The role of electronic banking on the financial Performance of commercial banks in Ethiopia
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Date
2019-12
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A.A.U.
Abstract
This study examines the Roles of E-banking on Financial Performance of commercial Banks in Ethiopia using return on equity as proxy of profitability. Technological development by banks is significant to maximize returns and pull in more customers who are becoming complex and demanding for better and quality service. The study used secondary data and employed purposive sampling technique to select ten commercial banks operating in Ethiopia covering the periods from 2015 to 2018. In light of prior literature, key bank specific and macroeconomic variables were identified to disclose their relationship and influence on financial performance of commercial banks. These variables were number of ATM terminals, number of debit cards, number of mobile banking users, value of ATM transactions, value of mobile banking transactions, bank size and inflation rate. The fixed effect regression technique and correlation analysis was used to analyze the data using the econometric package STATA version 13 software. The regression analysis showed that from bank specific variables, number of mobile banking users and value of ATM transactions had positive and significant roles on bank’s profitability measured by return on equity which indicated that increasing the number of mobile banking users and the value or price of transactions executed by ATM had a positive roles on the financial performance of commercial banks as these made basic financial services more accessible by minimizing time and distance to the nearest bank branches as well as reduced the bank‘s overheads and transaction- related costs and had the potential to extend the limited nature and reach of the formal financial services to various customers thereby increasing their profitability. On the other hand bank size had negative and significant role while inflation had a positive significant role from macroeconomic variable on bank’s profitability. The study suggests that focusing and enhancing on awareness creation alongside the key internal drivers could enhance e-banking practice as well as the performance of commercial banks in Ethiopia.
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
Commercial banks, Electronic Banking, Profitability and Macroeconomic