Browsing by Author "Gebrehiwot Gebremedhin"

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    Assessment of Capital Budgeting Decisions on Information System Investments; Evidence from Ethiopian Banks
    (Addis Ababa University, 2016-04) Getachew Mikiyas; Gebrehiwot Gebremedhin
    Preliminary surveys and literatures on information system investments suggests a high increase on the level of investment, while there appears to be a lack of concrete empirical research on the area. In an attempt to explore the extent of this presumption, this research investigates the current state of IS investment and its process within Ethiopian banking institutions. Several theories and empirical outcomes were proposed to explain the investment pattern, appraisal techniques and post investment perception of IS adopters by the study subjects. To this end, the results of the study showed that information system investments are justified by information system heads, with the investment pattern focusing mainly on transaction processing systems (100%), management information systems (95%) and communication systems (63%). Furthermore, the study revealed the wide application of simple strategic investment appraisal methods, while the level of usage of discounted cash flow techniques and sophisticated analytical and integrated techniques being low. To illustrate, Strategic techniques were found to be very popular with Technical importance and SWOT analysis being used 100% and competitive advantage and critical success factor being used by 95% of the responding banks. Adding to this findings, the study showed the degree of perception investors have on the relative advantage brought by the system and the compatibility of the system with the organizations setting, in doing so the respondents showed a positive perception that was revealed with a mean value of 4.86 and 4.43, respectively: on a 1 to 5 scale where higher value represents higher agreement. Based on this findings, recommendations were made for a divers composition of professionals and appraisal techniques on IS investment justification process. Key Words: Information System, Information Technology, Investment Appraisal Techniques
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    Assessment of Individual Investors’ Preference to Invest on the Shares of Ethiopian Insurance Share Companies; After IPO
    (Addis Ababa University, 2015-11) Birhanie Nadew; Gebrehiwot Gebremedhin
    A number of studies have been undertaken to identify the factors influencing individual investor’s decision preference to invest in stock markets by considering specific factors of both financial and non-financial like social factor, cultural factors, psychological perception and others. This study aimed to investigate the determinant factors that influence individual investors’ preference to invest on the shares of Ethiopian private insurance share companies. In Ethiopia t he number of private insurance companies is increasing from 8, in 2005, to 16 in 2015 which holds around 72 % of the market share of the insurance industry. The study deployed both primary and secondary data, the purpose of the secondary data is to supplement findings of the primary data. The primary data is about financial, social, cultural and psychological perception of individual shareholders which was obtained and analyzed through questionnaire from insurance companies shareholders and the secondary financial panel data covers the period from 2003 to 2014 pertaining to eight (8) Ethiopian insurance share companies about the profitability, leverage, firm size, general inflation of Ethiopia and one year lagged value of earning per share as possible determinant factors of individual investors’ preference which is proxied by earning per share. The empirical results of both the primary data and the regression output of the secondary data revealed that financial, social, cultural and psychological factors have an impact on the investment decision preference of the individual investors. Accordingly investors recommended to look at insurance companies choices relative to comparable companies based on multiple factors of both financial and non-financial factors related to social, cultural, psychological, profitability, firm size with regard to total asset and other historical financial performances. In addition insurance companies should enlighten investors on the factors that are necessary to maximize their wealth in the capital market that will affect investors’ investment decision. Key words: Insurance shareholders, investors’ preference, non- financial factors
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    Corporate Governance Mechanism: Impact on Performance of Ethiopian Commercial banks
    (Addis Ababa University, 2013-05) Getahun Kibrysfaw; Gebrehiwot Gebremedhin
    Numerous studies have looked at the implications of corporate governance mechanism on company performance although the literature is not unanimous in its conclusions. The aim of this research is to analyze the effect of different corporate governance mechanisms , particularly board structure, different regulations, ownership structure and depositors influence, on the performance of nine commercial banks of Ethiopia, covering the period of 2005-2012. The study adopts quantitative method research approach by combining documentary analysis and administrating simple questionnaire. The findings of the study shows that proportion of non- executive from board characteristics variable, CAR and reserve requirement from regulation proxies had negative and significant impact on the performance of Ethiopian commercial banks. On the other hand concentrated ownership, deposit ratio and availability of audit committee had a positive and significant impact on banks performance. However, the impact of the remaining variables like board size, board ownership, and liquidity on bank performance is negligible. The study suggests that the directive which regulates banks to have fully non-executive directors need to be modified. Furthermore, by reducing the type and ratio of reserve and liquidity requirement and by devising different mechanism, like establishing deposit insurance, NBE need to encourage banks to decrease their money holdings without the potential of any earning but with interest expense. In addition to this, there need to have directive which can enforce the disclosure of different relevant information like: share register, financial reports and the rating of each bank by NBE to different stakeholders and NBE need to assure the execution of these directives by different banks
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    Determinants of Behavioral Factors Influencing Individual Investors’ Decisions Making in Addis Ababa at Ethiopian Private Commercial Banks.
    (Addis Ababa University, 2015-11) Tadesse, Yoseph; Gebrehiwot Gebremedhin
    Traditional finance theories such as Capital Asset Pricing Model, Efficient Market Hypothesis and Modern portfolio theories presumes that markets are efficient, people make rational decisions to maximize profits. But recent studies on individual investors’ behavior have shown that people do not act in a rational manner, rather several factors influence their investment decisions in the stock market. This paper aims at identifying the factors influencing the individuals investors' behavior in Ethiopian private commercial banks. A sample of 252 investors has been selected as sample size by simple random sampling technique. Self completion questionnaire is employed to collect the data. To test the model and reliability of the data the author has used Cronbach's alpha test, factor loadings, KMO, total variance explained and Eigen value. In this study, exploratory factor analysis is used to find out the determinants of individual investment behavior. The present study has identified five major factors that can influences individual investor’s investment decision in Ethiopian private commercial banks. They are Heuristic: representativeness-overconfidence and availability bias, Prospect: loss aversion and regret aversion, Market factors: past trends of stocks, market information, price changes of stocks and customers' preferences ,and Herd factors: buying and selling decision of others, amount of stocks bought by others and speed of herding . All the behavioral variables have a moderate impact on investment decision of individual investors in EPCB. The Pearson's correlation coefficient analysis was used to examine the significant relationship of behavioral factors and investment decision, the result revealed that most of behavioral variables have positive and significant relationship to investment decision
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    Determinants of Commercial Banks Profitability: An Empirical Study on Ethiopian Commercial Banks
    (A.A.U, 2011-06) Hailegeorgis Belayneh; Gebrehiwot Gebremedhin
    The aim of this study is to examine the impact of bank-specific, industry-specific and macroeconomic determinants of Ethiopian commercial banks profitability. The study applied the balanced panel data of seven Ethiopian commercial banks that covers the period 2001- 2010. The paper used Ordinary Least Square (OLS) technique to investigate the impact of capital, size, loan, deposits, noninterest income, noninterest expense, credit risk, market concentration, economic growth, inflation and saving interest rate on major profitability indicator i.e., return on asset (ROA). The estimation results show that all bank specific determinants, with the exception of saving deposit, significantly affect commercial banks profitability in Ethiopia. Market concentration is also a significant determining factor of profitability. Finally, with regard to macroeconomic variables, only economic growth exhibits a significant relationship with banks' profitability. The results of the study are of value to both academics and policy makers.
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    Internal Audit: Reporting Relationship in Ethiopian Public Enterprises
    (Addis Ababa University, 2008-06) Mulugeta Samuel; Gebrehiwot Gebremedhin
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    Internal Determinants of Dividend Payout in Private Commercial Banks in Ethiopia
    (2016-01) Demilie Chekole; Gebrehiwot Gebremedhin
    The purpose of the study is to investigate internal determinant factors of dividend payout in private commercial banks in Ethiopia. The study considers the impact of seven variables: profitability, liquidity, leverage, growth, size and previous year’s dividend on dividend payout by using panel data regression technique with a random effect model between years 2009 and 2014. The findings of the study show that last year’s dividend, bank size and growth have statistically significant and positive relationship with banks’ dividend payout. On the other hand, variables profitability and leverage have negative and statistically significant relationship with dividend payout of private commercial banks in Ethiopia. However, the relationship of liquidity and dividend payout is positive but statistically insignificant. The finding of this paper suggests for investors and bank officials to consider the bank’s profitability, leverage, last year’s dividend, size and revenue growth when they make investment and dividend payout decisions. Key Words: dividend payout dividend policy profitability leverage growth size
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    Practice of Commercial Banks in Ethiopia Assessment of Liquidity Risk Management
    (Addis Ababa University, 2009-06) Melak Tirualem; Gebrehiwot Gebremedhin
    The main purpose of the study was to assess the liquidity risk management practice of commercial banks in Ethiopia. To deal with the problem, three fundamental research questions were formulated that stress on the impact of liquidity on performance of banks, the existence of standardized liquidity risk management strategy(practice) and the impact of the directives of NBE on the performance of commercial banks in Ethiopia. To conduct the study, descriptive method was employed. Purposive sampling was used in the selection of each bank and the respondents from the respective bank. Thus a total of 30 respondents participated to the sources of primary data for the study. Data were collected through questionnaire, interview and annual reports of each commercial bank. The data collected from primary and secondary sources were organized using tables and graphs ad interpretation was made on the data using quantitative and qualitative methods. The findings of the study revealed that there is no uniform (standardized) liquidity risk management policy and procedure in the banking industry which is for all commercial banks in Ethiopia. The directives issued by NBE have no significant impact that will affect the performance of commercial banks instead they are important for the normal operations of banks and the industry in general. The over all liquidity position of commercial banks is excess which is caused by low economic development and existence of limited financial instruments in the country. Liquidity position of a bank has an impact on the performance of the bank. Too much liquidity position of a bank decreases the performance of the respective bank unless the excess liquidity position is managed properly. Among the factors that influence liquidity risk management by commercial banks in Ethiopia include: absence of secondary markets, lack of enough financial instruments and absence of strong management information system. Finally, recommendations were forwarded based on the major findings so as to improve the liquidity risk management practice of commercial banks in Ethiopia
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    A Project Work on Causes and Impacts of the Non- Performing Loans on Performance of State Banks: A Case Study of DBE
    (Addis Ababa University, 2009-06) Admasu Yonas; Gebrehiwot Gebremedhin
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    The Trend of Loan Recovery Performance in Banking Industry: A Case Study of Awash International Bank S.CO
    (Addis Ababa University, 2009-06) Gurmu Feyisa; Gebrehiwot Gebremedhin
    he study endeavors to examine the trend of loan recovery performance of banking industry, a case study of Awash International Bank s.c. Many factors attributed to the growth of banking industries. Among these, the major one is loan recovery performance of banking industry.The data used to conduct this research was collected both from method was primary data and secondary data. Primary data was collected from National Bank of Ethiopia Banking supervision department and primary data was collected from 60 employees of AIB s.c who are working in the area of loan activity. Moreover, semi-structured and structured interview was also used to gather information that can be used as a case study from AIB’s loan officers. In addition, questionnaires were employed to AIB city branch mangers and credit department employees. The findings of the study indicated that there are many factors which hamper loan recovery performance of the Awash International Bank s.co.For example: poor loan assessment procedures; lack of effective use of man power; lack of revision appropriate revision of credit manual and lack of willingness of borrowers to disclose their information fully etc