Dr. Abebe Y.Feysel, Abdo Reshid2020-10-142023-11-042020-10-142023-11-042020-05http://etd.aau.edu.et/handle/123456789/22717A thesis submitted to Addis Ababa University, College of Business and Economics, Master of Business Administration Program in partial fulfillment of the requirements for the Degree of Masters of Business Administration in FinanceThe purpose of this study was to examine the impact of financial innovation on financial and operational performance of commercial banks in Ethiopia. This research, studied innovations in the area of mobile banking, internet banking and automated teller machines. These innovations were studied in relation to their effect on commercial banks’ financial and operational performance. An explanatory design was used while a questionnaire was used to gather primary data. The study conducted a census of all 17 commercial banks instead of adopting a sampling methodology. The study sample in terms of the respondents covered purposively selected senior managers and senior officers in head office and a sample of 220 was administered with the questionnaire and a 77.7% response rate was achieved. The data collected was analyzed with the aid of descriptive statistical techniques such as frequencies, percentages and mean score. More so, multiple linear regressions were used to establish the relationship between study variables and to test the hypotheses using Statistical Package of Social Sciences Version 22. Key findings from the study confirmed that, financial innovations influence performance of commercial banks in Ethiopia positively. The adoption of innovations by commercial banks has a higher potential of improving operational performance than financial performance. Financial innovation has positive, strong and significant effect on operational performance. Each type of bank innovation (mobile, internet and ATM banking) significantly and positively influenced bank operational performance. On the other hand, financial innovation had showed positive but weak relationship with financial performance. Mobile banking has a positive and statistically significant effect on the financial performance of commercial banks; whereas internet and ATM banking had positive but insignificant effect on the financial performance of commercial bank. Some of positive but insignificant impact of variables (internet and ATM banking) on financial performance may be due to an early stage, slow and low level of adoption of financial innovation in Ethiopia banking industry. Based on the findings of the study, it can be concluded that bank innovations influence performance of commercial banks in Ethiopia positively. Thus, the study recommend commercial banks in Ethiopia should invest and engage in financial innovation and exert more on awareness creation about financial innovation in order to boost their performance and to compete in ever changing financial system.enFinancial innovationFinancial PerformanceCommercial banksInternet banking and Automated Teller machinesThesis