Abstract
This study was aimed at measuring the financial performance of some selected private banks in Ethiopia. The financial performance of selected banks has been measured by using the five too important components of financial measures; those are capital adequacy, asset quality, management capacity, earning capacity and liquidity of banks. To this end necessary audited financial statements and related disclosures of selected private banks, which were prepared in line with international financial reporting standards for three consecutive years from 2017-2019 have been used. The collected secondary data have been analyzed by using a ratio analysis model. In line with comparison of selected private banks each other, the study revealed the following results. When Capital adequacy is used as a performance measure, comparatively Addis international bank is treated as capitally adequate and safe for creditors and depositors in repaying the loan what it is received. Abay bank, Dashen bank and Abyssinia bank jointly treated as relatively safe and capitally adequate next to Addis international bank. In terms of asset quality, awash international bank relatively treated better in managing credit followed by bank of Abyssinia and Addis international bank. When management efficiency is used as a performance measure of banks, Addis international bank is comparatively efficient in utilizing its assets to generate income a lot as compared to the remaining banks under study. In its earning quality, awash international bank has selected as the leader of the remaining banks. The study also concludes the performance of banks in terms of liquidity as one component of CAMEL, based on the analysis Abay bank outperforms the remaining banks.
Highlights
Countries whether developing or developed, will achieve its economic growth when the business is succeeded
Capital adequacy refers the amount of capital funds that the bank or other financial institutions expected to have as required by the financial regulator of the country
Based on the result discussed in the previous chapter, the researcher concluded the performance of the banks by using the five components abbreviated as CAMEL as follows: Capital adequacy, in this performance measure, comparatively Addis international bank is treated as capitally adequate and safe for creditors and depositors in repaying the loan what it is received
Summary
Countries whether developing or developed, will achieve its economic growth when the business is succeeded. Financial information plays an important role in making planning and controlling decisions This information is obtained from the financial statement of the firm. Firms prepare financial statements to provide it for internal users to make decisions that will enable them to plan for future and take corrective actions based on actual results and for external users i,e investors, banks, creditors, government, and other interested users. Banks are established for and play an important role in improving the country’s economy via promoting capital formation through mobilization of funds, encouraging innovation, monetization and influencing the economic activity of the country through the channelization of the mobilized funds in to different investment areas
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