Abstract:
This Research aimed to analyses the impact of credit risk on profitability of
six selected private commercial Banks in Ethiopia. The study specifically
sought to examine the relationship between credit risk and the profitability
of the firm as measured by ROA. The Researcher used an explanatory
research design. Secondary data was gathered from the audited annual
reports of the six selected private Commercial Banks and National Bank of
Ethiopia for 20(2000-2019) Years. The Data were analyzed using a
descriptive statics and panel data regression model and the result showed
that credit risk measures; Non-performing loan, loan loss provisions ratio,
and capital adequacy ratio have a significant impact on the profitability of
private commercial Banks in Ethiopia. The study suggested a need for
enhancing credit risk management to maintain the prevailing profitability of
private commercial banks in Ethiopia.
