The Effect Of Bank Size On Profitability Of Commercial Banks In Ethiopia

The objective of the conducted study was to assess the Effect of Size on Ethiopian commercial banks Profitability. Data collected from seventeen commercial banks of Ethiopia was included in the descriptive data analysis. The economic data analysis was made on the data collected from fifteen commercial banks of Ethiopia. Quantitative data in the structure of balanced panel data was used in the analysis. Secondary data was collected for the years 2013 to 2018 and used as an input to the research work .Ethiopian banks were categorized into small, medium and large based on the total asset they had possessed. The dependent variable was identified to be profit, and was represented by ROE as proxy. The independent variable was identified to be bank size, which was represented by the proxy total Asset. A significant profit difference between different size groups was found by the analysis. Correlation and regression analysis were used to assess the relationship between variables. The analysis revealed that there exist a positive and significant relationship between the dependent and independent variables. Size measured by total asset was found to be a predictor of profitability. Decision makers were recommended to give priority to incorporate a plan of expansion in their strategy.

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