Determinants Of Commercial Banks Profitability An Empirical Study On Private Commercial Banks In Ethiopia

Both internal and external determinants of Bank profitability affect the profitability ofrnPrivate Commercial Banks in Ethiopia. This study identifies bank specific, industryrnspecific and macroeconomic factors that determine the profitability of Ethiopian privaterncommercial banks. Six private commercial banks have been the subject for the studyrnranging from 2004/2005 to 2014/2015. The bank's Audited financial statement, NationalrnBank of Ethiopia and Ministry of finance and Economic Cooperation has been the mainrnsource for the study and the panel analysis has been carried out to obtain the result forrnthis empirical study. The study used ROA as a Dependent variable and capital adequacy,rnoperational efficiency, liquidity, income diversification, concentration, GDP, inflationrnand money supply as independent variables. The empirical results showed that capital,rnoperational efficiency, income diversification, concentration and money supply havernsignificant relationship with profitability of Ethiopian private commercial banks.rnHowever the result shows insignificant relationship between profitability of Ethiopianrnprivate commercial banks with liquidity, GDP and inflation.rnKeywords: Profitability, Private Commercial Banks

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