The Effect of Loan Default on Financial Performance of Commercial Banks in Ethiopia
| dc.contributor.advisor | Jonse Bane (PhD) | |
| dc.contributor.author | RegassaYadete | |
| dc.date.accessioned | 2024-04-23T11:38:23Z | |
| dc.date.available | 2024-04-23T11:38:23Z | |
| dc.date.issued | 2022-06-12 | |
| dc.description.abstract | This study aimed to find out the effects of loan default on financial performance of commercial banks in Ethiopia. Using a panel data spanning over the period 2010 to 2020 on seventeen commercial banks operating in Ethiopia, we estimated the effect of loan default on commercial banks financial performances. The data was collected from National Bank of Ethiopia and financial statement of each bank. The analyses were done using summary statistics, trends and fixed effect regression model. The findings show that, on average, about 2% of banks loan resulted in default with a minimum of 0.2 percent to maximum of 8.8 percent whereas the average return on asset (financial performance) is improving by 2.85% in the commercial banks working in Ethiopia. The finding also shows that, loan default is decreasing as financial performance is increasing indicating improvements in both indicators since 2010. Moreover, the result from panel fixed effect regression model revealed that loan default is not statistically significantly affecting the financial performances of the commercial banks in Ethiopia. Nonetheless, other variables including bank size and bank efficiencies are statistically significantly improving the financial performances of commercial banks in Ethiopia. Hence, this study recommends that, commercial Banks operating in Ethiopia should continue minimizing their loan defaults by enduring the creditworthiness (ability of potential customer to repay the loan) to improve their performances while they continue improving banking size and banking efficiencies. | |
| dc.identifier.uri | https://etd.aau.edu.et/handle/123456789/2846 | |
| dc.language.iso | en | |
| dc.publisher | A.A.U | |
| dc.title | The Effect of Loan Default on Financial Performance of Commercial Banks in Ethiopia | |
| dc.type | Thesis |