Browsing by Author "Yonas Lakew"

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    Determinants of Ethiopian Commercial Banks Profitability
    (AAU, 2024-12-25) Yonas Lakew; Habtamu Adane (PhD)
    This study investigates the factors influencing the profitability of commercial banks in Ethiopia, utilizing Generalized Least Squares (GLS) methods on unbalanced panel data from 16 banks over the period of 1998 to 2023. In this study Return on equity (ROE) is the dependent variable in the random effect model regression analysis. It looks at how ROE is related to a number of internal and external factors, such as bank size, liquidity ratio, efficiency ratio, capital adequacy, loan-to-deposit ratio, GDP, and inflation. The findings reveal that GDP, bank size, loan-to-deposit ratios, capital adequacy, and efficiency ratios positively and significantly impact the profitability of Ethiopian commercial banks. Conversely, liquidity does not show a statistically significant effect, while inflation negatively affects profitability. Based on these insights, the study recommends that Ethiopian commercial banks pursue strategic mergers to enhance size and profitability, optimize loan to-deposit ratios, strengthen capital adequacy, implement effective cost management strategies, diversify revenue streams, and promote a stable economic environment to support GDP growth and mitigate inflation