Browsing by Author "Abel Wassu"

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    The Effect of Risk Management on Financial Performance of Commercial Banks in Ethiopia
    (A.A.U, 2025-06-05) Abel Wassu; Takele Fufa (PhD)
    The main aim of this study was to identify the effect of risk management on the financial performances of selected commercial banks in Ethiopia with a sample size of 16 commercial banks, covering the fiscal year of 2017/18-2023/24. To achieve this objective quantitative research approach were employed. Secondary data were gathered from NBE databases and annual audited financial statements of commercial banks. To comply with these objectives the study has used a panel data model with random effect generalized least squares regression (GLS). To test the hypotheses developed based on the literature review, the collected data were organized and assessed for the fulfillment of linear regression assumptions and apply the random effects linear regression model. The study's findings indicate that liquidity risk management, interest rate risk, and foreign exchange risk have a statistically significant and positive relationship with the return on asset of banks. In contrast, operational risk and bank size show a statistically significant and negative relationship with financial performance. However, the relationships of credit risk, capital risk, and the loan loss provision with financial performance were found to be statistically insignificant. Based on the findings of the study the researcher recommended that commercial banks in Ethiopia adopt a sound and effective management of risks mainly, liquidity risk, interest rate risk, foreign exchange risk, and operational risk to enhance their financial performance ensure sustainable growth, and boost investor confidence. Additionally, it is recommended that the regulatory body address the proper measurement of financial metrics among banks including mainly liquidity ratio, and efficiency ratio to comply with international standards as well as establish rules that will ensure effective disclosure of financial information of banks including, foreign currency-related data.