A Study of Financial Performance of Private Banks; Evidence from the Case of Selected Private Banks in Ethiopia

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Evaluating the technical and operational efficiency of banks is a key consideration to assess the performance of banks. Besides making sure optimum level of capital, achieving enough liquidity and allowing appropriate expense management are the key determinant of financial performance of banks. In various studies different methods are applied to evaluate banks’ performance. The most common method of financial performance measurement is based on balance sheet and income statement analysis. The main purpose of the study at hand is to evaluate the financial performance of the selected dominant private Banks in the Ethiopian financial market. The study further provided evidence of how the dominant private bank has been financially performing over the course of 10-yearperiod. Audited annual reports from online resource of a total of three dominant private banks covering the year 2013 to 2022 were used in the study. This study applies analytical tools by using ratio analysis and panel data using regression equation based on audited financial statements. The research found out that according to financial ratio analysis tools Awash bank showed a highest performance in the ratios for the period whereas Dashen bank performed better than Abyssinian bank during the period. Furthermore, on both panel fixed model estimations of log of return on asset and Log of return on equity, Liquidity Management and Management efficiency in log form are explanatory variables that are major determinants.



Financial Performance, Financial Ratio Analysis, Panel Data Regression