The Effect of Lending Diversification on the Financial Performance of Commercial Banks in Ethiopia
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Date
2018-06
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Addis Ababa University
Abstract
This paper is to investigate the Effect of Lending Diversification on the financial Performance of commercial Banks in Ethiopia by using data 15 selected banks covering from year 2012 to 2016. The study used quantitative research approach and secondary financial data are analyzed by using linear regressions models for the bank performance measures such as Return on Equity (ROE), Return on Asset(ROA), Risk adjusted Return on Equity (RAROE), and Risk adjusted Return On Asset (RAROA) as dependent variables. The researcher found that management bodies of commercial banks should strive to use the classification of loan diversification and also see the adverse effect of lending diversification on the existing banks as well as for the new entrants. The empirical results suggest that the effect of lending diversification have a strong and moderate strong influence by using the relevant roles of bank performance factors; HHI index, including control variables such as Bank Size, equity ratio, non-performing loan, inflation rate on the performance of commercial banks in Ethiopia.
Description
A Thesis Submitted to the Department of Accounting and Finance Presented in Partial Fulfillment of the Requirements for the Degree of Master of Accounting and Finance
Keywords
Commercial banks, Financial performance