Effect of Compensation on Financial Performance of Banks: Case Study of Private Banks
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Date
2017-06
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Addis Ababa University
Abstract
The purpose of this study is to examine the effect of compensation on financial performance of Ethiopian commercial banks. In light of this objective the study adopted mixed research approach using 12 commercial banks in Ethiopia. These banks are operates in the industry for the last 7 years i.e. from 2010 up to 2016 and are chosen purposively. Thus, the study used a total of 84 observations. The study used documentary reviews of annual reports and in-depth interviews to test stated research hypotheses and to answer the research questions. The data was mainly analyzed on quantitative basis using OLS regression analysis. The results showed that compensation has no effect on financial performance of Ethiopian commercial banks. However, the result showed a significant relationship between Operational efficiency, Asset Quality, capital adequacy ratio, GDP, inflation, Earning Management and financial performance. In addition, the study found insignificant relationship between Liquidity Management and financial performance. Thus, focusing and reengineering the institutions alongside these indicators could enhance the profitability as well as the performance of the commercial banks in Ethiopia.
Description
A thesis submitted to the department of accounting and
Finance (A.A.U) in partial fulfillment for the requirement of
The degree of Master of Science in accounting & finance
Keywords
Asset Quality, Capital adequacy ratio, Earning management, GDP