While financial risk is one of the major risks of banks that can affect the development of financialrnsystem, identifying the determinants of this risk is crucial for the soundness of financial sector.rnThe main objective of this study is to find out determinants of financial risk in Ethiopian privaterncommercial banks covering a period of fifteen years (2001-2015) on six sample privaterncommercial banks using quantitative research approach. This study directly examined indicatorsrnof financial risk in terms of credit risk and liquidity risk in an objective manner from a widernrange of variables. Bank specific and macroeconomic variables were tested for the tworndependent variables credit and liquidity risk models by using the balanced panel fixed effectrnregression model. The findings of the study for credit risk model revealed that Loan to depositrnratio (Liquidity), income diversification, non performing loan, real GDP growth rate andrninflation have significant positive impact on credit risk whereas return on asset found significantrnnegative impact on credit risk of Ethiopian private banks. The rest three bank specific variablesrnLoan growth, bank size and operating inefficiency had no significant effect on credit risk ofrnEthiopian private banks during the test period 2001 to 2015.The regression result of the secondrnfinancial risk indicator liquidity risk revealed that capital adequacy ratio and Real GDP growthrnrate have significant positive impact on liquidity risk whereas Banks age and Average Nominalrnlending interest rate have significant negative impact on liquidity risk. Finally the resultrnindicates that return on asset, Tangibility and impaired loan have negative but insignificantrnrelationship with liquidity risk.rnKey words: Financial risk, credit risk, Liquidity risk, Ethiopian Private Commercial Banks