The Effect of Branch Expansion on Bank Financial Performance: The Case of Addis International Bank S.C
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Date
2024-02-24
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AAU
Abstract
This study is aimed to evaluate branch expansion’s effect on bank’s financial performance in case
of Addis International Bank S.C. For this purpose explanatory research design was employed and
quantitative approach was used. Branch expansion was measured by number of branches and
financial performance of bank was measured by NIM, ROA and ROE. Secondary data was
collected from annual reports, yearly magazines, departmental reports and various journals of
the bank for a period 2012-2023. The stationary, coitegration, autocorrelation and normality tests
were deployed and linear regression is conducted for the purpose of examining the effect of
independent variable on each dependent variables. As regression result shows number of branch
has insignificant positive effect on ROA while it is significant positive effect on ROE and NIM. In
general, the result of this study indicates that branch expansion’s effect on AdIB’s financial
performance is significant as well as positive. Based on this, the researcher recommend
managers and stakeholders of AdIB to open more branches and the bank’s return on its equity
and asset as well as net interest margin will increase. The researcher also recommends other
research performers to study branch expansion’s effect on non-financial performance of the bank.