Accounting and Auditing

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Determinants of lending Decision of Private Commercial Banks Ethiopia
(A.A.U, 2021-06) Zeleke Abay; Abate Sewale
The main objective of this study was to examine the determinants of lending decisions of private commercial banks in Ethiopia from year 2011 to 2020.The study used panel data of eight private commercial banks of Ethiopia selected purposively. The study applied explanatory research design and secondary data were analyzed through multiple linear regression models of the bank’s lending decision; Loan and advance (LOA). Random effect regression model were applied to analyze the effect of asset quality, capital adequacy, liquidity, lending interest rate, money supply, return on equity and volume of deposit on lending decision of private commercial banks. The finding of the study indicates that volume of deposit, Liquidity, Capital adequacy, Money supply and asset quality have significant effect on lending decisions of private commercial banks in Ethiopia, Whereas, return on equity and Interest rate have insignificant effect on lending decisions of private commercial banks in Ethiopia.
The Effect of Financial Risk on the Financial Performance of Ethiopian Commercial Banks
(A.A.U, 2021-03) Abebe Robel; Abate Sewale
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.
The Effect of Inflation on Reported Profit for Decision-Making: In the Case of Banks in Ethiopia
(A.A.U, 2021-03) Sheferaw Alemtsehey; Abate Sewale
This study analyzes the effect of inflation rate on reported profit, investment, and lending rate for decision making in Ethiopian banks between the period of 2015 – 2019. To address the research objectives, 10 banks were selected due to the availability of full data for the selected period. A total of 50 observations were collected from the audited annual financial report of each bank and macroeconomic and social indicators published by the National Bank of Ethiopia (NBE). The study adopts a purposive sampling method to collect data and a survey research method to analyze documents. In light of prior literature, key explanatory variables were identified to disclose the effect of inflation on reported profit. These variables are lending rate, profit, and investment. The variables were analyzed using STATA econometrics software. The assumptions needed to be fulfilled for OLS were tested and the result proves that the data was not found heteroscedastic, free of autocorrelation, and normally distributed. The findings of the study show that the lending rate has a statistically significant and positive relationship with the inflation rate. However, the other variables profit and investment have a positive and statistically insignificant relationship with inflation. The study recommended that the management and policymakers of Ethiopian banks should come up with better strategies of countering the inflation effect to allow sustained profits and attract customers and prevent them from minimizing and terminating borrowing
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
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.
The Influence of E-Banking Service Quality on Customer Satisfaction in Ethiopian Banking Industry in Case of Nib International Bank S.C Addis Ababa
(A.A.U, 2021-04) Tadege Worku; Abate Sewale
he main purpose of the study is to examine the influence of e-banking service quality on customer satisfaction. The study conducted in Nib International bank Addis Ababa city selected branch. The sampling technique that the researcher was used convenience sampling due to time scarcity. The method of data collection was questionnaire and source of data was primary data. Regression, correlation and descriptive analysis was used to analyses the influence of e- banking service quality on customer satisfaction by using SPSS. The researcher used four independent variables such as reliability, convenience, responsiveness and speed. From the four variables convenience is the most significant effect on customer satisfaction followed by speed and responsiveness even though speed is negatively affected customer satisfaction. Reliability is the least significant effect on customer satisfaction. The higher service quality leads the greater customer satisfaction. The researcher recommends NIB to conduct ongoing research on service quality and customer satisfaction in order to understand customer level of satisfaction on what to be done and what strategies to be implemented and launch new product and service since customer now the service provided by NIB and other banks.
Institutional Factors Affecting Loan Collection Performance of Development Bank of Ethiopia: The Case of Addis Ababa, Head Office
(A.A.U, 2021-06) Terefe Kidist; Abate Sewale
This study assesses the institutional factors affecting loan collection performance of Development Bank of Ethiopia. The institutional factors are categorized as Staff-related Factors, Policy-related factors and Management Information System-related factors. The study employs Descriptive Research Design and applies quantitative research approach to analyze and interpret the findings. In addition to reviewing the annual report of the bank as a secondary data, 50 questionnaires were completed by respondents who are staff members in different departments. As a result, Development Bank of Ethiopia's loan collection performance has been assessed to have significantly higher loan default rates. Based on the findings of the study, the major institutional factors affecting loan collection Performance of Development Bank of Ethiopia are Poor credit scoring and poor valuation of collaterals, ineffective monitoring and controlling of debtors, policy ineffectiveness in creating improved loan collection, restricting loan concentration and favoring loan diversification, , inefficiency of Management Information System in making ease of administrative tasks, improving the Bank’s loan collection performance, aiding operating efficiency, aiding controlling task of problem loans and lack of supervision schemes. It is recommended that Development Bank of Ethiopia should focus on upgrading its Management Information System so as to improve its loan collection performance. It is also suggested that DBE's Management Information System should include a problem loan management system.
The Role of Internal Auditing in Promoting Good Governance in Public Sectors of Addis Ababa City
(A.A.U, 2021-06) Assefa Melesse Addis; Abate Sewale
The aim of this study was to examine the role of internal audit practices in promoting good governance in public sectors of Addis Ababa City. The study used a descriptive and explanatory (mixed) design and both qualitative and quantitative approaches. A descriptive and inferential statistical analysis of correlation and regression analysis was employed in this thesis, and the data analysis was processed using the SPSS software version 25. The results of the analysis were used to interpret and discuss the findings. Cronbach's alpha coefficient of internal consistency was used to determine reliability. Data from the field was collected through the distribution of a structured questionnaire to a group of well-chosen internal auditors. Competent staffs, risk management, and organizational independence and objectivity all played a substantial and positive role in the promotion of good governance in the public sector. Although formal mandates and professional practice standards were positively connected to good governance, their contribution to good governance was statistically insignificant. These five independent variables account for 49.9% of the total contribution to the promotion of good governance in government offices. It was proposed that the internal auditors of the Addis Ababa City Public Sector act in accordance with the purpose, authority, and duty of internal audit as described expressly in their charter. Internal audit teams should be included in formal reporting by the sectors. Finally, it was suggested that the Addis Ababa City Public Sector Finance and Economic Development Office support internal auditing by recruiting a sufficient number of internal auditors and providing training to improve their abilities and capacity to do audits in the best possible way for the public.

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