Analyzing Financial Performance Trends of Commercial Banks in Ethiopia: Implications for Investor Engagement in the Emerging Capital Market
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Date
2024-06-12
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A.A.U
Abstract
This research paper examines the financial performance trends of commercial banks in Ethiopia
and explores their implications for investor engagement in the emerging capital market. The
study aims to address the following statement of the problem: Despite the growth and
development of the Ethiopian banking sector, there is a lack of comprehensive analysis on the
financial performance of commercial banks and its impact on investor engagement in the capital
market. This knowledge gap hinders investors' ability to make informed decisions and hampers
the overall growth and stability of the capital market. Therefore, this research seeks to fill this
gap by conducting a detailed analysis of financial performance indicators of commercial banks
in Ethiopia. The study focuses on analyzing key financial ratios related to profitability, liquidity,
solvency, and risk of eight commercial banks in Ethiopia. The research design adopts a
quantitative approach, utilizing data collection instruments and techniques to gather financial
data from the banks' annual reports from 2013-2022. The findings reveal the performance of
each bank in terms of profitability ratios, liquidity ratios, and solvency and risk ratios. The
research provides valuable insights to investors, regulators, and stakeholders, enabling them to
better understand the financial health of commercial banks and make informed investment
decisions in the emerging capital market . The conclusions and recommendations drawn from
this study contribute to enhancing the understanding of commercial banks' financial
performance and their role in the emerging capital market, ultimately promoting economic
growth and development in Ethiopia.
Key words: Banks, Ethiopia, Financial performance