P., Laxmikantham (PhD)Lambebo, Tamirat2018-07-022023-11-082018-07-022023-11-082015-06http://etd.aau.edu.et/handle/123456789/5311This study was conducted on the effects of debt financing on profitability of Commercial Banks in Ethiopia. For this purpose, sample of eight commercial banks was studied from all commercial Banks engaged in commercial banking activates. The study period covered twelve years from the years (2002-2013). The dependent variable is return on asset (ROA) used to measure the profitability of commercial banks and the independent variable are debt to asset ratio, debt to equity ratio and interest coverage ratio to measure the level of debt on capital structure of the institution. To ensure the accuracy of the results of the regression model used one control variable that is firm size. To address the main objectives of this study and to collect accurate information mainly used secondary data. Primary data was used to support the secondary data. As the result, the research approaches are mixed research approach. The data analyzed by using panel data analysis technique. The descriptive statistics and the correlation analysis were discussed, followed by the diagnostic test, which is necessary to fulfilling the assumption of the classical linear regression model. Then, a fixed effect regression output result was presented and the results of the regression outputs were discussed. Finally, discussion result indicates that all independent variables had positive relationship with profitability and statistically significant. Keywords: Debt Financing, profitability, return on asset, debt to asset ratio, debt to equity ratio, interest coverage ratio and firm sizeen-USDebt financingprofitabilityReturn on assetDebt to asset ratioDebt to equity ratioInterest coverage ratio and firm sizeThesis