The Impact of Industry Concentration on Performance of the Ethiopian Banking Industry
| dc.contributor.advisor | Worku Gebeyehu (PhD) | |
| dc.contributor.author | Addisu Habte | |
| dc.date.accessioned | 2025-04-08T07:36:47Z | |
| dc.date.available | 2025-04-08T07:36:47Z | |
| dc.date.issued | 2025-02-17 | |
| dc.description.abstract | This study examines the impact of industry concentration on the performance of the Ethiopian banking industry. The primary research question revolves around the impact of market concentration and relative market share versus bank efficiency in determining profitability and operational outcomes. Key performance metrics, including Return on Assets (ROA) and Net Interest Margin (NIM), were analyzed through a system Generalized Method of Moments (GMM) regression approach using Stata software Version 15. Additionally, MaxDEA Software was employed to compute efficiency scores, particularly technical, scale, and management efficiency, for each bank. The findings reveal that market concentration, represented by the Herfindahl-Hirschman Index (HHI), has a positive and significant effect on both ROA and NIM. This suggests that more concentrated markets enable higher profitability and wider interest margins, which supports elements of the Structure-Conduct-Performance (SCP) hypothesis. However, the negative and significant relationship between market share and bank performance calls into question the validity of the Market Power Hypothesis (MPH), implying that while larger banks enjoy some collusive advantages, individual market share does not necessarily translate into higher performance. From an efficiency standpoint, the results indicate that neither technical efficiency nor scale efficiency has a statistically significant impact on profitability, which challenges the Efficiency Structure Hypothesis (ESH). Interestingly, management efficiency demonstrates a positive and significant influence on both ROA and NIM, underscoring the importance of sound management practices in the banking sector. This research contributes to the ongoing debate about the drivers of bank performance in emerging markets, offering evidence that market concentration and managerial efficiency play crucial roles in shaping outcomes, while technical and scale efficiency are less decisive. The study emphasizes the need for enhanced competition and improved managerial practices within the Ethiopian banking industry to foster sustainable growth and profitability. Key words: Structure, conduct, performance, bank, efficiency, concentration, DEA | |
| dc.identifier.uri | https://etd.aau.edu.et/handle/123456789/5295 | |
| dc.language.iso | en | |
| dc.publisher | A.A.U | |
| dc.title | The Impact of Industry Concentration on Performance of the Ethiopian Banking Industry | |
| dc.type | Thesis |