Business Administration in Finance

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Browsing Business Administration in Finance by Author "Abebe, Yitayew (PhD)"

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    Determinants and Management of Credit Risk in Micro Finance Institutions: Empirical Study on Selected MFIs in Ethiopia
    (Addis Ababa University, 2012-06) Selamsew, Yohannes; Abebe, Yitayew (PhD)
    Credit risk is one of the risks any financial institution is exposed for; managing their credit risk will be the key to their financial sustainability. The general objective of this research is to determine the factors influencing Ethiopian Micro finance institutions credit risk, management of credit risk of major Ethiopian MFIs, and an entire review of the management techniques and practices on credit risk management. The researcher used a mixed approach study where the quantitative data show the determinants of credit risk and the qualitative data describes the causes, techniques and other things related with credit risk which is better described qualitatively. In total ten years data of ten MFIs were used to make an econometrics model and five structured interviews are administered to collect the qualitative data. The finding suggest that five variables i.e. loan to deposit ratio, average loan per borrower, total assets, leverage, and management efficiency are significantly affecting the credit risk, and their credit risk arises from different aspects that can be seen from three perspective i.e. external and internal factors, borrowers and lenders characteristics, and firm and loan characteristics. Although, Ethiopian MFIs have different techniques that are used to manage their credit risk.
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    Determinants of Ethiopian Foreign Direct Investment Inflows: Bounds Testing Approach
    (Addis Ababa University, 2019-06) Tamirat, Hailu; Abebe, Yitayew (PhD)
    The very purpose of this research paper is to investigate the long run relationship between foreign direct investment (FDI) and its determinants in Ethiopia. Accordingly, bounds testing approach to Auto Regressive Distributed Lag (ARDL) model has been utilized to test co-integrations among the variables of interests in Ethiopia for the period 1992-2017. Taking foreign direct investment as a dependent variable and real GDP per capita, consumer price index, exchange rate, public debt, gross fixed capital formation and human capital as independent variables, co-integration test has been conducted. The result confirm long run association among these variables. Subsequently, from the long run estimation result output, real GDP per capita as a proxy for market size, gross fixed capital formation as measure of infrastructure development and exchange rate depreciation have positive significant effect on foreign direct investment inflows; but negative and significant effect of consumer price index on foreign direct investment inflows to Ethiopia have been found in the long run. The short run relationship and error correction model (ECM) result reveals positive and significant impact of consumer price index and gross fixed capital formation on FDI inflows. Exchange rate is affecting FDI inflows negatively in the short run as it is shown by the study. The policy of promoting the economy through creating enabling investment climate to increase the output of the economy, maintaining macroeconomic stability, ensuring market determined exchange rate and developing the infrastructure to increase FDI inflows have been recommended.
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    The Determinants of Financial Performance of Commercial Banks in Ethiopia
    (Addis Ababa University, 2018-05) Solomon, Zergaw; Abebe, Yitayew (PhD)
    This study attempts to extensively investigate the determinants of financial performance of state owned and private-owned commercial banks in Ethiopia . The author has chosen one of the most popular methods for measuring banking performance, the CAMELS model approach, which is an acronym for the terms, Capital adequacy, Asset quality, Management quality, Earnings ability, Liquidity and Sensitivity to Market risk. The study used quantitative research approach and secondary financial data are analyzed by using multiple linear regression models. Fixed effect regression model was employed on a panel data obtained from audited financial statements of a sample 7 banks, which were selected using judgmental sampling technique, from 2004-2016 to investigate the impact & relationship of internal (bank specific) and external (macroeconomic) factors with bank profitability measure of ROA. The internal factors used in this study include Capital adequacy; Asset Quality, Management Quality, Earning ability & Liquidity Management, whereas the external factors are real GDP and Inflation. Moreover, Based on the regression result, all internal (endogenous) variables except Liquidity affect performance of the bank at 1% and 5% significance level and from external (exogenous) variables Inflation have significant effect on the performance of banks at 5% significance level. However, Real Gross Domestic Product (RGDP) have insignificant effect on financial performance of commercial banks in Ethiopia. Eventually, the study is attentive in its evaluation process pursuing meanigfull analysis that clearly identifies the Ethiopian banking sector strengths and challenges in all financial and managerial areas.
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    Estimation of Optimal Hedge Ratio for Oil Futures: An Application to the Ethiopian Petroleum Supply Enterprise
    (Addis Ababa University, 2019-05) Tesfaye, Belete; Abebe, Yitayew (PhD)
    Ethiopian Petroleum Supply Enterprise, the sole importer of different oil products in Ethiopia is exposed to price fluctuation risk. Hedging oil with futures contract can offset this risk. So, the most important issue is to what extent or percentage the risk exposure should be hedged with futures contract. The aim of this thesis is to estimate an optimal hedge ratio that will provide the highest price risk reduction using monthly spot and futures price from October, 1990 to March ,2019. Hedge ratios and hedging effectiveness are determined by employing three models namely: Naïve, OLS (Ordinary Least Square) and ECM (Error Correction Model). Hedging effectiveness is evaluated and compared for the three models. The empirical results show that the ECM model provide highest variance(risk) reduction as compared to other models indicating that this model fits better in designing hedging strategy for EPSE. The empirical finding suggests that the EPSE can use oil futures contract as an effective instrument to minimize price fluctuation risk.