Berhanu, Habtamu (PhD)Lemma, Seblewongel2018-06-292023-11-042018-06-292023-11-042017-06http://etd.aau.edu.et/handle/123456789/4935The purpose of this study was to investigate the impact of asset liability management on profitability of banks in Ethiopia by using panel data of seven commercial banks from year 2005 to 2016. The study used quantitative research approach and analyzed by using regression models Moreover, ROA, were used to measure profitability, Fixed effect regression model was applied to investigate the impact of capital adequacy, asset quality, operational efficiency, liquidity, income diversification and bank size. The finding of the study shows that income diversification, liquidity, bank size statistically significant and positive effect on banks profitability. On the other hand, variables like asset quality and operational efficiency has a negative and statistically significant effect on banks profitability. However, the relationship for capital adequacy is found to be statistically insignificant. The study revealed that asset quality ratio, operational efficiency, income diversification, liquidity, bank size are the key driver of return on asset of banks, Therefore, Bank managers are advised to give due attention to the significant variables to Improve profitability. Key words: Profitability, Commercial banks, Asset liability Managementen-USProfitabilityCommercial banksAsset liability managementThesis