Download or read book The Determinants of Private Commercial Banks Profitability In the Case of Selected Ethiopian Private Banks written by Moges Endalamaw Yigermal and published by . This book was released on 2018-03-12 with total page 20 pages. Available in PDF, EPUB and Kindle. Book excerpt: Scientific Essay from the year 2017 in the subject Business economics - Banking, Stock Exchanges, Insurance, Accounting, language: English, abstract: The main objective of the paper is to analyze the impact of bank specific and macro-economic factors on the profitability of selected Ethiopian private commercial banks over the period of 2005 to 2014. To meet the objective, both descriptive and random effect panel econometrics method of data analysis has been employed. The study uses both return on asset (ROA) and return on equity (ROE) as a measurement for banks profitability. Private Banks profit after tax gets increasing year after year and their ROA is found to be three percent on average. The deposit share of private commercial banks reached above 30 percent in 2014, while it was only 10 percent in 2000. The panel econometrics result shows that, the variable bank size and GDP growth rate has a positive and significant impact on private commercial banks ROA and ROE. While, interest rate spread has a negative and significant impact. The variable Loan to deposit ratio has negative and significant impact on banks ROA while, it has no effect on their ROE. Inflation also an important variable in explaining ROA at 10% significant level but, it has no effect on ROE. The other important variable in explaining ROE is loan concentration index it has positive and significant impact on banks ROE. But, it does not significantly explain ROA. As a recommendation the significant and positive impact of Bank size can be taken as a good signal for commercial banks to merge and to have scale advantage. The significant impact of macro-economic variables in explaining banks profit is an indicator to designed policies that promote sustainable output growth and controlling inflation to have stable banking sector.

Download or read book Determinants of Bank Profitability written by Habtamu Negussie and published by . This book was released on 2013-09-15 with total page 0 pages. Available in PDF, EPUB and Kindle. Book excerpt:

Download or read book Financial Distress and Its Determinants written by Ephrem Gebreslassie and published by LAP Lambert Academic Publishing. This book was released on 2014-11-13 with total page 80 pages. Available in PDF, EPUB and Kindle. Book excerpt: In this research the financial health condition of selected private commercial banks in Ethiopian is assessed by using the Altman's Z score model. Altman's Z score model (a.k.a, ZETA score analysis) is type of Multiple Discriminate Analysis (MDA) which has been applied by financial analysts to evaluate the general trend in the financial health of the enterprises over a period. In addition to the Altman's Zeta model, classical linear regression model (CLRM) is applied to identify the factors that affect the financial health condition of private commercial banks in Ethiopia, and the results of the analysis and recommendations are presented in a nice manner. This book also contains very important points that would be significant for students, researchers and university professors who deals with finance and financial institutions.

Download or read book Determinants of Commercial Bank Interest Margins and Profitability written by Asl? Demirgüç-Kunt and published by World Bank Publications. This book was released on 1998 with total page 52 pages. Available in PDF, EPUB and Kindle. Book excerpt: March 1998 Differences in interest margins reflect differences in bank characteristics, macroeconomic conditions, existing financial structure and taxation, regulation, and other institutional factors. Using bank data for 80 countries for 1988-95, Demirgüç-Kunt and Huizinga show that differences in interest margins and bank profitability reflect various determinants: * Bank characteristics. * Macroeconomic conditions. * Explicit and implicit bank taxes. * Regulation of deposit insurance. * General financial structure. * Several underlying legal and institutional indicators. Controlling for differences in bank activity, leverage, and the macroeconomic environment, they find (among other things) that: * Banks in countries with a more competitive banking sector-where banking assets constitute a larger share of GDP-have smaller margins and are less profitable. The bank concentration ratio also affects bank profitability; larger banks tend to have higher margins. * Well-capitalized banks have higher net interest margins and are more profitable. This is consistent with the fact that banks with higher capital ratios have a lower cost of funding because of lower prospective bankruptcy costs. * Differences in a bank's activity mix affect spread and profitability. Banks with relatively high noninterest-earning assets are less profitable. Also, banks that rely largely on deposits for their funding are less profitable, as deposits require more branching and other expenses. Similarly, variations in overhead and other operating costs are reflected in variations in bank interest margins, as banks pass their operating costs (including the corporate tax burden) on to their depositors and lenders. * In developing countries foreign banks have greater margins and profits than domestic banks. In industrial countries, the opposite is true. * Macroeconomic factors also explain variation in interest margins. Inflation is associated with higher realized interest margins and greater profitability. Inflation brings higher costs-more transactions and generally more extensive branch networks-and also more income from bank float. Bank income increases more with inflation than bank costs do. * There is evidence that the corporate tax burden is fully passed on to bank customers in poor and rich countries alike. * Legal and institutional differences matter. Indicators of better contract enforcement, efficiency in the legal system, and lack of corruption are associated with lower realized interest margins and lower profitability. This paper-a product of the Development Research Group-is part of a larger effort in the group to study bank efficiency.

Download or read book The Determinants of Ethiopian Commercial Banks Performance written by Tesfaye Boru Lelissa and published by . This book was released on 2014-08-15 with total page 72 pages. Available in PDF, EPUB and Kindle. Book excerpt: This paper investigates the determinants of Ethiopian banks performance considering bank specific and external variables on selected banks' profitability for the 1990-2012 periods. The empirical investigation uses the accounting measure Return on Assets (ROA) to represent Banks' performance. The study finds that bank specific variables by large explain the variation in profitability. High performance is related to the ability of banks to control their credit risk, diversify their income sources by incorporating non-traditional banking services and control their overhead expenses. In addition, the paper finds that bank's capital and liquidity status are not significant to affect the performance of banks. On the other hand, the paper finds that bank size and macro-economic variables such real GDP growth rates have no significant impact on banks' profitability. However, the inflation rate is determined to be significant driver to the performance of the Ethiopian commercial banks

Download or read book Comparative Studies on Financial Performance of Commercial Banks in Ethiopia Problems and Prospects written by Tarekegn Tamiru Woldesenebt and published by GRIN Verlag. This book was released on 2019-01-25 with total page 82 pages. Available in PDF, EPUB and Kindle. Book excerpt: Thesis (M.A.) from the year 2011 in the subject Business economics - Banking, Stock Exchanges, Insurance, Accounting, grade: Very Good, Mekelle University, language: English, abstract: The objective of the study was to compare the financial performance of commercial Banks by using their average ratio in terms of profitability, liquidity, efficiency, and solvency. In this study by using excel analyzed information was presented by statistical measures like graphs and tables. Both the trend and comparative financial performance analysis approaches were used. Five years audited financial reports from 2005 to 2009 of the commercial banks were taken for comparison purpose. Those commercial banks taken for comparison were Commercial Bank of Ethiopia, Dashen Bank Share Company, Bank of Abyssinia, United Bank, Wegagen Bank, and Nib International Bank. Year of establishment, amount of capital reserve, and number of branches are taken as a criterion for selecting these commercial banks for analysis purpose. In addition to data gathered from secondary sources, unstructured interview was conducted on problem and prospects related to the financial performance of commercial banks and the responses were presented. The respective ratios of each bank are compared with the average ratios of the six commercial banks taken for the study. Then trend analyses of six commercial banks taken in this study are presented by using the above ratios. In both the financial performance analysis approaches i.e., the trend and comparative analysis, Commercial Bank of Ethiopia (CBE) showed good performance in financial ratios of Profitability, Liquidity, and Solvency ratio, but Bank of Abyssinia(BOA) has showed weak performance in all above explained financial ratios. From this, it is concluded that CBE was profitable and functionally efficient and BOA is less profitable and the earning capacity of the bank is weak. Therefore, in order to improve profitability the management of BOA must increase management efficiency by reducing administrative expenses to the best possible level, efficiently control costs and utilize customers deposit, dispose of the assets which are not contributing for the profitability of the banks and work to maximize the overall profitability of the bank through investing in profitable avenue.

Download or read book Enterprise Risk Management in Ethiopian Private Banks An Assessment written by Yetayew Alemu and published by . This book was released on 2020-11-12 with total page 74 pages. Available in PDF, EPUB and Kindle. Book excerpt: Thesis (M.A.) from the year 2020 in the subject Business economics - Banking, Stock Exchanges, Insurance, Accounting, grade: 3.33, Ethiopian Civil Service University, course: Financial Management, language: English, abstract: The aim of this research is to explore the practice of Enterprise Risk Management in Ethiopian Private Banks. Currently, there are 16 private commercial banks working in the country, some of which are celebrating their 20 years' anniversaries. To represent all the 16 private banks, the researcher grouped them in two categories. Wegagen Bank, United Bank and Bank of Abyssinia has been selected from the earliest established commercial banks and Abay Bank, Buna international Bank and Berhan Bank were selected from the lately established banks in simple random sampling method with a total number of 51 employees working risk management area from the selected 6 commercial banks. The data were collected through questionnaire and face to face interview. The questionnaires were distributed to all risk management department staff of each selected commercial banks. The interviews were made with NBE's bank supervision department and directors as well as managers and directors of commercial banks. 51 questionnaires were distributed, properly filled and fully returned to the researcher. The finding of the research reveals that, the major challenge faced by commercial banks are weak ton at the top, absence of qualified staff, absence of advanced risk management technology and lower management attention and the recommendations were, Banks should have an enterprise risk management committee at management level, Banks should conduct workshops or panel discussion to identify enterprise level risks in each activity and Banks should have comprehensive risk register and database to run their business with smooth operations and absence of interruption.

Download or read book Determinants of Commercial Banks Profitability in Ethiopia written by Firew Bekele and published by LAP Lambert Academic Publishing. This book was released on 2013 with total page 72 pages. Available in PDF, EPUB and Kindle. Book excerpt: This book elaborates the Determinants of Commercial Banks' profitability in Ethiopia taking five bank specific variables namely: capital adequacy, bank size, asset composition, loan loss provision and liquidity and ROA and ROE were used to measure profitability.Ten years data(2003-2012) gathered from seven commercial banks(CBE, Awash, Dashen, Nib, Wugagen, Abyssinia, United banks) were analyzed using descriptive, correlation and regression a

Download or read book Existing Share Transfer Mechanism in Ethiopia Challenges and Benefits written by Bahiru Gebeyehu and published by GRIN Verlag. This book was released on 2020-10-27 with total page 97 pages. Available in PDF, EPUB and Kindle. Book excerpt: Master's Thesis from the year 2020 in the subject Business economics - Investment and Finance, grade: Excellent, , course: Financial Markets, language: English, abstract: The overall aim of this study was to assess what the existing share transfer mechanism in the private banking companies in the absence of secondary stock market in Ethiopia is, along with its related challenges and benefits. The information was obtained from 12 purposively sampled private banking companies by adopting descriptive research design. Semi structured questionnaires were administered to 153 respondents from which 43 were all share department expertise and 110 were conveniently selected shareholders from those banks and interviews also administered for share department directors of those banks. The questionnaires covered the key aspects of what options are there to transfer shares in the absence of secondary stock market in Ethiopia and related challenges and benefits. The main conclusions of the paper were: despite the absence of secondary stock market in Ethiopia shares can be transferred between investors through different ways includes by purchase through the help of share department employees of the companies, by descendant’s if the transfer is sequestration, and through court order at the time of debt settlement, divorce, death. Difficult to know market value of shares, less marketability, inaccessibility of information about share trade were the major challenges with the existing share transfer mechanism that existed in private banking companies in the absence of stock market in Ethiopia. Generally the findings suggest that shares of the private banking companies can transferred between investors in the absence of stock market in Ethiopia. Some recommendations were given from those the banks should open formal office to act as an agent for share transfer purpose for their shareholders by doing so the banks can enhance the transferability of shares.

Download or read book The effect of financial innovations on profitability of commercial banks of Ethiopia written by Abdihakeem Omer and published by GRIN Verlag. This book was released on 2023-02-10 with total page 107 pages. Available in PDF, EPUB and Kindle. Book excerpt: Master's Thesis from the year 2020 in the subject Business economics - Banking, Stock Exchanges, Insurance, Accounting, grade: Very Good, , course: MBA - FINANCE, language: English, abstract: The Ethiopian banking system is very much behind in the adoption of financial innovations compared to the rest of the world, however, the Ethiopian financial sector cannot remain an exception in expanding the use of the modern banking. The main objective of this study was to examine the effect of financial innovations on the profitability growth of commercial banks in Ethiopia. The specific objectives were to examine the effect of product innovation, bank specific factors and macro-economic factors on profitability growth in commercial banks. The study were used quantitative research, secondary data, and data was analyzed using both descriptive and inferential statistics and employed purposive sampling technique to select 12 banks for the study in the periods from 2016 to 2019. Multiple regression with the aid of STATA 14 software was used to examine in this study.

Download or read book The Impact of Income Sources Diversification on Bank Performance written by Mudesir Kasim and published by GRIN Verlag. This book was released on 2020-02-21 with total page 62 pages. Available in PDF, EPUB and Kindle. Book excerpt: Master's Thesis from the year 2016 in the subject Business economics - Banking, Stock Exchanges, Insurance, Accounting, grade: 3.5, , language: English, abstract: The general objective of this study is to investigate the impact of income source diversification on financial performance of commercial banks in Ethiopia. Commercial banks in Ethiopia are currently facing competition from non-bank institutions entry into the activities which was in the past only role of banks. Therefore, banks started searching new income sources rather than focusing only traditional inter-mediation income generating activities. Thus, this study was to examine the impact of income sources diversification on bank performance in case of some selected commercial banks in Ethiopia by using panel data over the period 2010-2015. The study used secondary data collected mainly from each sampled banks annual report financial statements. Since the data is secondary in nature, quantitative approach was adopted. This data was analyzed by using STATA version 12 and Microsoft Excel. Fixed effect model was used, since this model is preferred than the random effect model based on the hausman specification test. Return on asset (ROA) was used as dependent variable while income diversification (Div) as independent variable with control variables such as bank size (BS) in terms of total assets, equity/ assets ratio (EAR), loan/asset ratio (LAR) and expense/income ratio (Exp). The findings of the study show that the level of diversification has a positive impact on financial performance of Ethiopian commercial banks. In addition, the study also revealed that EAR, LAR and BS had positive impact on financial performance while Exp had negative impact. The results of the study are important for bankers to understand how income diversification affects the performance of banks. Therefore, the study recommended that banks should diversify their sources of income into interest and non-interest as well as reduce operating expense in effective way, so as to enhance their performance (ROA).

Download or read book Determinants of Net Interest Margin in Selected Commercial Banks in Ethiopia written by Enyew Alemaw Mesfin and published by . This book was released on 2019 with total page 10 pages. Available in PDF, EPUB and Kindle. Book excerpt: The aim of this study was to investigate into the determinants of net interest margin of selected commercial banks in Ethiopia over the period 2010 to 2017 inclusive. To do so, fixed effects panel regression model was employed for 13 selected commercial banks. The study covered bank level, industry level and macro level variables that affect the net interest margin of the selected banks. The findings of the study revealed that assets quality, capital adequacy, bank size, earning ability, liquidity position, management soundness, exchange rate, inflation and market concentration are significant factors for net interest margin of banks under the study. On the other hand, economic growth and political instability are found to be insignificant variables.

Download or read book Taxation Bank Leverage and Financial Crises written by Ruud A. de Mooij and published by International Monetary Fund. This book was released on 2013-02-25 with total page 26 pages. Available in PDF, EPUB and Kindle. Book excerpt: That most corporate tax systems favor debt over equity finance is now widely recognized as, potentially, amplifying risks to financial stability. This paper makes a first attempt to explore, empirically, the link between this tax bias and the probability of financial crisis. It finds that greater tax bias is associated with significantly higher aggregate bank leverage, and that this in turn is associated with a significantly greater chance of crisis. The implication is that tax bias makes crises much more likely, and, conversely, that the welfare gains from policies to alleviate it can be substantial—far greater than previous studies, which have ignored financial stability considerations, suggest.

Download or read book The Impact of IT Investment on Banking Profit Case of Ethiopian Banks written by Wubshet Ayanew and published by LAP Lambert Academic Publishing. This book was released on 2013 with total page 64 pages. Available in PDF, EPUB and Kindle. Book excerpt: Information Technology and banking performance is one of the most exciting areas of research that has been the focus of intense interest throughout the globe over the decades, but little has been devoted to examine the impact of IT on the profitability of African banks, specially in sub Sahara countries. This empirical study examines the impact of IT investment on the profitability of Ethiopia banking sector along with other bank specific profit determinants. It should be known that In Ethiopian banking sector the context for making IT investment decisions has been altered in the recent years. Currently modern banking services such as ATM services, Mobile banking, Internet and SMS banking are increasingly becoming available. With respect to profitability, Ethiopian banking is booming. Financial results for the 2010 fiscal year show an industry enjoying high growth, high profits, and high dividends. Their profits were up 45 percent and shareholders (at banks open for more than a year) received an average return of 27 percent on their investments.

Download or read book The Determinants of Banks Liquidity Buffers in Central America written by Ms.Corinne Delechat and published by International Monetary Fund. This book was released on 2012-12-21 with total page 43 pages. Available in PDF, EPUB and Kindle. Book excerpt: Banks’ liquidity holdings are comfortably above legal or prudential requirements in most Central American countries. While good for financial stability, high systemic liquidity may nonetheless hinder monetary policy transmission and financial markets development. Using a panel of about 100 commercial banks from the region, we find that the demand for precautionary liquidity buffers is associated with measures of bank size, profitability, capitalization, and financial development. Deposit dollarization is also associated with higher liquidity, reinforcing the monetary policy and market development challenges in highly dollarized economies. Improvements in supervision and measures to promote dedollarization, including developing local currency capital markets, would help enhance financial systems’ efficiency and promote intermediation in the region.

Download or read book The Withdrawal of Correspondent Banking Relationships written by Mrs.Michaela Erbenova and published by International Monetary Fund. This book was released on 2016-06-30 with total page 42 pages. Available in PDF, EPUB and Kindle. Book excerpt: This paper focuses on the withdrawal of correspondent banking relationships (CBRs) in some jurisdictions post-global financial crisis. It describes existing evidence and consequences of the withdrawal of CBRs and explores drivers of this phenomenon drawing on recent surveys and select country information. While the withdrawal of CBRs has reached a critical level in some affected countries, which can have a systemic impact if unaddressed, macroeconomic consequences have not been identified so far at a global level. The paper presents responses from the international community to address this phenomenon, and explains the role that the IMF has been playing in this global effort, especially with regards to supporting member countries in the context of surveillance and technical assistance, facilitating dialogue among stakeholders, and encouraging data gathering efforts. The paper concludes by suggesting policy responses by public and private sector stakeholders needed to further mitigate potential negative impacts that could undermine financial stability, inclusion, growth and development goals.

Download or read book Determinants of Liquidity Risk written by Yalemselam Worku and published by LAP Lambert Academic Publishing. This book was released on 2015-03-23 with total page 92 pages. Available in PDF, EPUB and Kindle. Book excerpt: Banks play a crucial role in the overall development of a given country. Though liquidity risk is one of the main risk of commercial banks and affects the development of the financial system as a whole, there is almost no or little attempt was done to examine its determinants in Ethiopian commercial banks. Thus, this study attempted to find out determinants of liquidity risk in Ethiopian commercial banks covering a six years period (2007-2012) on ten sample commercial banks using secondary data. Both bank specific and macroeconomic liquidity risk determinants were investigated employing the fixed effect panel data regression model. The study revealed that bank size, capital adequacy, dependency on external fund and liquidity of assets have a negative statistically significant relationship with liquidity risk. However, according to the fixed effect panel data regression model profitability, RGDP growth, inflation and lending interest rate are found to be not powerful variables to influence liquidity risk of Ethiopian commercial banks in the test period. Generally, in this study bank specific variables have more significant effect than macroeconomic variables.