Alem HagosDagmawit Tsegaye2026-03-062026-03-062025-06-01https://etd.aau.edu.et/handle/123456789/7866This research evaluated the performance of private commercial banks' IFB windows in Ethiopia that are actively involved in IFB services. The research aimed at examining the operating models, offerings, financial performance, and Sharia compliance of IFB windows, relative to events during the early stages of application to the period 2020 to 2024. The main objective was to examine the financial performance of IFB windows, using Return on Assets (ROA) as the key measure, and the profitability determinants. Only five of the 32 private commercial banks were included in the analysis due to the presence of regular and independent financial data of IFB operations. Panel data was utilized and a Random Effects regression model was employed to analyze the effect of key variables such as Deposit Mobilization, Management Efficiency, Operating Efficiency, Bank Size, and Capital Adequacy on IFB profitability. Findings show wide differences in performance across the listed banks. The Cooperative Bank of Oromia led in profitability, mobilization of deposits, and asset size but was marred by operational inefficiency. Dashen Bank showed good cost control and stable growth of deposits and low capital adequacy. Oromia Bank showed balanced performance while Wegagen Bank lagged behind in most of the indicators despite comparatively efficient operations. Hibret Bank, though in smaller magnitude, demonstrated a good trend of profit and cost management. Deposit Mobilization, Management Efficiency, Bank Size, and Capital Adequacy were revealed to have a statistically significant and positive relationship with ROA by regression analysis. Operational Efficiency and macroeconomic factors such as exchange rate, GDP, and inflation, however, had no statistically significant relation with profitability. The study contributes to the dearth of empirical studies on IFB performance in Ethiopia and offers policy inputs for policymakers, bank managers, and regulators. It also underscores the need for bank-level strategic reforms to render IFB operations profitable and sustainable in the country.enThesis