Determinants Of Commercial Banks Profitability An Empirical Study On Ethiopian Commercial Banks

The aim of this study is to examine the impact of bank-specific, industry-rnspecific and macroeconomic determinants of Ethiopian commercialrnbanks profitability. The study applied the balanced panel data of sevenrnEthiopian commercial banks that covers the period 2001- 2010. The paperrnused Ordinary Least Square (OLS) technique to investigate the impact ofrncapital, size, loan, deposits, noninterest income, noninterest expenserncredit risk, market concentration, economic growth, inflation and savingrninterest rate on major profitability indicator i.e., return on asset (ROA). Thernestimation results show that all bank-specific determinants, with thernexception of saving deposit, significantly affect commercial banksrnprofitability in Ethiopia. Market concentration is also a significantrndetermining factor of profitability. Finally, with regard to macroeconomicrnvariables, only economic growth exhibits a significant relationship withrnbanks’ profitability. The results of the study are of value to bothrnacademics and policy makers

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