
Abstract: Factors Affecting Profitability: An Empirical Study on Ethiopian Banking Industry Amdemikael Abera Addis Ababa University, 2012 This study examines the bank-specific, industry-specific and macro-economic factors affecting bank profitability for a total of eight commercial banks in Ethiopia, covering the period of 2000-2011. To this end, the study adopts a mixed methods research approach by combining documentary analysis and in-depth interviews. The findings of the study show that capital strength, income diversification, bank size and gross domestic product have statistically significant and positive relationship with banks’ profitability. On the other hand, variables like operational efficiency and asset quality have a negative and statistically significant relationship with banks’ profitability. However, the relationship for liquidity risk, concentration and inflation is found to be statistically insignificant. The study suggests that focusing and reengineering the banks alongside the key internal drivers could enhance the profitability as well as the performance of the commercial banks in Ethiopia. Moreover, banks in Ethiopia should not only be concerned about internal structures and policies, but they must consider both the internal environment and the macroeconomic environment together in fashioning out strategies to improve their performance or profits. Finally, the government needs to revisit its requirements imposed solely on private banks like investing 27% of their total loans on bonds at a relatively lower interest rate.
Description: Presented in Partial Fulfillment of the Requirements for the Degree of Master of Science (Accounting and Finance)
URI: http://hdl.handle.net/123456789/4146
Appears in:Thesis - Accounting & Finance

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