Browsing by Author "Wongelawit Estifanos"

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    Factors Affecting Bank Profitability: the Case of Selected Private Banks in Ethiopia
    (A.A.U, 2025-02) Wongelawit Estifanos; Kelifa Srmolo (PhD)
    Banks play a major role in the development of an economy by channeling resources. Hence, a bank’s performance is of high interest to the bank itself, regulatory bodies and other stakeholders. This study assessed factors that affect bank profitability by considering sixteen private banks’ panel data spanning 10 years, from 2014 – 2023. As secondary data was used for the study, a quantitative approach was implemented. A nonprobability purposive sampling method was used to select the sixteen banks from the research’s target population, all private commercial banks in Ethiopia. The relationship between the dependent variable and the explanatory/independent variables was explained using an explanatory research design. Fixed effect model was applied to perform a multiple regression analysis on the balanced panel data sets. The explanatory variables used in the study consist of both internal and external factors which include revenue diversification, expense, inflation, GDP and peace and security whereas return on asset was selected as the dependent variable to measure profitability. The findings of the study indicate that revenue diversification, expense, inflation and GDP are statistically significant variables with revenue diversification and inflation having a positive effect on return on asset. GDP and expense have a negative but significant impact on profitability. On the other hand, peace and security was a statistically insignificant variable based on the results of the study. It is recommended that banks diversify their income-generating activities to hedge against risk and manage their expenses efficiently to increase their profit. Additionally, better inflation management policies should be in place to take advantage of opportunities presented while mitigating potential risks.