Corporate Finance

Permanent URI for this collection

https://etd.aau.edu.et/handle/123456789/6324

Browse

Browsing Corporate Finance by Issue Date

Filter results by year or month
Now showing 1 - 20 of 65
  • No Thumbnail Available
    Item
    Assessment of Risk Management Practice in Ethiopian Commercial Banks
    (Addis Ababa University, 2024-02) Segni Teshome; Tenkire Seyfu (PhD)
    The purpose of this research is to “assess the risk management practices of Ethiopian commercial banks. The study is used descriptive survey method and applies a mixed method research strategy for each stratify as representative sample by taking the quantitative method as major component while the qualitative method plays a supplementary role. Data was collected from purposely selected commercial banks permanent staff and analysis was carried out using descriptive statistics supporting by SPSS v 23. Based on the descriptive and analytical analyses results of the questionnaire data, Likewise, the overall usefulness of the risk management practices in selected banks found well prefund by the managing risk based on the empirical data analysis. This thesis unveils higher mean of agreement between the managing market risk and the risk management practices. These results indicate that the managing liquidity risk is also another valuable aspect to improve the usefulness of the risk management practices of selected commercial banks. Furthermore, the descriptive statistics result stated that managing liquidity risk with the risk management practices has been found and endorses that it is important for the management to give more consideration to deal with the liquidity risk in order to bring improvement in the risk management practices of all banks. This study further confirms the role of managing operational risk in the whole banking risk management approach and has found moderates of implementations of the managing operational risk and the risk management practices in selected commercial banks is strongly minimized its risk. The main conclusions of this paper are selected banks should develop a common understanding about the strategy, policy and procedures across the bank and under no circumstance should the bank violate the limit set by NBE and finally prepare training for risk related staffs to manage risk effectively and efficiently. Therefore, the banking sector and other related sectors should be introduced with the necessary work to be completed on this subject, nonetheless by making a start with the determination of the road maps and national initiatives. Key words: Risk Management Practice, Basel principles, selected commercial Banks,
  • No Thumbnail Available
    Item
    The Role of Emerging Capital Market in Capital Allocation: The Case of Ethioipian Capital Market
    (Addis Ababa University, 2024-03) Denekew Aderaw; Tenkire Seyfu (PhD)
    One of the remarkable phenomena of the 21st century is the globalization of both factor and product markets, which has significantly transformed economies worldwide. This globalization has created a myriad of opportunities, particularly for developing countries, by providing them with greater access to a diverse array of products and services from developed nations. For these emerging economies, this access means not only the ability to import advanced technologies and high-quality goods but also the potential to integrate into global supply chains. Such integration can spur local industries, enhance productivity, and ultimately contribute to economic growth. Conversely, developed countries also reap substantial benefits from this interconnectedness. They gain access to a wealth of opportunities for diversification, allowing them to explore new markets and reduce dependency on their domestic economies. Additionally, globalization enables these nations to tap into inexpensive labor pools in developing regions, which can significantly lower production costs. Moreover, the availability of untouched natural resources in various parts of the world presents an avenue for developed countries to secure essential materials that are critical for their industries. Lastly, the presence of high purchasing power in certain global markets allows developed nations to expand their consumer base, driving further economic growth and innovation. The establishment of deep, liquid, and well- regulated capital markets are instrumental in financing the economy and are the foundation for thriving private sector, a key driver of jobs and growth. The study endeavors to investigate the role of the capital market that helps to ensure the financial systems efficiency, stability, risk management, preventing costly crises, and helping channel savings toward capital that is essential for economic development and poverty reduction. The paper utilized financial development, trading volume, liquidity, information disclosure as a proxy measure of capital market performance. It also used profitability, shareholders wealth creation, and long- term business sustainability to measure capital allocation efficiency. Key words: Capital allocation; Capital Market authority; Market efficiency.
  • No Thumbnail Available
    Item
    Assessment of Factors Influencing Bond Market Development in Developing Countries: The Case of Ethiopia
    (Addis Ababa University, 2024-10) Awgichew Abiye; Dakito Alemu (PhD)
    The development of a robust bond market is crucial for the advancement of the financial sector and the overall economic growth of a country. The aim of this research was to explore the key factors influencing the development of bond market in Ethiopia. The study employed a quantitative research approach to examine and describe the political, economical, regulatory, infrastructure and intermediaries and investors’ base dimensions based on the data collected through survey method. The study was conducted over 130 respondents from government organizations, national and international financial institutions and bond market consultants. The data was collected using 5-point Liker scale questionnaire and purposive sampling technique. The findings highlight that political instability, macroeconomic volatility, and inadequate infrastructure are unfavorable for the development of the bond market in Ethiopia. The study also reveals positive aspects, such as the presence of regulatory frameworks promoting market integrity and transparency, but emphasizes the need for further reforms and investments. Specific recommendations include implementing political and economic reforms, enhancing regulatory independence, investing in modern market infrastructure, and promoting a diverse investor base. By addressing these challenges and leveraging identified opportunities, Ethiopia can create a vibrant bond market that contributes to economic stability and growth. This paper provides policymakers, regulators, and market participants with actionable insights and strategies for fostering a resilient bond market in Ethiopia. Key Words: Bond market, Bond market development, Bond market in Ethiopia, Factors influencing bond market development
  • No Thumbnail Available
    Item
    The Effect of Fintech on Firm Performance: The Case of Telebirr and Ethio Telecom
    (Addis Ababa University, 2025-02) Tihut Berhanu; Mengistu Bogale (PhD)
    The rapid evolution of financial technology (FinTech) has reshaped corporate strategies globally, particularly in the telecommunications sector, where mobile money services are pivotal for revenue diversification and financial inclusion. This study examines the effect of Telebirr, Ethio Telecom’s FinTech platform, on firm performance in Ethiopia’s state-controlled telecom sector. Focusing on Telebirr’s digital payment, lending, and mobile money transfer services, the research evaluates their impact on revenue growth, operational efficiency, customer acquisition, and market competitiveness. Adopting a quantitative approach, the study employed a structured questionnaire to collect data from 255 Ethio Telecom employees involved in FinTech operations. Descriptive and inferential statistical analyses, including Pearson’s correlation and multiple linear regression, were conducted to test hypotheses derived from the Resource-Based View and Diffusion of Innovation theories. Key findings revealed that Telebirr’s digital payment services significantly enhanced operational efficiency and customer satisfaction, with moderate contributions to revenue growth. However, digital lending services, while attracting new customers, exhibited negligible effects on profitability. Mobile money transfers increased transaction volumes but did not substantially improve market competitiveness. Regression analysis indicated that only 3.7% of firm performance variance was explained by FinTech services, suggesting the influence of external factors such as regulatory constraints, low financial literacy, and infrastructural gaps. The study concludes that while Telebirr strengthens Ethio Telecom’s operational capabilities, its financial impact remains constrained by Ethiopia’s unique market dynamics. Strategic recommendations include enhancing digital infrastructure, refining lending models, and reducing transaction costs to maximize FinTech’s potential. Policymakers are urged to foster regulatory flexibility and financial literacy programs to support Ethiopia’s digital transformation. This research contributes insights into FinTech’s role in regulated markets, offering a framework for telecom operators navigating digital ecosystems in similar contexts.
  • No Thumbnail Available
    Item
    Research on Effect of Adopting Financial Technology on The Operational Efficiency of Ethiopian Banking Service A Case Study on Selected Commercial Banks
    (Addis Ababa University, 2025-02) Meron Mindaye; Tenkir Seifu (PhD)
    This study investigates the impact of financial technology (Fin-tech) adoption on the operational efficiency of Ethiopian banking services, focusing on selected commercial banks. The research examines key dimensions of Fin-tech adoption, including technological integration, cost efficiency, process automation, and customer experience. Employing a quantitative approach, data was collected from bank employees using structured questionnaires and analyzed through statistical methods such as correlation and multiple regression analysis.Findings reveal that technological adoption has the most substantial influence on operational efficiency, with 85.5% of respondents acknowledging improvements in transaction processing, risk management, and workflow productivity. Additionally, 83.4% of participants reported significant reductions in operational costs due to Fin-tech-driven automation. Process automation enhances transaction speed and accuracy, as confirmed by 84.5% of respondents, leading to a 40% increase in employee productivity. Moreover, Fin-tech solutions significantly enhance customer experience, with 87.1% of respondents indicating improved service accessibility and efficiency.Despite the numerous benefits, challenges remain, including regulatory constraints, cybersecurity risks, and digital literacy gaps among employees and customers. To maximize Fin-tech’s impact, the study recommends comprehensive technological integration, investment in digital infrastructure, workforce training, and supportive regulatory frameworks. Future research should explore the long-term effects of Fin-tech adoption and the role of emerging technologies like blockchain and artificial intelligence in further transforming the banking sector.
  • No Thumbnail Available
    Item
    The Impact of Ethiopian Banks’ Investment Strategies on Stock Market Liquidity: An Analysis of Institutional Behavior & Market Dynamics.
    (Addis Ababa University, 2025-04) Elias Tenkolu; Hawlet Ahmed (PhD
    This study investigates the impact of Ethiopian banking investment strategies on stock market liquidity, with a focus on institutional behavior and evolving market dynamics. Given Ethiopia’s current efforts to establish a formal stock exchange, the role of banks—as key institutional investors—is particularly relevant to understanding market liquidity. Grounded in Market Microstructure Theory, Liquidity Preference Theory, and Behavioral Finance, the research explores how factors such as the regulatory environment, macroeconomic context, market infrastructure, and risk appetite influence banking investment behavior. The research employs a quantitative design, using secondary data collected from annual reports and regulatory filings submitted to the National Bank of Ethiopia (NBE). The sample includes seven major private commercial banks (e.g., Dashen, Awash, Abyssinia), selected using random sampling to ensure representativeness and minimize bias. Key financial indicators used in the analysis are Return on Assets (ROA), Debt-to-Equity Ratio (D/E), and Free Cash Flow (FCF) as independent variables, with Dividend Payout Ratio (DPR) representing stock market liquidity as the dependent variable. Descriptive statistics and regression analysis were employed as the main tools of analysis. The findings reveal significant variation in banks’ investment and dividend behaviors, influenced by risk tolerance, regulatory pressures, and profitability levels. These results validate the hypothesis that strategic financial decisions by Ethiopian banks have a significant effect on stock market liquidity. This study contributes to the limited empirical literature on emerging markets and provides actionable insights for investors, regulators, and policymakers aiming to foster a more liquid, transparent, and efficient stock market in Ethiopia.
  • No Thumbnail Available
    Item
    The Impact of Mobile Money on Financial Service Usage in Addis Ababa
    (Addis Ababa University, 2025-05) Christian Tesfaye; Tenkir Seifu (PhD)
    Financial inclusion remains a critical challenge in Ethiopia, where a large, underserved population, particularly in rural areas, faces barriers to economic participation. Low levels of financial service usage, including account ownership, digital payments, and loan uptake, persist compared to regional peers, hampered by factors like limited access points and lack of documentation. Mobile money, leveraging the ubiquity of mobile phones, offers a potent solution, driving financial inclusion across Sub-Saharan Africa. Ethiopia has embraced this potential, with the National Bank of Ethiopia (NBE) prioritizing digital financial services, including mobile money, to achieve 70% adult financial inclusion by 2025. The subsequent launch of multiple mobile money platforms, including Telebirr and M-Pesa, has spurred significant user growth, especially for Telebirr. This study investigates the impact of this growing mobile money adoption on financial services usage in Addis Ababa, addressing the overarching research question: How does the adoption of mobile money impact financial services usage? Specifically, the study seeks to quantify the impact of mobile money adoption on savings rates, loan uptake, and digital transaction adoption in the city. To achieve this, a quantitative research approach was employed, utilizing a survey research design to collect primary data directly from respondents. The study surveyed 100 adults aged 20-64 in Addis Ababa, selected through stratified random sampling, with stratification based on mobile money usage (users and non-users), gender, and age. The survey instrument, a structured questionnaire with Likert scale questions, captured information on respondents’ financial behaviors and perceptions related to digital payments, savings, and loan access. Key findings from this study demonstrate that mobile money adoption does not automatically lead to increased financial services usage. While descriptive analysis showed a strong positive shift towards digital payments, regression analysis did not confirm a significant causal link based solely on ownership. Perceptions of easier saving did not translate to increased saving, and loan uptake increases were not consistently linked to mobile money in regression. Lack of awareness and perceived complexity hindered adoption among non-users, emphasizing that adoption alone is insufficient to drive broader financial service engagement.
  • No Thumbnail Available
    Item
    Factors affecting the financial performance of manufacturing companies in Ethiopia The Case of Selected Manufacturing, Ethiopia
    (Addis Ababa University, 2025-06) Meron Kebede; Dakito Alemu (PhD)
    The manufacturing industry in Ethiopia is currently underdeveloped, contributing only 11.7% to the country's Gross Domestic Product (GDP). The objective of this study was to investigate the various factors affecting manufacturing companies in Ethiopia. To achieve this, the study utilized panel data collected from selected manufacturing firms over the period of 2019 to 2023. A combination of descriptive and explanatory research designs was employed. Secondary data were sourced from the Ethiopian Revenue Customs Authority's large taxpayer branch office, ensuring the reliability and accuracy of the data used in the analysis. To analyze the data, the study utilized panel data regression and Spearman correlation to test the relationships and effects of independent variables on dependent variables. The study's findings reveal several significant relationships: The analysis indicated a significant negative relationship between leverage and financial performance, specifically measured by Return on Assets (ROA). This finding suggests that as leverage increases, the return on assets tends to decrease, consistent with the pecking order theory. This theory suggests that firms prefer internal financing over external financing and that higher debt levels can be unfavorable to financial performance due to increased costs and financial risk. In contrast, liquidity demonstrated a significant positive relationship with ROA. This indicates that companies that effectively manage their liquid assets can enhance their financial performance, capitalizing on investment opportunities and maintaining operational flexibility. Additionally, the analysis revealed that firm size and age had a negative relationship with ROA. In conclusion, the study recommends that manufacturing companies focus on optimizing liquidity to effectively capitalize on investment opportunities and manage their operations
  • No Thumbnail Available
    Item
    Factors Influencing the Success of Reward-based Crowdfunding Campaigns in Africa
    (Addis Ababa University, 2025-07) Feteha Nuredin; Tenkir Seifu (PhD)
    This research investigates the key campaign-level factors that influence the success of reward-based crowdfunding campaigns in Africa, a region where traditional financing remains limited and crowdfunding is emerging as an alternative funding mechanism. Drawing on a dataset of 378 completed Kickstarter campaigns, the research applies a quantitative research approach and explanatory research design to quantitatively examine the strength and direction of the relationship between the key campaign-level factors and Campaign success such as funding goal size, number of backers, campaign duration, narrative length, multimedia presence, and project category. The research consequently employs a logistic regression model to estimate the probability of campaign success based on these predictors. Descriptive findings indicate a 52% success rate, a rate substantially higher than prior estimates for the continent, largely attributable to the stronger digital infrastructure and diaspora engagement associated with international platforms. Additionally, the descriptive analysis presented that projects in creative categories like documentary, photobooks, and public art outperformed those in education, agriculture, or personal causes. While lower funding goals and higher backer counts were significantly associated with success, more traditional predictors such as campaign duration, video inclusion, and description word count, commonly highlighted in global literature, were not statistically significant in this dataset. These findings suggest that while global success factors may apply in part, local digital, economic, and sociocultural dynamics mediate their predictive value. The study contributes empirical evidence to the limited body of African reward-based crowdfunding research and offers practical guidance for campaign creators, platform designers, and policymakers aiming to expand digital finance and inclusive entrepreneurship.
  • No Thumbnail Available
    Item
    The Impact of Financial Innovation on The Performance of Commercial Banks in Ethiopia
    (Addis Ababa University, 2025-07) Biniyame Kebede; Tenkir Seifu (PhD)
    This study examines the impact of financial innovation on the performance of commercial banks in Ethiopia, focusing on both financial and operational outcomes. Financial innovation, including internet banking, mobile banking, automated teller machines (ATMs), ATM cards, and point of sale (POS) terminals, has revolutionized banking operations globally. Using panel data from eight commercial banks over nine years (2015–2023), this research employs a regression model to analyze the relationship between financial innovation and bank performance. Return on Assets (ROA) measures financial performance, while the number of new customer recruits serves as an indicator of operational performance, with bank size included as a control variable. The findings reveal that mobile banking, ATM cards, and POS terminals have a positive and statistically significant impact on both financial and operational performance, suggesting that these innovations enhance efficiency and customer acquisition. Conversely, internet banking and ATMs exhibit either an insignificant or negative effect, highlighting challenges related to adoption or profitability. The study underscores the importance of embracing financial innovation to strengthen bank performance, while addressing barriers to adoption. The results offer valuable insights for policymakers, banking executives, and regulators seeking to shape strategies for digital transformation and financial sector growth. Future research should consider additional financial innovation variables and assess their long-term effects on competitiveness and financial inclusion in Ethiopia.
  • No Thumbnail Available
    Item
    Operational Risk in Ethiopian Commercial Banks: A Case Study with Emphasis on Financial Fraud
    (Addis Ababa University, 2025-08) Zemichael Tesfamariam; Dakito Alemu (PhD)
    This study evaluates the operational risks and financial fraud faced by Ethiopian commercial banks, focusing on internal, human, and external factors that contribute to these issues. It also examines the most prevalent types of fraud and the countermeasures in place. This study employed a mixed-methods research approach to gather data via questionnaires from 236 employees working in 31 commercial banks. A descriptive research design was used to explore and characterize the subject under investigation. Data were sourced exclusively from primary sources, ensuring direct relevance to the research objectives. Ethical considerations were rigorously upheld throughout the data collection process. Additionally, reliability and validity were assessed on a sample basis before analyzing the complete dataset using SPSS. The research identified key internal processes and systems factors that contribute to operational risk. These include inadequate IT systems and infrastructure, weak transaction authentication protocols, a lack of segregation of duties, poor documentation practices, and insufficient real-time monitoring systems. Human factors also played a significant role, such as a weak ethical culture within the organization, a lack of accountability and oversight, a lack of employee training, insufficient background checks during hiring, and employee misconduct. External factors were identified that include cybersecurity threats, political and economic instability, lack of specialized oversight for emerging technologies, weak enforcement of compliance standards, and inconsistent enforcement of anti-fraud regulations. The study documented prevalent types of fraud committed by customers, such as mobile banking fraud, cheque fraud, money laundering, and identity theft, which were identified as the most common. Among employees, the most prevalent types of fraud included debits from dormant accounts, embezzlement, bribery, and collusion with external parties. Additionally, the findings highlighted critical measures for mitigating operational risk and preventing fraud, such as strengthening internal controls, conducting regular audits and monitoring of high-risk accounts, implementing strict access control for sensitive systems, implementing advanced real-time fraud detection systems, and providing regular employee training on fraud prevention. These insights emphasize the importance of a multifaceted approach to mitigate operational risk and prevent financial fraud in the banking sector.
  • No Thumbnail Available
    Item
    The Effect of Macroeconomic Variables and Political Instability on Foreign Direct Investment in Ethiopia: A Time Series Analysis Using VECM Model
    (Addis Ababa University, 2025-08) Yifru Yirdaw; Tesfa Nega (PhD)
    This study analyzes the effect of key macroeconomic determinants and political instability on foreign direct investment (FDI) inflows in Ethiopia from 1992 to 2024. Using annual time-series data and the Vector Error Correction Model (VECM), the study explores both long-run and short-run relationships between real GDP, inflation, real lending interest rates, the period-weighted average exchange rate, political instability, and FDI inflows. The findings indicate the presence of long-run equilibrium relations between FDI and the explanatory factors. High interest rates are found to discourage FDI through increased borrowing costs, and exchange rate volatility has a negatively effect on investor confidence. Political instability also serves as a significant deterrent, eroding economic stability and discouraging long-term investment. Specifically, inflation, interest rates, and political instability are long-run forcing variables, influencing macroeconomic trends without adjusting themselves in the short term. On the other hand, FDI, GDP, and exchange rate variables respond to restore long-run equilibrium after shock. These results highlight the necessity of macroeconomic stability and political certainty in foreign investment inflows. The studies identify the necessities of specific policy responses, including exchange rate stabilization, interest rate moderation, and improving governance, to improve the investment climate in Ethiopia. Policymakers should give priority to long-term economic reforms rather than short-term adjustments to realize investment growth sustainably. By reducing macroeconomic instability and improving institutional stability, Ethiopia can attract and retain foreign investors
  • No Thumbnail Available
    Item
    The Role of Digital Banking in Improving access to Financial Services: The Case of Selected Commercial Banks in Ethiopia
    (Addis Ababa University, 2025-08) Yonathan Yimer; Tenkir Seifu (PhD)
    This study,The Role of Digital Banking in Improving Access to Financial Services: The case of selected commercial Banks in Ethiopia , investigates how digital banking improves access to financial services in Ethiopia by concentrating on three commercial banks in Addis Ababa. Employing a quantitative explanatory design, the study gathered 215 valid responses drawn via purposive sampling from customers and staff through structured questionnaires and analyzed the data in STATA 15.1 using descriptive statistics, factor analysis, and regression. Results show that digital channels, especially mobile applications, markedly expand access by off ering convenience, 24/7 availability, and remote reach, though lower transaction costs are not widely perceived and obstacles such as limited digital literacy and infrastructure deficits remain. While the Addis Ababa only sample constrains generalizability , the research underscores the need for targeted literacy initiatives, infrastructure investment, and user centered platform design to close inclusion gaps. As one of the few empirical studies on D igital B anking’s contribution to financial access in Ethiop ia, it offers original insights for banks, policymakers, and development agencies seeking to leverage digital finance for broader economic empowerment
  • No Thumbnail Available
    Item
    Factors Affecting digital Money Wallet Adoption: The Case of Selected Users in Addis Ababa
    (Addis Ababa University, 2025-08) Sagni Berhanu; Mengistu Bogale (PhD)
    This study explores the determinants of digital wallet adoption in Addis Ababa, Ethiopia, by integrating key demographic variables with constructs from the Unified Theory of Acceptance and Use of Technology(UTAUT). Using quantitative data collected through a structured questionnaire, the research investigates the main and moderating effects of age, gender, income, education, and technological literacy on adoption behavior. The UTAUT constructs—Performance Expectancy (PE), Effort Expectancy (EE), Social Influence (SI), and Facilitating Conditions (FC)—are examined both as independent predictors and as moderators of demographic influences. The findings reveal that age, income, and technological literacy significantlyaffect adoption, while gender and education do not exhibit notable influence. Moreover, interaction effects suggest that PE and EE strengthen adoption likelihood among higher-income individuals and that FCs play a more prominent role for older users. With an R-squared value of 22.2%, the model offers a modest yet meaningful explanation of adoption behavior. The study contributes to the growing body of literature on financial technology uptake in developing urban contexts and offers actionable insights for developers, service providers, and policymakers. It concludes by emphasizing the importance of localized digital finance solutions, targeted support mechanisms, and further empirical inquiry into user behavior
  • No Thumbnail Available
    Item
    Analysis of the determinants of Banking agents’ Performance: The Case of Commercial Bank of Ethiopia Bole District
    (Addis Ababa University, 2025-08) Senait Kebede; Tinker Seifu (PhD)
    This study examined the determinants of banking agent performance for the Commercial Bank of Ethiopia (CBE) within the Bole District of Addis Ababa. The research identified key factors influencing agent success, drown up on a theoretical framework encompassing Innovation Theory, Agency Theory, Perceived Risk Theory, Transaction Cost Theory, and Bank-Led Theory. A quantitative methodology was employed, utilizing structured questionnaires to collected data from a sample of CBE banking agents selected through stratified sampling. The study examined the impact of agents’ banking knowledge, infrastructure, financial costs, and bank-to-agent location on agent performance. By analyzed this data using SPSS, the research seeks to provide insights into how CBE can optimize its agent banking model to enhance agent effectiveness and contribute to broader financial inclusion goals within Ethiopia. The findings indicated that agent performance is positively impacted by infrastructure and agents’ knowledge, and negatively by transaction cost and bank-to-agent distance. The research was expected to inform policy recommendations aimed at improving agent training, strengthening network infrastructure, reducing financial burdens on agents, and enhancing awareness creation measures. The study acknowledges the limitations of sampling and calls for further research to validate the findings and explore the issue of agent banking in diverse contexts.
  • No Thumbnail Available
    Item
    Factors Affecting Institutional Investors Participation in Ethiopian Capital Market
    (Addis Ababa University, 2025-08) Natnael Tesera; Dakito Alemu (PhD)
    The study aims to investigate the key factors affecting the participation of institutional investors in the Ethiopian capital market. Employing a mixed research design, the study integrated descriptive and explanatory components to provide a comprehensive understanding of the institutional investors' readiness to engage with this emerging market. The research employed a mixed-methods approach, combining quantitative and qualitative data collection and analysis. The target population for the study included a diverse range of institutional investors seeking to participate in the Ethiopian capital market such as insurance companies, microfinance institutions, federal and regional government entities, state-owned enterprises, and pension and retirement funds. For the qualitative component, a purposive sampling technique was utilized to gather in-depth insights from key informants. The quantitative phase of the study employed a stratified random sampling approach to ensure representation from the different types of institutional investors. Descriptive analysis revealed a moderate perception of the legal and regulatory framework, with concerns about compliance and enforcement. However, inferential analyses showed a significant positive correlation and influence of these factors on investor readiness, emphasizing the need for improved clarity and harmonization. Knowledge factors (human capital and information access) were perceived negatively descriptively, yet inferential analysis highlighted their significant positive impact on readiness, indicating a need for enhanced financial literacy and information availability. Resource factors showed mixed perceptions descriptively, but inferential analysis identified them as the strongest positive predictor of readiness. While overall investor readiness was moderately positive descriptively, inferential analyses confirmed the significant positive influence of the legal and regulatory environment, knowledge, and resources. The study concludes that effective institutional investor participation hinges on a supportive legal and regulatory framework, enhanced knowledge and information access, and adequate resources, particularly technological infrastructure and human capital. Recommendations include an immediate focus on strengthening the legal and regulatory environment, a mid-term priority on enhancing knowledge and access, and a long-term strategy to facilitate resource development through collaborative efforts
  • No Thumbnail Available
    Item
    The Effect of Loan Portfolio Management on Bank Liquidity: Empirical Evidence from Selected Commercial Banks in Ethiopia
    (Addis Ababa University, 2025-08) Kaleab Solomon; Tenkir Seifu (PhD)
    This research investigates the effect of loan portfolio management on the liquidity of selected commercial banks in Ethiopia. Effective loan portfolio management plays a crucial role in maintaining a bank’s liquidity, ensuring financial stability, and mitigating risks. The study employs an Estimated Generalized least squares econometric regression model using data from nine commercial banks over a period of eight years (2017–2024) the model was used to correct for heterosdastcity. Liquidity is measured as the ratio of liquid assets to total assets and ratio of liquid assets to customer deposits, while loan portfolio management is assessed through diversification indices, the Herfindahl-Hirschman Index (HHI) for sectorial and loan-type diversification. The study also incorporates control variables such as bank size, capital adequacy, profitability, deposit-to-asset ratio, GDP growth, and inflation. The findings reveal that loan portfolio diversification, sectorial diversification and loan type divarication have a significant effect on bank liquidity. The study concludes that improved diversification strategies can enhance bank liquidity and financial resilience. It recommends that commercial banks adopt a balanced loan diversification strategy to mitigate liquidity risks while ensuring optimal financial performance
  • No Thumbnail Available
    Item
    Comparing Credit risk Determinants: Interest free banks VS Conventional Banks in Ethiopia
    (Addis Ababa University, 2025-08) Anwar Nurhsien; Tenkir Seifu (PhD)
    This study utilized secondary panel data collected from 80–100% of Ethiopian conventional and Interest free banks, analyzed using a fixed effects regression model in E-Views, guided by the Hausman test results. The research aimed to compare the determinants of credit risk (measured as Non-Performing Loans, or NPL) for both conventional and Interest free banks in Ethiopia. Based on empirical and theoretical reviews, it was hypothesized that NPL would exhibit:  Positive significant relationships with real interest rate and credit growth rate.  Negative significant relationships with GDP growth rate, capital adequacy ratio, net interest margin, income diversification, and return on assets.  No significant relationship with bank size and market concentration ratio, for both banking models. Key findings: For conventional banks, the credit growth rate had a positive significant relationship with NPL. Conversely, return on assets, net interest margin, GDP growth rate, and bank size exhibited negative significant relationships. The market concentration ratio showed no significant relationship with NPL, confirming expectations. However, variables such as real interest rate, capital adequacy ratio, and income diversification unexpectedly lacked significant relationships with NPL. For Interest free banks, real interest rate and capital adequacy ratio showed positive significant relationships, while bank size had a negative significant relationship with NPL. As anticipated, the market concentration ratio demonstrated no significant relationship. However, other variables, including GDP growth rate, credit growth rate, net interest margin, income diversification, and return on assets, did not display significant relationships with NPL, contrary to initial expectations. These results highlight both similarities and differences in the determinants of credit risk for Interest free and conventional banks. Variations can be attributed to differences in economic environments, banking practices, and regulatory frameworks. The findings offer valuable insights for policymakers to consider when designing policies and regulations for the banking sector.
  • No Thumbnail Available
    Item
    Initial Public Offering (Ipo) Readiness in Ethiopia: Assessing Regulatory Framework, Corporate Governance, Financial Literacy & Technological Challenges
    (Addis Ababa University, 2025-08) Mohammed Ahmed; Dakito Alemu (PhD)
    This study investigates the IPO (Initial Public Offering) readiness of companies in Ethiopia, focusing on the regulatory framework, corporate governance practices, financial literacy levels, and technological barriers that may impact their ability to successfully undertake an IPO. Employing a mixed-methods approach, the research combines quantitative data collected through questionnaires and analyzed using descriptive statistics (frequency distributions, percentages, means, and standard deviations) in SPSS 20, with qualitative data gathered from semi-structured interviews. The target population comprises Chief Finance Officers (CFOs), Chief Executive Officers (CEOs), General Managers, Deputy General Managers, Finance Managers, and Chief Accountants from selected large taxpayer share companies and private limited companies within the manufacturing, banking, and insurance sectors in Ethiopia. A stratified random sampling technique, using Yamane's formula, was used to determine a sample size of 129 respondents. Primary data was collected through questionnaires with both open and closed-ended questions, and face-to-face interviews. Secondary data was obtained from sources such as the National Bank of Ethiopia, the Capital Market Authority, academic journals, and relevant financial proclamations and policies. The result of this study revealed the lack of compliance with international IPO standards, insufficient transparency in financial discloser, weak investor protection mechanisms, lack of independent oversight on board of directors, limited understanding of investment process among potential investors, insufficient education on risk and benefit of IPOs, lack of integration between technological platforms used in the IPO process, cyber security concerns that jeopardize sensitive information. The study recommended regulatory reform, enhancing corporate governance, improving financial literacy, addressing technological barrier and strengthening the IPO ecosystem. The research contributes to the understanding of factors influencing IPO decisions in emerging economies and provides practical guidance for companies considering going public in Ethiopia
  • No Thumbnail Available
    Item
    Determinants of Bank Liquidity Risk; Evidence From Commercial Banks in Ethiopia
    (Addis Ababa University, 2025-08) Mihiret Yohannes; Tenkire Seyfu (PhD)
    This study analyzes the macroeconomic and bank-specific factors influencing commercial banks' liquidity risk in Ethiopia between 2015 and 2024. Using annual regression analysis and panel data techniques—excluding and including fixed effects, random effects, and dynamic panel models—the study tests the influence of such variables as growth in loans, net interest income, capital adequacy, operational inefficiency, inflation rate, and GDP growth on banks' liquidity. The results pinpoint loan expansion as the most consistent and statistically significant determinant of liquidity, with coefficients ranging from 0.0305 to 0.0612 between models, implying that expanding portfolios of loans has a tendency to enhance liquidity. Inflation also positively but less robustly affects liquidity, with significance largely in dynamic models. The rest of the variables, including capital adequacy, net interest margin, operational inefficiency, and growth in GDP, had minimal or statistically zero effects on liquidity risk. Fit measures of the model, particularly during 2021–2024, indicate stronger explanatory ability, suggesting changing economic conditions or better sufficient alignment of financial metrics with liquidity behavior. The research discovers that prudent loan portfolio growth and prudent inflation tracking would be what effective liquidity risk management of the Ethiopian commercial banks would need, as a substitute to overreliance on traditional macroeconomic or balance sheet indicator