The Mediating Effect of Organizational Learning on the Relationship Between NBE Monetary Policy and Selected State-owned and Private Commercial Banks Of Ethiopia Profitability
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Date
2024-07-01
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AAU
Abstract
A country's economy is heavily reliant on a properly functioning banking system to keep money
flowing smoothly. The banking sector has consistently served the economy by ensuring
profitability. Monetary policy, on the other hand, is a short-term government policy used to control
a money supply and keep inflation under control. The objective of this study was to examine the
mediating effect of organizational learning on the relationship between NBE monetary policy and
the commercial banks of Ethiopia profitability. To achieve the study's objective, the researcher
employed an explanatory research design and a quantitative research approach. The study's target
population consisted of senior managers from seventeen Ethiopian commercial banks. 264
respondents were selected using a random sampling technique. A structured and self-administered
questionnaire was developed for NBE monetary policy dimensions (reserve requirement, liquidity
requirement, Treasury bond purchase, foreign exchange surrender requirement, and credit cap
expansion), organizational learning, and bank profitability, and distributed to target respondents.
This study used 211 questionnaires, and the results were analyzed using descriptive and inferential
statistics. Pearson Correlation analysis reveals a statistically significant negative relationship
between all NBE monetary policy dimensions, while organizational learning had a statistically
significant positive relationship with bank profitability. Furthermore, the regression results
showed that NBE monetary policy dimensions (reserve requirement, Treasury bond purchase,
foreign exchange surrender requirement, and credit cap expansion) had a negative and
statistically significant effect on bank profitability, whereas liquidity requirement and
organizational learning had a positive and statistically significant effect on bank profitability.
Among the study's variables, credit cap expansion was identified as the most important factor in
bank profitability. According to Hayes' SPSS Process Macro findings, organizational learning
partially mediates the relationship between NBE monetary policy and commercial bank
profitability. Thus, it is strongly advised that banks diversify their revenue streams through
organizational learning, such as expanding wealth management services, interest-free banking,
and increasing commissions, service charges, and fees, rather than relying solely on loans and
advances. Decision-makers also needed learning agility to seize the opportunity and adapt the
bank's business model to changes in monetary policy. Depending on the study findings, additional
recommendations were made.