The Effect of Leverage on Ethiopian Private Banks’ Profitability
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Date
2021-03
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A.A.U
Abstract
The objectiveof the study was examinethe effect of leverage on the profitability of private banks
in Ethiopia.Data was analyzed using descriptive statistics, correlation analysis as well as panel
regression analysis. The research useddescriptive research design methodology is content
analysis of annual reports of 8 Ethiopian private banks for the period from 2012 to 2019, using
multiple linear regression analysis. Secondary data on the 8 list private banks at NBE was
collected. The independent Variable were Debt Ratio, Debt equity ratio, degree of operation
leverage and degree of financial leverage while the dependent variable was Return on Equity
(ROE).In general, all measurement of leverage except asset size has positive effect on Ethiopian
private banks profitability.Therefore, the study recommend that private banks should better to
concern on increment of total loan by keeping the profitability to generate more interest
income from the loan.
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Keywords
Return on equity, Debt to asset,Debt to equity, financial leverage,