Abebe Yitayew (PhD)Andualem Assefa2024-03-292024-03-292024-01-15https://etd.aau.edu.et/handle/123456789/2619This study aims to assess the practices of product differentiation and it’s implication on financial performance of commercial banks in Ethiopia. The researcher used explanatory research design complemented with a qualitative research approach. Using simple random sampling technique 74 samples were selected among 93 employees from commercial banks of Ethiopia located in Addis Ababa. The data were analyzed using basic descriptive statistics including frequencies, percentages, mean, and cross-tabs. The findings of the study indicate that the banks have opened several branches in various parts of the country which have led to increased customers and this in turn has improved the proximity and customer convenience. It was also evident that the banks have diversified their operations by offering differentiated products and services associated with loans and deposits. It was also made evident, as a result of differentiation, the banks have attained, high profitability level, and favorable liquidity level to help them meet their short term obligations and also it creates to manage assets and liabilities too. Furthermore, the study found that there is a positive relationship between product differentiation, in terms of product innovation, product design quality and uniqueness with the financial performance of the selected banks. This research concludes that in order to improve the banks business performance, banks should apply new product/ service that their competitors desperately needs. Beside the aforementioned variable that, management quality plays a vital role in maintaining and boosts business performance of Ethiopian banks. Finally, this comprehensive evidence will help policy makers to give attention to product differential and it’s implication on the banks financial performance to gain competitive advantage over the rivals and has paramount importance for the clients to address and exceed their expectations tooen-USThesis