Factors Causing Profit Fluctuation in Ethiopian Private Banks.
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Date
2017-01
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Addis Ababa University
Abstract
This paper examines internal and external factors that cause profit fluctuation in Ethiopian
Private Banks. Six private commercial banks were the subject for the study ranging from 2006 –
2015. The bank's financial statement, National Bank of Ethiopia and Ministry of finance and
Economic Cooperation has been the main source of data for the study and the panel analysis has
been carried out to obtain the result for this empirical study. Also the research used primary
data (questioners). The samples are select using non probability/purposive sampling on the basis
that the sample banks are representative of the specific problem. The study begins with Hausman
test (Random Effect Model versus Fixed Effect Model) to determine the most suitable model to be
used in this study. The empirical result shows that Banks Branch Expansion, Expense
management and Asset quality have negatively affect profit and are the major contributor in
profit fluctuation. The results suggest that Ethiopian private commercial banks could improve their
expense management by formulating policies around these factors and banks have to pay attention to the
Provision for Loan Losses. The findings also showed an insignificant relationship among inflation
rate and Ethiopian private commercial banks profit fluctuation
Key words:- Profit fluctuation, Private commercial Banks.
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Keywords
Profit fluctuation, Private commercial Banks.