The Effect of Investment on Financial Performances: the Case of Selected Private Commercial Banks in Ethiopia
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Date
2025-08-11
Authors
Feysel Faris
Journal Title
Journal ISSN
Volume Title
Publisher
A.A.U
Abstract
Investment has been a real concern in banking industry, because right investment is potentially
an effective tool that banks can use to gain a strategic competitive advantage and improve its
performance. The main purpose this paper was lack of studies in banks investment impact on
financial performance in Ethiopia specifically in private banks. This research conducted on
banks investment impact on their financial performance, with objective of assessing the influence
fixed asset investment, intangible asset investment, investment in equity or share and investment
in bill and bond on return on equity in selective private banks, by taking a sample of 4(four)
banks from the overall 38private banks in Ethiopia. The study used return on equity (ROE) as
dependent variable and fixed asset investment (IFA), intangible asset investment (IAI)t,
investment in equity or share(IE) and investment in bill and bond(IBB) as independent variables.
Data were collected from companies annual report data and multiple regression and correlation
analysis was used to test the hypothesis developed and to show the relationship among the
dependent variable and the independent variables. The study found that two variables of
investment (fixed asset investment, and investment in equity or share) have positive and
significance influence on banks return on investment and intangible asset investment have
negative significant influence on banks return on investment. But the influence of investment in
bill and bond is insignificance. Therefore, this research suggested to private bank to keep their focus on the variables affecting return on investment and take them into consideration in
formulating strategies for improving banks performance on return on equity .