Business Administration in Finance

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Browsing Business Administration in Finance by Author "Abate Sewale"

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    Assessment of the Determinants of Non-performing Loans the Case of Commercial Banks in Ethiopia
    (Addis Ababa University, 2017-05) Atomsa Yonas; Abate Sewale
    The paper investigated the determinants of non-performing loans (NPLs) in commercial banks in Ethiopia in the period of 2007–2016. This study sought to explain the significance of interest rate, growth in GDP, inflation rate, exchange rate, real interest rate, ROA, ROE and loan growth rate on nonperforming loans in commercial banks in Ethiopia.. Explanatory research is conducted in order to identify the extent and nature of cause-effect relationships between dependent and independent variables. The study used secondary data collected from eight purposively selected commercial banks in Ethiopia. Econometric regression analysis was used in establishing the significance of the relationship. The paper found that the level of NPLs can be attributed to both macroeconomic conditions and banks’ specific factors, though the former set of factors was found to have a relatively low explanatory power. From the macro determinants, Real interest rate has positive relationship with NPL which are statistically significant at 1% level of confidence. ROA and ROE from bank specific factors have negative and significant relationship with the NPLs in commercial banks in Ethiopia. The outcome of this project firstly would enable commercial banks adopt workable strategies, benefit to the Ethiopian banking and non-banking financial sectors as a whole, and serve as a source of reference for other related research works in the future. Government Expenditure, Import & export of the country, foreign currencies availability, political stability, and competition in banking industry are recommended for further studies. Key words: Nonperforming loan, Return on asset, Ethiopian commercial Banks, Real GDP, crossectional data, Inflation.
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    Challenges and Prospects of E-payment Service: In the Case of Selected Ethiopian Commercial Banks.
    (A.A.U, 2020-12) Mulatu Wakgari Geda; Abate Sewale
    In Ethiopia cash is still the most dominant medium of exchange and electronic payment systems are at an embryonic stage. This study is aimed to assess the challenges and prospects of E-payment in Ethiopian commercial banks. The study was conducted based on the data gathered from five banks in Ethiopia; four private banks (Dashen bank, Zemen bank, Nib International bank and Awash bank) and one state owned bank (commercial bank of Ethiopia). Qualitative and quantitative research approach were used to answer the research questions that emerge through the review of existing literature and the experiences of the researcher in respect of the E-payment system in Ethiopia. The study statistically analyses data obtained from the survey questionnaire and interview. The study used descriptive statistics and Data was analyzed using a statistical package for social sciences (SPSS). The study identified basic benefits of E-payment for the customers and banks, which helps to enhance other banks to engage in such activity. It also indicated that the major challenges Ethiopian banking industry faces in the practice E-payment system are, Organizational related problems (lack of awareness creation and public confidence, lack of system readiness, lack of trust and lack of responsiveness), infrastructure related (lack of network penetration, power disruption and lack of alternative power and network) and socio-cultural challenges include (fear of risk, society perception to emerging technology). Prospects of E-payment system in Ethiopia; Digital Economic policy is the most important opportunity in Ethiopian e-payment system, liberalization of telecom sector, competitive e-payment channel, emerging need and innovation. The study suggests recommendation: the banks should run campaigns, promotions and adverts, which aim at educating their customers on the need to adopt electronic payment services deeply into technical areas to develop confidence and public awareness. Banks also should make their e-payment instruments ready, motivating e-payment support staffs to immediate e-payment users’ support and make clear the limit of daily e-payment transaction limit. To overcome network and power challenges, the banks should create better strategic partnership with telecom sector and electric power providers, installing 4G network and generators for e-payment users where e-payment instruments locate. To use the prospects (opportunities), the banks should being prepared for digital economy policy of Ethiopia, emerging need, restructuring of network infrastructure provider (ethiotelecom) and competitive e-payment channels. By drafting bank based (modified) digital policy, identifying and hiring emerging (prospect) e-payment customers, developing criteria to select network provider and e-payment channel provider based on latest e-payment owners and users’ criteria
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    Determinants of Dividend Pay-out Ratio: Empirical Study on Private Commercial Banks in Ethiopia
    (A.A.U, 2021-03) Tessema Girma; Abate Sewale
    This research aims to examine the determinant factors of dividend pay-out policy of the stated private commercial banks in Ethiopia. In this study, seven variables such as lending rate, liquidity, growth, asset size, efficiency, profitability and inflation are taken as potential determinants of dividend pay-out policy. Ordinary least square (OLS) multiple regression model was used on a sample of nine private commercial banks for the period of ten years from 2010 to 2019. Quantitative research approach and descriptive research design is employed. While testing the impact of seven independent variables on the dividend pay-out ratio, we concluded that only three can explain the dividend policy. The results show that dividend pay-out ratio is positively and significantly affected by lending rate, but are negatively affected by liquidity and growth. Asset size, efficiency, profitability and inflation do not have a direct influence on the dividend payments. Thus, Lending rate, liquidity and growth are functioning as the key determinants of dividend pay-out of the listed private commercial banks in Ethiopia. As per the findings in this research existing and potential investors as well as the banks management, board members and policy makes should pay their attention on variables(lending rate, liquidity and growth)since they significantly determine dividend pay-out rate of private commercial banks in Ethiopia.
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    Factors Affecting Loan Repayment Performance of Borrowers in the Case of Dashen Bank Addis Ababa District
    (2021-01) Tadesse Tabor; Abate Sewale
    The loan is a single largest asset in banks’ balance sheet. Thus, it’s essential to learn about the factors that affect this asset. However; some of the loan given out become non-performing or end up in default and adversely affect the financial performance of commercial banks. Dashen bank A.A district currently provides different types of loan to its customers. But its onperforming loan rate is becoming high and high comparing to the previous periods. Although different studies were undertaken to find out the different factors that contributed for non-performing loans most of them concentrated on micro finance which can’t be generalized to the bank context in addition to this new factors like effect of covid 19 and corruption was included in the study. The general objective of the study is to identify and explain how and which client, lender and business characteristics affect loan repayment performance of Dashen bank A.A district borrowers. Identifying factors that affect successful loan repayment will help Dashen Bank to be aware of the current factors influencing loan repayment performance and reformulate appropriate credit program. There are many researches regarding repayment of loans, in Ethiopia as well as internationally. The researcher’s states different empirical and theoretical literature reviews from different perspective and titles. And Based on the objective of the study conceptual model has been developed. The research adopted descriptive research designing and it applied a qualitative and quantitative research methodology. The quantitative data method will be employed to collect the primary data from the sample respondents in relation to the socio-economic characteristics of borrowers, business factors and loan related factors. The hosmer and lemeshow test result shows that 0.821 which means that the model is fit in addition Nagelkerke R Square suggests that the model explains roughly 88.5% of the variation in the outcome or all the 19 variables together or jointly explain 88.5% of loan repayment performance of a borrower by the model. There are around 11 significant factors which can distinguishes credit worthy borrowers and not creditworthy borrowers, so scrutinize borrowers based on those factors and give the loan to the one which have high rate comparing to the other borrowers. Keywords: borrowers, loan repayment, logistic mode