Browsing by Author "Berhanu Belay"

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    Determinants of Non-performing Loans in Commercial Banks in Ethiopia
    (A.A.U., 2019-11) Berhanu Belay; Sewale Abate
    This study examines the determinants of non-performing loans evidenced by commercial banks of Ethiopia. The study uses explanatory research design and quantitative research approach with secondary panel data utilized over the study period 2009-2018(10 years). More specifically, the study adopts an ordinary least squares (OLS) model. The finding of the study reveals that; operational efficiency measured by the cost to income ratio, financial performance measured by return on asset, loan to deposit ratio measured by total loan to total deposit, and capital adequacy ratio found the most significant variables affects the banks' non-performing loan from bank-specific factors. While loan loss provision and bank size found insignificant in determining the non-performing loan of banks. Furthermore, from macro-economic variables; inflation is the only significant variable that determines the non-performing loan of the commercial banks in Ethiopia. On the other hand, variables like GDP growth rate, lending interest rate, and exchange rate are found as insignificant variables in determining non-performing loans. This study suggests that Ethiopian Commercial Banks shall search an investment opportunity in order to diversify its source of revenue and deliberately shift its source from the traditional income (interest) to different sources of income in a bid to decrease non-performing loans of the banks.