Impact Of Asset Liability Management On Profitability Of Commercial Banks In Ethiopia

The purpose of this study was to investigate the impact of asset liability management onrnprofitability of banks in Ethiopia by using panel data of seven commercial banks from yearrn2005 to 2016. The study used quantitative research approach and analyzed by usingrnregression models Moreover, ROA, were used to measure profitability, Fixed effect regressionrnmodel was applied to investigate the impact of capital adequacy, asset quality, operationalrnefficiency, liquidity, income diversification and bank size. The finding of the study shows thatrnincome diversification, liquidity, bank size statistically significant and positive effect onrnbanks profitability. On the other hand, variables like asset quality and operational efficiencyrnhas a negative and statistically significant effect on banks profitability. However, thernrelationship for capital adequacy is found to be statistically insignificant. The study revealedrnthat asset quality ratio, operational efficiency, income diversification, liquidity, bank size arernthe key driver of return on asset of banks, Therefore, Bank managers are advised to give duernattention to the significant variables to Improve profitability.rnKey words: Profitability, Commercial banks, Asset liability Management

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