The Role Of Electronic Banking On Financial Performance Of Commercial Banks In Ethiopia

Abstract

The financial institution in Ethiopia has been recently improving the E-banking services with the hope of improving the financial performances. This paper aims to study whether such services (E-banking) is significantly improving the financial performances of commercial banks in Ethiopia. The paper used a panel fixed effect regression model on the information seventeen banks in Ethiopia collected from National Bank of Ethiopia over the period of 2013 to 2020. The findings show that the intent of using debit card has increased sharply followed by mobile banking service and point of sale since 2013. Moreover, the inferential result has revealed that having e-banking services such as debit card, mobile banking and point of sale improves the financial performances in the commercial banks in Ethiopia. However, these findings are statistically insignificant as the data we have used fails to show that having e-banking services were statistically significantly contributed to the improvement of financial performances. On the other hand, the findings show that having stable liquidity and being strongly efficient significantly improves the financial performances in Ethiopia. Hence, this study recommends that, the policies to encourage further development in electronic banking services along with stable banking liquidity and efficiency are useful in improving financial performances in Ethiopia.