Analyzing Financial Performance Of Commercial Banks In Ethiopia Camel Approach

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The objective of this study was to analyze the financial performance of EthiopianrnCommercial Banks using CAMEL approach and rank the banks based on theirrnperformance as well as to test the existence of the relationship between the selectedrnCAMEL factor measurements with the profitability measures. The financial performancernof Fourteen Commercial Banks examined by using panel data from year 2010 to yearrn2014.The study used quantitative research approach and secondary financial data arernanalyzed by using multiple linear regression model for two profitability measures: ROErnand ROA. Fixed effect regression model was applied to investigate the impact &rnrelationship of CAMEL factors: Capital adequacy, Asset Quality, Management efficiency,rnEarning and Liquidity with bank profitability measures separately. The empirical resultrnshows that capital adequacy, Asset Quality and Management efficiency have negativernrelation whereas earning and liquidity shows positive relationship with both profitabilityrnmeasures with strong statically significance except Capital Adequacy which isrninsignificant for ROA whereas Asset quality for ROE. The study suggests focusing andrnreengineering the banks internal drivers could enhance the profitability of commercialrnbanks in Ethiopia. Furthermore the ranking result based showed the first one by capitalrnadequacy, asset quality and liquidity ratio was Bunna International Bank whilernCommercial Bank of Ethiopia by Management efficiency and Earning ratio and finallyrnWogagen Bank was the first by the composite rate

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Analyzing Financial Performance Of Commercial Banks In Ethiopia Camel Approach

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