Browsing by Author "Bereket, Nigussie"
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Item Monetary Policy and Loan Portfolio of Ethiopian Commercial Banks: An Assessment of the Role of Credit Creation(Addis Ababa University, 2017-06) Bereket, Nigussie; Habtamu, Birhanu (PhD)The study was carried out to empirically explore the monetary policy and macroeconomic determinants of Ethiopian commercial banks’ performance proxied by total loans and advance using balanced 14 years (2003-2016) annual audited financial statements of 6 banks and macroeconomic data. It covers 100% of the population which are operated full years in the study period. The study used three monetary policy variables: Liquidity Requirement Ratio, Lending Interest Rate and Cash Reserve Requirement and two macroeconomic: Real gross domestic product growth rate and annual Inflation Rate. Fixed effect model was used for the total loans and advance. The empirical result revealed that all monetary policy and macroeconomic variables except cash reserve requirement ratio are statistically significant in determining performance of Ethiopian commercial banks. The study suggests the need for private commercial banks to consider the macro economic factors when developing their strategies to efficiently manage their loans and advances, as we found significant relationship between macro-economic factors and total loans and advances. The study also recommends the National Bank of Ethiopia moderate the minimum policy rate as instrument for regulating commercial banks operations and facilitating investment in the economy and the authority better re-evaluate the policies governing cash reserve requirement ratio in order to influence bank reserves considering its current insignificant effect on commercial banks credit creation role.