Abstract
This study analyzes the performance and financial credibility of Private Commercial banks in Ethiopia for the period of 2013-2019. This period is taken to consider the political instability and social unrest in the country. As one of the most popular methods for measuring banking performance, CAMELS method is used to analyze the performance of the banks. The good performance of the financial institutions must for the sustainable growth of economy Therefore, this research paper makes analysis of performance of selected private banks in Ethiopia under political instability. The finding indicates that performance of banks in 2016 were decreased than any other year in terms of profit, profit per employee, loan and net income. Cost to income ratio increased. The result implies employee productivity of banks were decreased in 2016, where there were high social and political unrest in the country. Therefore, banks should not concentrate in a single region and has diversify their operations across regions. Keywords: financial performance, CAMEL approach, Political instability, private banks DOI: 10.7176/RJFA/12-19-04 Publication date: October 31 st 2021
Highlights
The financial institutions are the engine of good financial system and play a pivotal role in the economic growth, which help the investor to invest and get return
The study measures the performance of three private commercial banks in Ethiopia
The CAMEL analysis was chosen to evaluate the performance of Awash Bank, Cooperative Bank of Oromia and International Bank of Oromia based on five elements which are Capital Adequacy, Asset Quality, Management Efficiency, Earning Quality, and Liquidity
Summary
The financial institutions are the engine of good financial system and play a pivotal role in the economic growth, which help the investor to invest and get return. Development of a vibrant and active financial institution that complements existing public sector work is considered important to Ethiopia’s economic progress. Insurance companies and microfinance institutions were the major financial institutions operating in Ethiopia. As per 2018/19 report of National Bank of Ethiopia, the financial sector in Ethiopia currently consists of 18 banks, 16 were private and 2 state-owned. Banking system plays a very important role in the economic life of the nation. The health of the economy is closely related to the soundness of its banking system. Supervision and continuous performance evaluation of the banking sector is compulsory to ensure the financial stability of the economy
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