Determinants of commercial banks profitability: an empirical Evidence from the commercial banks of Ethiopia
No Thumbnail Available
Date
2012-05
Authors
Journal Title
Journal ISSN
Volume Title
Publisher
A.A.U
Abstract
The main objective of this study is to examine the effect of bank-specific, industry specific
and macroeconomic determinants of Ethiopian commercial banking industry
Profitability from the period 2000 - 2011. By using OLS estimation method to measure the
Effect of internal and external determinants on profitability interims of average return on
Asset and net interest margin. The estimation results show that profitability persists in
Some extent, implies that the indicator of the existence of relatively fairly competitive
Market in Ethiopian commercial banking environment, especially competition between
Private Banks. Regarding the explanatory variables, all bank-specific determinants, with
The exception of bank size, expense management and credit risk, affect bank profitability
Significantly and positively in the anticipated way. However, bank size, expense
Management and credit risk affect the commercial banks profitability significantly and
Negeatively. 1n addition to this, no evidence is found in support of the presence of market
Concentration. Finally, from macroeconomic determinants GDP has positive and
Significant effect on both asset return and interest margin of the bank. But interest rate
Policy has significant and positive effect only on interest margin.
the commercial banks of Ethiopia policy makers and managers should give high
Concern to the credit risk management, expense management and large bank size
management in order to reduce the hindrance of the profitability of the banks.
Description
Keywords
Commercial, Evidence