The Effect of Bank Specific Factors on Financial Performance of Private Commercial Banks in Ethiopia
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Date
2020-12
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A.A.U
Abstract
The main purpose of this paper is to investigate the effect of bank specific factors which can affect
the financial performance of private commercial banks in Ethiopia. A total of 16 private
commercial banks (those having well organized financial data till 2009) were purposefully taken &
their audited annual financial reports were analyzed for the period of 2009-2018. For this
purpose, explanatory research design, Pearson Correlation Coefficient and Multiple Linear
Regression Analytical approaches were applied. In this study, return on asset taken as the
dependent variables and bank specific factors liquidity management, asset quality, management
efficiency, earning quality and capital adequacy as independent variables were used. Any
autocorrelation problem was checked. The results indicated that capital adequacy, management
efficiency and earning quality have positive and statistically significant effect on financial
performance of private commercial banks of Ethiopia measured by ROA. But, liquidity
management has negatively significant impact on financial performance of the banks (ROA).
Finally, the study also depicted that asset quality is statistically significant determinant of sound
financial performance of private commercial banks in Ethiopia. Therefore, due attention should be
given in ensuring adequate capital, optimum liquidity, efficient expense management system and
adequate earning quality by commercial banks for better performance and profitability in their
own area of business.
Description
A Thesis Submitted to Department of Accounting and Finance in partial
Fulfillment of the Requirements for the Award of the Degree of Master of
Science in Accounting and Finance
Keywords
Financial Performance, Effect of Bank Specific Factors