A Study on the Factors Affecting the Financial Performance of Select Commercial Banks of Ethiopia

This study examines the Analysis on financial performance determinants: A study on selected commercial Banks in Ethiopia. Among the total of 17 public and private sector banks by using Purposive sampling technique 9 banks have been selected for the study. Quantitative research approach was adopted by using secondary data by using panel data of banks over a period of ten years (2006-2015). The fixed effect model was chosen rather than random effect model based on the hausman specification test result. In order to realize the objectives of the study multiple regression models was employed. Banks specific factors considered CAMEL approach and the key macroeconomic factors such as gross domestic product, inflation rate and foreign exchange rate were also included to analyze the banks financial performance in terms of ROA and ROE, Accordingly, the result revealed that Capital adequacy has positive and significant impact on bank financial performance of return on asset, and Earning ability and liquidity management has negatively and significant impact on bank financial performance of return on equity, On the other hand, variables such as Gross Domestic Variable has positively impact on both return on asset (ROA) and return on equity (ROE). Keywords: Financial performance, Banks. DOI: 10.7176/RJFA/10-9-02 Publication date:May 31st 201