Accounting and Auditing

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Browsing Accounting and Auditing by Author "Abate, Sewale (PhD)"

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    The Effect of Financial Risk on the Financial Performance of Ethiopian Commercial Banks
    (A.A.U, 2021-03) Abebe. Robel; Abate, Sewale (PhD)
    This study aimed to identify effects of financial risk on the performance of Ethiopian Commercial banks over the period from 2000 to 2018. The study employed secondary data that bank detailed data were obtained from the audited financial statements of the selected Ethiopian commercial banks head office. In addition, Macroeconomic data were used from MOF. Moreover, balanced panel data were utilized in the research. Accordingly, by using purposive sampling technique only seven commercial banks out of the total of seventeen commercial banks functioning in Ethiopia were included here. Beside to this, the study used ROA as a dependent variable and liquidity risk, solvency risk, credit risk, interest rate risk, foreign exchange rate risk, GDP and bank size as independent variables. Finally, the empirical result of random effects panel data model regression revealed that liquidity risk, solvency risk, GDP and Bank size take positive effect on ROA and statistically insignificant with the exception of liquidity risk which takes positive impact on ROA as well as statistically significant impact, while credit risk has statistically significant and negative influence on the financial performance (ROA) of the Ethiopian commercial banks providing interest rate risk and foreign exchange rate risk statistically insignificant and negative influence on ROA. As a result, Ethiopian commercial banks should evaluate the borrowers’ historical and projected cash flows and adequate collateral margins in order to improve financial performance, need to come with credit policies and devise strategies that not only limit the banks' exposition to credit risk but also establish a proper credit risk management strategy, should have optimal level of liquidity which enables to meet their contractual commitments and should device rigorous policies and measures with appropriate fiscal and monetary policies must be applied to control risks in an economy.
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    Impact of Asset Liability Management on Profitability: A Case of Selected Private Commercial Banks in Ethiopia
    (A.A.U, 2021-06) Abi, Abel; Abate, Sewale (PhD)
    The main aim of the study was to examine the impact of asset and liability management on profitability of selected private commercial banks in Ethiopia for the study period 2010 to 2019. The researcher used explanatory research design to examine the impact of asset–liability management on profitability of selected private commercial banks in Ethiopia. Eleven private commercial banks were selected based on purposive sampling technique, quantitative data collected from each selected private commercial banks, and from National bank of Ethiopia. Profitability was used as dependent variable, whereas. Income diversification, liquidity, bank size, funding cost, asset quality, capital adequacy and operational efficiency .The collected data analyzed using descriptive statistic, correlation analysis and multiple regression analysis with the help of Eviews statistical software. The finding of the study shows that income diversification, liquidity, bank size and funding cost statistically significant and positive effect on banks profitability. On the other hand, variables like asset quality, capital adequacy and operational efficiency has a negative and statistically significant effect on banks profitability. The study revealed that asset quality ratio, operational efficiency, income diversification, liquidity, bank size, capital adequacy and funding cost are the key driver of return on asset of banks, Therefore, Bank managers are advised to give due attention to the significant variables to Improve profitability.