Detrminants Of Profitablity Of Private Commercial Banks In Ethiopia
Year: 2025
Type: article
Abstract: The general objective of the study was to examine the Determinants of private Commercial Banks Profitability in Ethiopia by using balanced panel data of eleven private commercial banks for the time series segments of (2009-2020). The study identified thirteen explanatory variables from both internal (bank specific) and external (macroeconomic) attributes. Return of asset (ROA) and return of equity was used as a measure of profitability. According to Hausman specification test of fixed effect model and random effect model was preferred and applied to examine the effect of bank size, capital adequacy, deposit growth, liquidity risk, operating efficiency, income diversification, branch expansion and bank age, real GDP, inflation rate, lending rate, foreign exchange rate & unemployment on profitability (ROA) and (ROE). The main finding of the study shows that determinant factors such as bank size, capital adequacy, deposit growth, income diversification and branch expansion were statistically significant and positive relationship with profitability of private commercial banks. In contrast, Liquidity risk, operational efficiency, bank ages and foreign exchange rate were statistically significant and negative relationship with profitability. However, no evidence is found about the significant relation between real GDP growth rate, unemployment rate, inflation rate and lending rate with profitability of private commercial bank.
DOI: 10.20372/nadre:16522
Author: Adnew, Fikadu
Language: English
Subfield: Finance
Domain: Social Sciences
Open Access status: green
OpenAlex ID: W6926079020
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