Effect of Investment on Electronic Banking on Financial Performance of Commercial Banks in Ethiopia
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Date
2019-03
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Addis Ababa University
Abstract
The main aim of the study is to investigate the effect of Investment on electronic banking on
financial performance of commercial Banks in Ethiopia. In order to fulfill the stated objective
quantitative research approach with explanatory type of research were used. The research was
conduct by consecutive six years Annual Audited Financial Report of selected seven Commercial
Banks in Ethiopia using a purposive sampling method for the period 2013 – 2018. The study also
employed a multivariate regression model using Return on Asset and Return on Equity, as a
dependent variable for measuring the financial performance of the selected Banks and four
independent explanatory variables of electronic banking products investment on ATM,
investment on mobile banking, investment on internet banking and investment on POS. The fixed
and random effect regression technique and correlation analysis was used to analyze the data using
the econometric statistical package eview 8 software. The sampled data was also presented and
analyzed by using descriptive statistic by mean, standard deviation, maximum and minimum. The
effect of the investment on electronic banking in this research is statistically significant in
explaining the ROA and ROE of commercial banks in Ethiopia however the statistical
significance is different for each electronic banking product. The study finds that bank
performance measurement has a strong and significant relationship with investment on ATM. In
addition investment on POS has a positive and significant effect on ROA and negative and
statistically insignificant effect on ROE. On the other hand investment on mobile banking facilities
has a positive and insignificant effect with ROA but it has a significant positive effect on ROE.
However investment on internet banking infrastructure have a negative and significant effect with
ROA but for ROE it has a negative and insignificant effect. According to the result some variables
influences negatively but, it is clear that investment on e-banking is promising activity to
increase the performance of Ethiopian Commercial Banks. So the study recommended commercial
banks are advised to increase the adaptability and accessibility of electronic banking products
specifically internet banking and POS terminal service in order to enhance the financial
performances.
Description
A Thesis Submitted to the School of Graduate studies of Addis Ababa University
in Partial Fulfillment of the Requirements for the Degree of Master of Science
in Accounting and Finance.
Keywords
Ethiopia, Investment on Electronic banking, Return on asset