Assessing Product Differentiation and Its Implication on Bank Performance; The Case of Selected Commercial Banks In Ethiopia
No Thumbnail Available
Date
2024-01-15
Authors
Journal Title
Journal ISSN
Volume Title
Publisher
AAU
Abstract
This study aims to assess the practices of product differentiation and it’s implication on financial
performance of commercial banks in Ethiopia. The researcher used explanatory research design
complemented with a qualitative research approach. Using simple random sampling technique
74 samples were selected among 93 employees from commercial banks of Ethiopia located in
Addis Ababa. The data were analyzed using basic descriptive statistics including frequencies,
percentages, mean, and cross-tabs. The findings of the study indicate that the banks have opened
several branches in various parts of the country which have led to increased customers and this
in turn has improved the proximity and customer convenience. It was also evident that the banks
have diversified their operations by offering differentiated products and services associated with
loans and deposits. It was also made evident, as a result of differentiation, the banks have
attained, high profitability level, and favorable liquidity level to help them meet their short term
obligations and also it creates to manage assets and liabilities too. Furthermore, the study found
that there is a positive relationship between product differentiation, in terms of product
innovation, product design quality and uniqueness with the financial performance of the selected
banks. This research concludes that in order to improve the banks business performance, banks
should apply new product/ service that their competitors desperately needs. Beside the
aforementioned variable that, management quality plays a vital role in maintaining and boosts
business performance of Ethiopian banks. Finally, this comprehensive evidence will help policy
makers to give attention to product differential and it’s implication on the banks financial
performance to gain competitive advantage over the rivals and has paramount importance for
the clients to address and exceed their expectations too