Role of Electronic Banking on Financial Performance of Commercial Banks in Ethiopia
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2016-12
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Abstract
This thesis aims to examine the Roles of E-banking on Financial Performance of
Commercial Banks in Ethiopia. A successful bank in presenting good services to clients
and gaining profit is the one using new banking tools. The study has examined the roles
of e-banking on return on assets as one of the most fundamental indexes of profitability.
The study used secondary data employed purposive sampling technique to select ten
banks for the study commercial banks operating in Ethiopia covering the periods from
2013 to 2015. In light of prior literature, key explanatory variables were identified to
disclose their relationship and influence on financial performance of commercial banks.
These independent and other control variables are value or price of transaction of ATM,
value or price of transaction of POS, debit card, number of automated teller machine
terminals, number of point of sale terminal and market share of banks. Result using
random effect panel least square regression with the aid of E-view 8 application
exhibited that numbers of ATM terminals, number of POS terminals and bank market
share have positive and significant role on financial performance of commercial banks
measured by return on asset. The study shows that increased number of ATM, POS and
market share had a positive role on the financial performance of commercial banks
with many banking institutions indicating that increased market share allowed a
company to achieve greater scale in its operations which generally improved its
profitability. Therefore, this study recommends for enhancing return on asset commercial
banks should exert more on awareness creation about e-banking service and timely
support for users will cause an increase in e-banking practice in Ethiopia.
Key Words: Electronic Banking; Commercial banks; ROA; Profitability
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Electronic banking, Commercial banks, ROA Profitability