The Effect Of Bank Regulation On Profitability Of Private Commercial Banks In Ethiopia

This study empirically examines the effect bank regulation on performance of privaterncommercial banksin Ethiopia and interprets the result by relating with the regulations. Thernstudyused balanced panel model in examining the regression model and collect data fromrnsevenprivate commercial bankscovering the period of eleven (11)consecutive years, 2005-rn2015. To this end, the study employed a quantitativeresearch approach by documentaryrnanalysis based on their audited financial statement. The study used one dependent variablernreturn on asset (ROA), five independentvariables that are equity investment, legal reservernrequirement, capital requirement, Capital adequacy and bank size.The regression resultrnshowedthat capital requirement and bank size had a positive and significant effect onrnprofitability of private commercial banks. Capital adequacy and reserve requirement hadrnnegative and significant effect on profitability. Equity investment had negative butrninsignificant effect on performance of private commercial banks in Ethiopia. The researchrnprovides evidence of majorityvariables used to measurebank regulationhas an effect onrnprofitability of Ethiopian private commercial banks. Hence, the study recommendsthatrnEthiopian private commercial banks should give due attentionon bank regulationto enhancerntheir profitability significantly.rnKey words: - Bank, Bank regulation and Performance

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