Accounting and Finance Dissertation

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Access to Finance and its Challenge for Small Business Enterprises Case of Addis Ababa City
(Addis Ababa University, 2010-06) Zeru, Fetene; Duresa, Degefa (PhD)
Small-scale enterprises have become an important contributor to Ethiopia’s economy. The sector contributes to the national objective of creating employment opportunities, training entrepreneurs, generating income and providing a source of livelihood for the majority of low- income households in the country, accounting for material amount of GDP (Eshetu and Mammo, 2009). Improving access to finance for small business is an important devilment tool, because it helps these business sectors, in addition to strengthening the forward and backward integration to and from different sectors, to create employment for the unemployed and increases their income and consumption. The purpose of this paper was to bring to light one of the major prerequisites, namely access to finance aspects, of the small scale enterprises which are foundation in accelerating economic growth. The main objective of the paper is to identify the challenges that small businesses in Addis Ababa (selected sub cities) face in accessing finance from financial institution through identifying the dominant means of financing small businesses and factors influence the extent of accessing finance. The study was conducted by taking into account the demand side aspect. The most pressing problem identified, from response of small businesses and from responsible officers interviewed, was accessing fund to finance working capital and in fixed investment. The basic factors aggravated the problem for small business are loan covenants need by financial institution, lack of collateral, level of cost of financing and availability of other financing instruments. In addition; as it was confirmed from the research, luck of credit history with the financial institutions, willingness of banks and suppliers to provide credit and the firm’s specific outlook about sales and profitability have contributed to the problem. Key words: Access to finance, Small business enterprises
Accounting Practices of Small and Medium Sized Enterprises and its Effect on Access to Finance in Addis Ababa
(Addis Ababa University, 2011-06) Mosisa, Tafa; P., Laxmikantham (PhD)
This study seeks to examine the accounting practice of small and medium sized enterprises and its effect on access to finance in Addis Ababa. It identifies the sector as the key to unlocking the economic potentials of the country. However, the sector is constrained by a number of factors which include among others minimum or poor accounting practice and difficulty in accessing credit facilities. For the achievement of the objective of the study quantitative research approach particularly survey design were used and the data obtained were analyzed using descriptive statistics and ordinary least square regression. The study revealed that the majority of the studied firm has no formal accounting practice. The study also revealed that the major sources of finance available for the establishment and expansion of SMEs in Addis Ababa are personal saving, microfinance, money from friends or relative, iqub and less from banks. The result of ordinary least square regression evidences that variables such as capital, manager education level and age of the firms are the significant determinants of firms’ accounting practices whereas the problems significantly associated with access to bank credits are the demand for collateral, accounting practice or formal accounting information and age of the firm
Adoption of Electronic Banking System in Ethiopian Banking Industry: Barriers and Drivers
(Addis Ababa University, 2012-05) Gemechu, Ayana; Subramanian, Ulaganathan (PhD)
This thesis aims to examine adoption of E-banking in the Ethiopian banking industry with respect to the barriers which can influence firms from taking advantage of E-banking system and expected benefits derived by adopting the system. The study was conducted based on the data gathered from four banks in Ethiopia; three private banks (Dashen bank, Zemen bank and Wegagen bank) and one state owned bank (commercial bank of Ethiopia). A mixed research approach was used to answer the research questions that emerge through the review of existing literature and the experiences of the researcher in respect of the E- banking system in Ethiopia. The study statistically analyse data obtained from the survey questionnaire. A research framework developed based on technology-organization- environment framework and Technology acceptance model to guide the study. The result of the study indicated that, the major barriers Ethiopian banking industry faces in the adoption of Electronic banking are, security risk, lack of trust, lack of legal and regulatory frame work, Lack of ICT infrastructure and absence of competition between local and foreign banks. The study also identified perceived ease of use and perceived usefulness as a driver of adopting E-banking system. The study suggests a series of measures which could be taken by the banking industry and by government to address various challenges identified in the thesis. These measures include: Establishing a clear set of legal frame work on the use of technology in banking industry, supporting banking industry by investing on ICT infrastructure and banks needs to be focused on technological innovation competition rather than traditional bases of retail bank competition
The Adoption of International Financial Reporting Standards (IFRS) in Ethiopia: Benefits and Key Challenges
(Addis Ababa University, 2012-05) Fantahun, Fikru; Laxmikantham, P. (PhD)
This study aims to examine the adoption of International Financial Reporting Standards (IFRS) in Ethiopia. The study focuses on examining the benefits and challenges of IFRS including the factors that could influence its adoption. To answer research questions and test the hypotheses the study adopted the mixed research approach. The questionnaire data were analyzed using descriptive statistics, correlations, and multiple linear regression analysis and data from interview and document reviews were interpreted qualitatively. The results show that IFRS adoption in Ethiopia will result in a number of important benefits to a wide range of stakeholders. High cost of adopting, the complex nature, lack of proper instructions from regulatory bodies for implementing IFRS, as well as IFRS’s emphasis on fair value accounting, are listed among the most important challenges of IFRS adoption. The study also find that with the exception of government policy the other four variables which are professional bodies, capital market, educational level and company size significantly influence the adoption of IFRS in Ethiopia. Finally, the thesis displayed practical implications for the government of Ethiopia and regulatory bodies in setting a firm deadline for the IFRS adoption and in following the proper application of all the adopted standards. The findings also suggest that a rigorous IFRS capacity building program should be embarked by the government, all regulatory bodies, firms and training institutions in order to provide the needed manpower for IFRS implementation. Keywords: Adoption, International Financial Reporting Standards, Ethiopia
Adoption, Challenges and Perception of International Financial Reporting Standards (IFRS) on the Quality of Financial Reporting of Financial Institution in Addis Ababa, Ethiopia
(Addis Ababa University, 2016-05) Hailemichael, Melese; Laxmikantham, P. (PhD)
International Financial Reporting Standards (IFRS) have been adopted by 143 countries around the world. The goals of the IFRS is to develop, in the public interest, a single set of high-quality, understandable, enforceable and globally accepted financial reporting standards based upon clearly articulated principles. However, its adoption and implementation bring opportunities and create challenges to the adopter. The main objective of this study was to assess the adoption, challenges and impact of international financial reporting standards (IFRS) on the quality of financial reporting of financial institution in Addis Ababa to provide an input for financial institution, governmental and policy makers and serve as for future researches on this field of study. Both primary and secondary sources of data have been used for the study from 32 financial institutions. Primary data were collected through pre designed questioners whereas secondary data were collected from different governmental organization reports, scientific papers and proceedings relevant to the study using document and regression analysis techniques, and proclamations and regulations that deal with financial reporting issues in Ethiopia. The study found that some financial institutions in Addis Ababa, Ethiopia have started using IFRS voluntarily for the preparation of their financial statements without making necessary awareness but nationally; IFRS is adopted officially in December 5, 2014 through enactment of Proclamation. And from the analysis of survey that in the dependent and independent variables there is significant correlation. Among those the IFRS on the quality of financial reporting has significant correlation with the transparency, accountability and economic efficiency. The result of the study will provide a good lesson for other Financial Institution, Governmental and Policy Makers for the implementation of IFRS network. Key Words: IFRS, Adoption; Benefits; Challenge; Quality; Transparency, Financial institutions
An Assessment on Credit Management Practices of Commercial Banks in Ethiopia: /The Case of Six Selected Private Commercial Banks/
(AAU, 2024-03-13) Kahsu Hluf; Abebaw Kassie (PhD)
Now days, the need to take credit to do a business is getting increased. This is so because entrepreneurs and business men have good business ideas but do not have initial capital to make their business in to practice. Whenever lenders (banks) decide to grant a credit, they need to have credit management and method of collecting it. This research work, therefore, dealt with the `Credit Management practices’ of selected commercial banks. The general objective is, then, to assess the banks` credit management practices and method of collections by taking 2023 as a reference year. The research design of this paper work is descriptive. The sampling technique that the researcher used is that of non-probability using convenience and purposive sampling. Both qualitative and quantitative approaches were used. The data gathered from the field and document analysis were tabulated, organized and systematically demonstrated in the form of tables and graphs. The major research findings of this research work revealed that the overall mean score value of credit appraisal variable was very satisfactory that is most respondents strongly agree to the existing credit appraisal. Besides, the overall mean score value related to the variable collection policy andits strategy was satisfactory that is most respondents agree to the existing credit collection policy. Further, the overall mean score value of the variable credit lending policy and related strategies showed average level of satisfaction. The criteria to get a credit need to have either buildings or vehicles, with which the lower society could not afford. Thus, the researcher recommends original educational documents to be considered as collateral to get a loan. This piece of work could also open a way for further research works treating the topic in a very wide way by considering the views of credit customers.
Analyzing Financial Performance of Commercial Banks in Ethiopia: CAMEL Approach
(Addis Ababa University, 2015-05) Getahun, Mulualem; Emerie, Asmare (PhD)
The objective of this study was to analyze the financial performance of Ethiopian Commercial Banks using CAMEL approach and rank the banks based on their performance as well as to test the existence of the relationship between the selected CAMEL factor measurements with the profitability measures. The financial performance of Fourteen Commercial Banks examined by using panel data from year 2010 to year 2014.The study used quantitative research approach and secondary financial data are analyzed by using multiple linear regression model for two profitability measures: ROE and ROA. Fixed effect regression model was applied to investigate the impact & relationship of CAMEL factors: Capital adequacy, Asset Quality, Management efficiency, Earning and Liquidity with bank profitability measures separately. The empirical result shows that capital adequacy, Asset Quality and Management efficiency have negative relation whereas earning and liquidity shows positive relationship with both profitability measures with strong statically significance except Capital Adequacy which is insignificant for ROA whereas Asset quality for ROE. The study suggests focusing and reengineering the banks internal drivers could enhance the profitability of commercial banks in Ethiopia. Furthermore the ranking result based showed the first one by capital adequacy, asset quality and liquidity ratio was Bunna International Bank while Commercial Bank of Ethiopia by Management efficiency and Earning ratio and finally Wogagen Bank was the first by the composite rate
The Application of Management Control System in Ethiopian Commercial Banks
(Addis Ababa University, 2011-06) Eshetie, Ayichew
Banking sector is one of the most successful financial institutions in Ethiopia; however, there is virtually no formidable study on management control system about this sector. The increasing knowledge and understanding on the application of management control system, for the area in which this research was undertaken by benchmarking of the same research undertaken in other country, were taken as the major initiators of this study and were the rationale to the research. This study focused only the application of management control system in Ethiopia Commercial Banks even if there were different managerial issues in the banking industry at the head and branch offices as well. An institution based cross sectional descriptive study with analytic components was conducted in Ethiopian commercial banks which are functioned at Addis Ababa. The study employed both quantitative and qualitative study approaches. Study population for the survey was employees, officers and mangers of the banks. Besides, for the qualitative part, key informant interviews were conducted with mangers and officers of the banks. A questionnaire with five Likert scale for the survey which is mainly used for quantitative part, and Semi-structured interview guide for the qualitative were used as data collection tools. SPSS version 19 for windows was employed to perform statistical analysis. Findings were displayed using tables, and pie-charts. The regression results show that strategic planning and management; and performance measurement have positive and statistical significant contribution on management control system of Ethiopian commercial banks .this is as similar result with (Sinikka 2007).Besides, the commercial banks are competing mainly in service and many of them adapting differentiation strategy. The priority of the majority of commercial banks is customer retention. Commercial banks are encouraging employees to upgrade their knowledge and skill on the basis of experience or service offer to the bank. However, some problems were also there; human capital, benefit entitlement, liquidity and responsibility center. Therefore, the commercial banks need to give due attention for these problems, giving and preparing continuous training for employees and evaluating training results. Key words: Management control system, commercial bank, budgeting system, performance measurement, cost accounting and service pricing, decision making, compensation and benefit
Assessing Determining Factors of Best Risk Management Practice of Ethiopian Commercial Banks
(2016-01) Nigussie, Worku; Gebrehiwot, Gebremedhin
The paper is about “Assessment and Evaluation of best risk management practices” of commercial banks in Ethiopia based on fifteen commercial banks operating in Ethiopia. The number of respondents was eighty. While collecting the requisite data, five points Likert Scale has been used. The objective of the study was to critically examine determining factors of best risk management practices of Ethiopian commercial banks i.e., types of risk facing a bank, The extent in which the management and staff members of commercial banks understand and implement risk management and if or not the staff members of the selected commercial banks aware of the risks associated with their actions and goals. The study also examines how far the banks follow the guidelines of National Bank of Ethiopia regarding risk management. For this study there are six independent variables: understanding risk and risk management (URM), risk assessment and analysis (RAA), risk identification (RI), risk monitoring (RM), Risk Evaluation (RE), required policy in place (RP) and one dependent variable, RMP. Initially, data reliability was found by applying Cronbach’s alpha. So regression model was applied to analyze the impact of independent variables on dependent variables. From the analysis it was concluded that there were five variables which have positive significance impact on the dependent variable RMP. The study also reveals that credit risk, market risk and operational risk are the major risks to the bankers. Key words: Commercial Banks, Risk Management, and Risk Management Practices
Assessing Product Differentiation and Its Implication on Bank Performance; The Case of Selected Commercial Banks In Ethiopia
(AAU, 2024-01-15) Andualem Assefa; Abebe Yitayew (PhD)
This study aims to assess the practices of product differentiation and it’s implication on financial performance of commercial banks in Ethiopia. The researcher used explanatory research design complemented with a qualitative research approach. Using simple random sampling technique 74 samples were selected among 93 employees from commercial banks of Ethiopia located in Addis Ababa. The data were analyzed using basic descriptive statistics including frequencies, percentages, mean, and cross-tabs. The findings of the study indicate that the banks have opened several branches in various parts of the country which have led to increased customers and this in turn has improved the proximity and customer convenience. It was also evident that the banks have diversified their operations by offering differentiated products and services associated with loans and deposits. It was also made evident, as a result of differentiation, the banks have attained, high profitability level, and favorable liquidity level to help them meet their short term obligations and also it creates to manage assets and liabilities too. Furthermore, the study found that there is a positive relationship between product differentiation, in terms of product innovation, product design quality and uniqueness with the financial performance of the selected banks. This research concludes that in order to improve the banks business performance, banks should apply new product/ service that their competitors desperately needs. Beside the aforementioned variable that, management quality plays a vital role in maintaining and boosts business performance of Ethiopian banks. Finally, this comprehensive evidence will help policy makers to give attention to product differential and it’s implication on the banks financial performance to gain competitive advantage over the rivals and has paramount importance for the clients to address and exceed their expectations too
Assessment of Capital Budgeting Decisions on Information System Investments; Evidence from Ethiopian Banks
(Addis Ababa University, 2016-04) Getachew, Mikiyas; Gebrehiwot, Gebremedhin (Ato)
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
Assessment of ERP Project Benefits and Barriers in Post Implementation Stage: The Case of Ethio Telecom Case Study
(Addis Ababa University, 2017-02) Jemal, Abdi; Hagos, Alem (PhD)
In recent years, most developing countries companies implement integrated software to create smooth inter-organization integration, get competitive context of business environment, hold customer satisfaction, produce real time report, provide user satisfaction as operating the system, and getting output from the system. ERP is one of complex information systems that integrate the data of all business areas within the organization. Many researcher identifies varies factors which contribute for the ERP implementation and post implementation phase failure. The purpose of this study would be First, to assess the potential benefit and barriers that can affect the successful exploitation of ERP system in Ethiopian company. Second, to list which categories of benefits and barriers require more attention to maintain success at post implementation phase? A case study designed with quantitative method, Likert type data collected from 295 properly sampled participants and descriptive statistic were used to analyze each factors. The results found all benefit and except there barriers factors the rest barriers given consideration by the respondent but some were underestimated compared to relevant literature. The result also shows the benefits realized and barriers faced composed of all categories. Therefore, as the previous relevant study this research also concludes that both benefits and barriers are significant at post implementation stage. Key words: ERP, user satisfaction, benefit, risk and barriers
Assessment of Ethiopian leather industry performance (An Empirical study)
(AAU, 2023-12-23) Yilkal Tadesse; Alem Hagos (PhD)
The focus of the research is to assess the performance of Ethiopian leather industry in the case of the pittard, colba and batu tannery. mixed method design was employed. Both qualitative and quantitative re search approach were applied. Stratified, purposive and lottery method was used. Primary and secondary data were collected by questionnaires, interview and data review. To analyze the data, statistical package for social science (SPSS) which is statistical software package become applicable accordingly. The finding of the study revealed that the tanneries performance was lower due to lack of imported chemicals, mangers capacity and marketing linkage in running production and sales. The management of the tannery perceives lack of chemicals. In addition, that there are significant marketing managers who do not get op portunity for training globally about linkage with traders. The coordination between different tanneries in the standards of quality of leathers is weak. The LIDI gives more focus to the export targets, less main streaming of qualities. Lastly the study recommends; the tanneries should discuss with government and other stakeholders how to import chemicals frequently or produce chemicals locally so that the manufac turer will produce quality leathers and the performance will be higher. Secondly; the leather industry per formance of the sector will increase if the managers get training on global market Besides, the govern ment should support and fulfill infrastructure and skill development continuously through bench marking programs with different middle-income countries, The target population and sampling method commu nity, government body (LIDI), management and employees in production departmen
Assessment of Factors Affecting Loan Repayment Performance of Borrowers: An Empirical Study on Selected Microfinance Institutions in Oromia Region
(Addis Ababa University, 2017-01) Garomsa, Abreham
Microfinance institutions in Ethiopia are playing an important role in poverty reduction strategies initiated by the government of Ethiopia. These institutions have a mission of creating and facilitating credit and other financial schemes to enhance self-employment opportunities and poverty reduction. To address the main objectives of the study, four Microfinances were selected for the study purpose. The study was aimed at identifying and analyzing the potential factors that affects repayment performance of micro and small scale enterprises and individual entrepreneur borrowers using the structured questionnaires, semi-structured interviews and focus group discussions. Accordingly, in order to achieve this objective 319 sample borrowers were selected from the total of 2910 borrowers served by those selected MFIs. The descriptive statistics analysis and probit regression model was employed to estimate the model and analyze the results of findings. The result shows that ten variables including constant: sex, income from other sources, monitoring utilizations of other members in a group, credit timeliness, repayment time suitability, repayment trend on monthly basis and training adequacy are found significant and positively influence loan repayment performance of borrower. While loan utilization for the intended purpose, repayment trend on irregular basis and visit & follow-up on irregular basis was found negatively influence the repayment performance of borrowers. The extensive involvement and interference of third parties on the decisions of loan approval processing to lending institute were found as a contribution for high defaulting. Thus, it is recommended that the lending institutes needs to focus on monitoring loan utilization systems of borrowers and technical support needs of the target borrowers through delivering better awareness creation to organize the more viable borrowers, close supervision and follow-ups and strengthening their internal and external weaknesses though better integration with key partner stakeholders. Key words: Microfinance, loan repayment, loan utilization, integration, stakeholders
Assessment of Factors Affecting the Value-Added Tax Collection Performance in the Case of Gullele Sub-city, Addis Ababa, Ethiopia
(AAU, 2024-03-13) Mekbib Altaye; Alem Hagos (PhD)
Recently, Value Added Tax (VAT) has become a major worldwide tax instrument which enhances economic growth, and it has a significant factor in increasing government revenue, which funds expenditures. However, governments have addressed many obstacles to ensure effective tax collection. The study aims to assess the factors affecting the Value-Added Tax (VAT) Collection Performance, in the case of the Gullele sub-city, Addis Ababa Ethiopia. In doing so, the study evaluates the VAT collection performance factor in more detail. Both qualitative and quantitative research methods were used to collect and analyze primary and secondary data for the study. Self-administered questionnaires to the branch office employees were used to collect primary data. The target populations of the study were the staff members of the Gullele sub city small scale taxpayer’s branch office. In the branch office there were 32 total workers in the taxation department who were directly involved in VAT collection and administration. The study used purposive and convenient nonprobability sampling technique. Accordingly, the total sample size considered by the researcher was 30. Descriptive Survey data analysis method used, and STATA 14 were used for the quantitative analysis. Furthermore, secondary data was gathered to assess the factors that affect the VAT collection performance. The lack of advanced technology, the low number of registered VAT payers and those who announced their VAT return with payment, the inadequate capacity-building and training programs for tax officials and staff, and other tax administrative practices are the main causes of the low performance of VAT collection. The study concluded by recommending the use of cutting-edge technology, ongoing staff capacity building, proper intention for the planning of VAT collection, hiring the necessary workforce, enhancing consumer and VAT payer awareness, and increasing the number of VAT payers to increase the performance of VAT in Ethiopia. It also needs the government’s and citizens' due attention, and the concerned body may take the findings worthwhile for corrective action.
Assessment of Financial Management of Urban Local Governments of Addis Ababa, Ethiopia
(AAU, 2018-01-08) Milen Amare; Abebaw Kassie (PhD)
Municipal Financial management particularly the aspect of municipal revenue collection and financing of municipal functions are important areas of concern in Addis Ababa. Addis Ababa city administration is facing with an ever increasing demand for municipal services and this challenge will continue in so far as the city continues to expand. This issue is directly linked to the ability of the city administration in generating adequate and increasing revenue and in its ability to efficiently utilize the available resources. The revenue enhancement plan of the city shows that despite the untapped potential, the city couldn’t collect adequate own revenue that can enable it serve residents of existing and new expansion areas. This study therefore, makes an effort to explore whether expenditures for municipal functions is financed by own revenue; if there are revenue lines that conflicts to each other or with that of state revenues; the cities experience in terms of budget predictability and to look in to the contributing factors towards revenue collection performance. Secondary data (plan and actual data for revenue and expenditure) were used to make analysis of revenue performance over time and to assess utilization capability of the city. Semi structured interview with officials of revenue bureau and BoFED were carried out to collaborate the findings from the secondary data. In addition 60 respondents were purposively targeted from among residents of two subjectively selected woredas to answer a research question. Distribution tables, charts, percentages and examination of bases and timing of municipal revenue levies followed a descriptions and inferences were employed to analyze data and information. The study has discovered that due to shortage in municipal revenue collections, municipal functions are partly financed by state revenue. Budget predictability problem is more on municipal revenue than state revenue and underutilization of budget is commonly observed over the study years. Through the findings of the study, residents aware of municipal revenues and do not have objection to the laws governing such revenues, rather they feel that they are morally obliged to pay their share. However they believe that there is discrimination among tax payers and claim that even for similar businesses the amount of tax and municipal charges is not uniform. Nepotism and corruption are figured out at the top cause for such discrimination
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 (Ato)
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
Assessment of Institutional Performance and Sustainability of Selected Microfinance Institutions: A Data Envelopment Analysis Approach
(Addis Ababa University, 2011-06) Elema, Yitay; Ulaganthan, Ulanghatan (PhD)
In this study attempts are made to evaluate the institutional performance and sustainability of six MFIs employing conventional financial performance and sustainability indicators and non-parametric DEA-based malmquist total factor productivity index model. The study period covered 2003 to 2009. DEA-based malmquist total factor productivity index model is applied on panel data to derive total factor productivity growth under both production and intermediation approach which could be decomposed as technological change and technical efficiency change. The results of conventional financial performance and sustainability indicators revealed that all MFIs‘ outreach performance has increased during the study period. Despite the increase in outreach performance, it is difficult for the institutions to operate and expand without subsidies. This is reflected by their financial self-sufficiency ratios. During the study period all most all MFIs in the sample reported below the minimum requirement financial self-sufficiency ratio. This indicated the long-term sustainability of MFIs is in question once the subsidies are dried-up. Respondents‘ response also confirmed that grants are preferable as primary source of fund rather than retained earnings and member saving. In the study the researcher identified that, technological change has higher value relevance than technical efficiency gain. By decomposing technical efficiency the researcher also observed pure technical efficiency gain has a substantially higher explanatory power than scale efficiency gain The researcher also found that the intermediation services which is the responsibility of the MFIs to transfer funds from surplus groups such as from savers and donors to the deficit groups particularly borrowers or investors are more productive than the production responsibility of MFIs which considers the institutions as producers of deposits and loans. During the study period the institutions reported average productivity growth of 20.7% under both input and output oriented intermediation approach. In both cases the shift in total factor productivity was observed due to technological progress. Under the production approach in both input and output oriented measures an average productivity deterioration of 5.3% was identified. This decline in productivity was the result of 5.6% retrogresses in technology, though there was a marginal 0.4% gain in technical efficiency
Assessment of Internal Audit Practice Efficiency in Private Commercial Banks of Ethiopia
(A.A.U, 2022-03) Alemu, Biruk; Fufa, Takele (Dr)
This research paper assesses Internal Audit practice efficiency in the case of 13 sampled private commercial banks. A purposive sampling method was used and data were collected using structured questionnaires with a total of 183 questionnaires were distributed to internal auditors of all Private commercial banks, and 160 (87.43% response rate) had collected. The data were run with SPSS version 20 and standard regression analyses were carried out to assess Internal Audit practice efficiency. In addition, the finding of this study is to show the direct relation effects of Competency of internal auditors, Independence of internal auditor activity, senior management support, the existence of an audit committee with the Assessment of Internal Audit practice efficiency in private commercial banks. According to the regression output, the Competency of internal auditors and senior management support significantly and positively. The remaining two variables; the independence of the internal auditor and the existence of the audit committee were positively related to the internal audit practice but their contribution to the IAP was statistically not significant. All of these four independent variables are making 88.10% of the contributions for the internal audit practice in private commercial Banks in Ethiopia. The researcher also recommends further research to be carried out on other factors that could contribute a value for internal audit practice of banking industry in Ethiopia. Keywords: Internal audit; internal audit function; corporate governance; commercial banks
Assessment of Internal Audit Practice in the Cases of Ethiopian Airlines Group
(A.A.U, 2022-03-22) Henok Balew; Abebaw Kassie (PhD)
Internal audit maintains for a business enterprise in the global business environment that can ensure the safeguarding of the enterprise's assets. Aside from the previously conducted research, this paper would examine the internal auditing practices of Ethiopian Airlines group. The overall goal of this study was to evaluate internal audit practices in the airline industry using Ethiopian Airlines as an example. Specific objectives of this study were to evaluate the overall structure of the internal audit system, the obstacles that the internal audit encountered, the autonomy of the internal audit from management, and the actual practice's compliance with standards of the organization. This study used a descriptive research method with a judgmental or purposive sampling technique. The target population for the study was employees of Ethiopian Airlines located at Head Office, Internal audit division. The sample size for this study was 50 from all employees in the internal audit department and 92% of the target sample was attained through questionnaires sent. The analysis shows that there is strong internal audit structure and adequacy across the company and there is independence of the audit section from the company line structure. This audit report also revealed that there is no freedom of auditors to disclose any audit findings without prior approval of the management. Finally, a conclusion and recommendation have been made based on the study`s findings.

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