Determinants of Banks Liquidity and Its Impact on Profitability on Selected Banks in Ethiopia
| dc.contributor.advisor | Sisay Regassa Senbeta (PhD) | |
| dc.contributor.author | Eyob Gezahegn | |
| dc.date.accessioned | 2025-03-04T08:17:25Z | |
| dc.date.available | 2025-03-04T08:17:25Z | |
| dc.date.issued | 2025-02-06 | |
| dc.description.abstract | The "Determinants of Banks Liquidity and Its Impact on Profitability in Selected Banks in Ethiopia" are reviewed in this paper, which covers the period from 2002 to 2022. The study uses both fixed effect and random effect panel data regression models to assess the factors influencing key financial ratios, such as the Loan to Deposit Ratio (LDR) and Liquid Asset to Total Asset Ratio (LATA), using a comprehensive dataset obtained from audited financial statements of sampled banks. Descriptive statistics indicate conservative lending practices and strong liquidity management among these banks, with notable variability observed across different financial metrics. The correlation analysis reveals there is moderately positive association between liquidity (measured by LATA) and profitability (measured by Return on Assets, ROA), suggesting that higher liquidity corresponds with increased profitability. Conversely, there is a significant positive correlation between LDR and Net Interest Margin (NIM), suggesting that effective asset-liability management enhances profitability. Panel unit root tests ensure the variables' stationarity post-differencing, thereby guaranteeing reliable regression outcomes. Model diagnostics, including tests for multicollinearity, normality, heteroscedasticity, and autocorrelation, validate the robustness of the regression models. The results underscore the importance of capital adequacy and effective asset-liability management in enhancing bank performance. This research contributes to the existing studies by providing nuanced insights into the financial trends with in the Ethiopian banking industry and offers practical implications for policymakers and banking professionals. | |
| dc.identifier.uri | https://etd.aau.edu.et/handle/123456789/4432 | |
| dc.language.iso | en | |
| dc.publisher | AAU | |
| dc.title | Determinants of Banks Liquidity and Its Impact on Profitability on Selected Banks in Ethiopia | |
| dc.type | Thesis |