Abstract
This paper sought to analyze data and interpret statistical results in testing the performance of an interest rate commission agent banking system. Primary and secondary data were collected from banking industry in Ethiopia to test the research hypotheses, credit risk and liquidity crunch have no impact on AIRCABS, investor loan funding has a positive impact on profitability and sustainability of AIRCABS and discrete market deposit interest rate incentive has a positive impact on stable deposit mobilization in a bank. To test the hypothesis, statistical tools such as Cronbach’s alpha, Kuder-Richardson (KR-20), canonical correlation and multinomial logistic regression were used. The result showed that credit risk and liquidity crunch have no effect on an interest rate commission agent banking system, investor loan funding has a significant strong relationship with profitability and sustainability of AIRCABS and discrete market deposit interest rate incentive has also a significant strong relationship with stable deposit mobilization. This led to a conclusion that an interest rate commission agent banking system (AIRCABS) model is viable and reliable.
Highlights
Disbursing loan holding customer deposit as an asset has exposed the banking business to credit risks and liquidity crunch
Primary and secondary data were collected from banking industry in Ethiopia to test the research hypotheses, credit risk and liquidity crunch have no impact on an interest rate commission agent banking system (AIRCABS), investor loan funding has a positive impact on profitability and sustainability of AIRCABS and discrete market deposit interest rate incentive has a positive impact on stable deposit mobilization in a bank
The result showed that credit risk and liquidity crunch have no effect on an interest rate commission agent banking system, investor loan funding has a significant strong relationship with profitability and sustainability of AIRCABS and discrete market deposit interest rate incentive has a significant strong relationship with stable deposit mobilization
Summary
Disbursing loan holding customer deposit as an asset has exposed the banking business to credit risks and liquidity crunch. 90-degree lending strategy: involves the fund mission agent banking system was designed to provider and the bank By this lending strate- transfer credit risk and liquidity crunch to invesgy, the fund provider is money depositor who tors and entrepreneurs to maximize profitability later shifts full or partial fund for investment and sustainability in the market. An interest rate commission agent bank can transfer credit risk by selling loans to new investors, renting the project to new entrepreneurs, selling collateral and getting loan repayment insurance coverage. To solve these problems, an interest banks’ audited financial statements and national rate commission agent banking business model bank publications of economic indicators considthat transfers credit and liquidity risks to investors ered for the period covering from July 1, 1993 to and entrepreneurs by increasing the agent bank’s June, 2016.
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