Determinants Of Nonperforming Loans Evidence From Commercial Banks In Ethiopia

The aim this study is to examine three bank specific and three macroeconomic determinants of nonperforming loans proposed by the literature in the Ethiopian banking system for the period 2005 to 2013 using Arellano Bond (1991) first difference GMM estimation method. The three bank specific factors are ROA, capital to asset ratio and loan to deposit ratio and the three macroeconomic factors are real GDP growth, unemployment and inflation. The estimation result indicates that the coefficient of lagged dependent variable was between 0 and 1 as expected. Profitability and capital adequacy both showed significant (p

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