The Effect of Leverage on Ethiopian Private Commercial Banks’ Profitability

dc.contributor.advisorDegefe, Duressa (PhD)
dc.contributor.authorSeyoum, Tesfaye
dc.date.accessioned2018-11-01T08:04:50Z
dc.date.accessioned2023-11-04T07:58:17Z
dc.date.available2018-11-01T08:04:50Z
dc.date.available2023-11-04T07:58:17Z
dc.date.issued2018-06
dc.descriptionA Thesis submitted to the department of accounting and finance in partial fulfillment for requirement of Degree of Masters Science in Accounting and Financeen_US
dc.description.abstractThe main objective of this study is to examine the effect of leverage on Ethiopian private commercial banks’ profitability. For this purpose, from private commercial Banks engaged in commercial banking activates ten private commercial banks was studied. The study covered nine years’ period (2008/09-2016/17). The dependent variable was the return on equity (ROE) used to measure the profitability. And the independent variables were the degree of operating leverage and degree of financial leverage to measure the leverage of the institutions. To ensure the accuracy of the result of the regression model used two control variables these were operational efficiency and bank size. In order to address the main objectives of this study balanced panel data was used. The panel data were obtained from the audited financial statements of ten private commercial banks’ and National Bank of Ethiopia. The data were analyzed by using panel data analysis techniques by using Eviews 8. The descriptive statistics and diagnostic tests were discussed, followed by, regression analysis. Then, regression result indicates that, the degree of operating leverage had positive and statistically insignificant impact, the degree of financial leverage had negative and statistically significant impact on profitability of private commercial banks. Moreover, operational efficiency also had negative and statistically strongly significant relationship with profitability. Finally, bank size had statistically significant impact on profitability. Therefore, private commercial banks could be increased income to improve profitability since they are operating above breakeven point. They should also give due consideration to manage their debt properly, increase loan and raise equity financing optimize profitability.en_US
dc.identifier.urihttp://etd.aau.edu.et/handle/123456789/13569
dc.language.isoen_USen_US
dc.publisherAddis Ababa Universityen_US
dc.subjectDegree of financial leverageen_US
dc.subjectDegree of operating leverageen_US
dc.subjectPrivate Commercial Banksen_US
dc.subjectReturn on equityen_US
dc.titleThe Effect of Leverage on Ethiopian Private Commercial Banks’ Profitabilityen_US
dc.typeThesisen_US

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