Opportunities for and Determinants of Private Commercial Banks in Ethiopia the case of Zemen Bank S.C.
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Date
2022-06
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Addis Ababa University
Abstract
The study attempted to assess the opportunities for and determinants of private commercial banks. The study is cased study focusing on Zemen Bank S.C. The assessed the opportunities that exist and the determinants that affect the performance of private commercial banks, by focusing on two sets of factors. The first one is bank specific or internal factors (Capital Adequacy, Asset Quality, Earning Ability, Management Efficiency, Liquidity, and Bank Size), which are basically influenced by internal decisions of management and the board. The second one is macroeconomic or external factors (GDP, NBE Regulation, Exchange Rate, Inflation, Interest Rate, and ICT Infrastructure). The external factors are sector-wide or country-wide influences which are beyond the control of the banks. Primary data for the study was collected through questionnaires from employees of the bank and both quantitative and qualitative methods of data analysis are used. Descriptive research design method was employed. The findings of the study indicate that liquidity, weak management efficiency, and poor earning ability are the major internal factor determinants. Whereas, even though all the external factors highly influence performance of private commercial banks, NBE regulations, ICT infrastructure, and Inflation are the main determinants. Private commercial banks have bright prospects in the technological innovations & advancements and the economic growth of the country
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Keywords
Banking sector, Opportunities, Determinants