Factors Influencing Financial Performance Of Selected Commercial Banks In Ethiopia

Abstract

This study examines the factors influencing financial performance of selected commercial banks in Ethiopia by using panel data of nine sample commercial out of 17 both public and private banks operating in Ethiopia over the period fifty years from 2007-2021. This study used ROA and ROE as dependent variable and the independent variables of the study: Bank specific factors include CA, AQ, EA, LIQ and BS whereas industry specific factor is bank concentration and Macro economic factors are GDP and INFL. The study adopts purposive sampling technique. The data were gathered from National Bank of Ethiopia for the sampled commercial banks financial Statements and annual macro-economic variables. Based on the regression result, Secondary source of data and Quantitative research approach were used for the study. Fixed effect model was used for the study. Fixed effect model was used to determine explanatory variables. Based on the study methodology use explanatory descriptive types of the research. Explanatory research is to measure the causal relationship between dependent and independent variables. Based on the regression result, there is negative and significant of CA, AQ, and EA with financial performance. There is positive and significant relationship between liquidity, bank concentration and bank size with financial performance. Also, GDP and Inflation are positively and insignificantly affects financial performance