Determinants Of Commercial Banks Financial Performance In Ethiopia

This study examines the determinants of financial performance of commercial banks inrnEthiopia by using panel data of seven sample commercial banks out of eighteen commercialrnbanks operated in Ethiopia over the period 2000-2014. Since the data is secondary in nature,rnthe quantitative approach to research was used. Besides, the random effect model was used.rnUnder this study, both internal and external factors were included. The internal factors usedrnin this study include capital adequacy, Asset quality, Earning ability, liquidity managementrnand Bank size whereas, the external factor is foreign exchange rate. Moreover, ROA, ROErnand NIM were used to measure the financial performance. This study runs a redundant fixedrneffects test using Hausman specification test. Hence based on the result random effect modelrnwas adopted. Based on the regression result; asset quality, earning ability and bank size haverna significant influence on the financial performance of Ethiopian commercial banks measured byrnreturn on asset , return on equity and net interest margin. Thus, management bodies of commercialrnbank should strive to strengthen the identified significant factors.rnKey words: financial performance, commercial banks

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