Effect Of Loan Portfolio Management On Financial Performance Of Ethiopian Commercial Banks

The purpose of the study was to examine the effect of loan portfolio quality on thernfinancial performance of selected commercial banks in Ethiopia. Witha dataset from thernannual reports for all the17Ethiopiancommercial banks for 5 years from 2015 to 2019rnG.C.Panel data regression and correlation analysis was used to analyze the relationshiprnbetween dependent variable and independent variables. The regression analysis wasrnfacilitated with the aid of EViews9 statistical software. An ordinary Least Square (OLS)rnmethod is used as a technique in order to test the parameters of the model assumptions.rnReturn on Equity (ROE) is used to proxy financial performance whiles Loan to asset ratiorn(LAR), Liquidity (LIQ), loan Loss Provision (LLR), size of total Deposit (LogD), CapitalrnAdequacy ratio (CAR) and Loan Growth (LGR) is used as proxies for loan portfoliornmanagement indicator. The result has indicated that Loan Growth has an inversernrelationship with profitability while Capital Adequacy ratio and loan Loss Provisionrnhave a positive association with profitability of the commercial Banks. The study suggestsrnthe National bank to continually respond to the socioeconomic impact banks may have asrnwell as the Banks need to work proactively in developing various product portfolio tornmeet the demand of their respective customers

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