Commercial Banks In Ethiopia Research Articles

Revisiting the relationship between board structure and bank performance in Ethiopian commercial banks

Revisiting the relationship between board structure and bank performance in Ethiopian commercial banks

Factors Affecting Capital Structure Decisions of Banks: A Systematic Literature Review Evidence from Commercial Banks of Ethiopia

Factors Affecting Capital Structure Decisions of Banks: A Systematic Literature Review Evidence from Commercial Banks of Ethiopia

Causes of Valuation Inaccuracy in Mortgage Lending in Ethiopia

This study aims to add to the scarce empirical literature on mortgage valuation by ranking the variables that make inaccurate mortgage valuations. Given the central role, valuation plays in lending, high valuation inaccuracy leads to major market distortions in real estate with potentially harmful financial system repercussions. Thus, this study is envisioned to investigate the causes of valuation inaccuracy for mortgage purpose in commercial banks in Ethiopia. To achieve this objective, the study employed a convergent parallel mixed design. Data were collected from valuers through questionnaires and interviews using purposive, snowball, and convenience sampling techniques. To investigate the impact of the factors on valuation inaccuracy, an ordinal regression model was used. The study revealed that inappropriate valuation methods, the inadequacy of the market data, and property market imperfection were the most significant predictors. However, there are moderately significant causes which include the characteristics of the property market, valuation regulatory framework, and absence of the valuation standard. Client pressure, ethics, and competence of valuers were insignificant predictors. This paper recommends that the government should establish a government agency that is independent and in charge of valuation regulation, developing legal frameworks, and intervening in the property market. Based on the framework valuers should use an appropriate valuation method. Moreover, there should be an establishment of central databases that valuers relied on.

Factors Determining Banks’ Loan and Advance: A Case Study on Commercial Banks in Ethiopia

Factors Determining Banks’ Loan and Advance: A Case Study on Commercial Banks in Ethiopia

Internal Audit Effectiveness and Its Determinant Factors in Commercial Banks of Ethiopia: The Case of Bale Robe Town

Internal Audit Effectiveness and Its Determinant Factors in Commercial Banks of Ethiopia: The Case of Bale Robe Town

Board structure and bank performance: Evidence from Ethiopia

This study aims to examine whether board structure (board size, board composition, CEO duality, and board gender diversity) is associated with bank performance. To do so, the study makes use of panel data of 14 commercial banks in Ethiopia covering a 9-year period during 2011–2019 which results in 126 bank-year observations. The findings of the study show that board composition (BCOMP) and board gender diversity (FDIRS) have positive and significant impacts on bank performance. This implies that the increase in the proportion of independent directors and female board members in the board room increases bank performance. On the other hand, the results reveal that board size (BSIZE) and CEO duality (DUAL) decrease bank performance: Both of these variables have significantly negative effects on bank performance. This means that bank performance decreases as the number of board of directors increases. Also, bank performance decreases when a single individual is jointly responsible for the CEO position with the board of directors as well as board chairperson responsibilities. The results suggest that the board has a considerable role in the Ethiopian bank governance. Hence, the results could benefit policy experts and regulators to formulate policies on recuperating board governance.

Mobilization of Deposit in Commercial Banks of Ethiopia: Conceptual Model Development through Literature Review

Mobilization of Deposit in Commercial Banks of Ethiopia: Conceptual Model Development through Literature Review

Analyzing Challenges that Affect Leadership Styles Among Top Ten Commercial Banks in Ethiopia

Analyzing Challenges that Affect Leadership Styles Among Top Ten Commercial Banks in Ethiopia

Assessments of CFA Measurement Model of Digital Marketing Success with Business Performance: The Mediating role of Customer Loyalty: The Case of Commercial Banks of Ethiopia (CBE), Ethiopia

Assessments of CFA Measurement Model of Digital Marketing Success with Business Performance: The Mediating role of Customer Loyalty: The Case of Commercial Banks of Ethiopia (CBE), Ethiopia

Developing Anti Money Laundering Identification using Machine Learning Techniques

There are several areas that can be applied the machine learning techniques, one of which is the finance and economics sector, it can effectively help and assist on decision support on fraud investigation. In this sector the skills and methods of fraud is becoming more complicated. In financial sector there are a lot of fraud mechanisms from them money laundering is crucial activity to fraud. The main purposes of this study develop and recommend a machine learning algorithm for identification of Anti-Money Laundering. The bank data set collected from Commercial Bank of Ethiopia which has 14740 with number of missing value and then after effectively pre-processing the data set, the five different types of machine learning algorithms were used, these are support vector machine, Logistic Regression, Naïve Bayes Decision tree, and Random forest. From those machine learning algorithms, Random Forest the best performance with 99.1% accuracy.

Assessments of CFA Measurement Model of Digital Marketing Success with Business Performance: The Mediating role of Customer Loyalty: The Case of Commercial Banks of Ethiopia (CBE), Ethiopi

Assessments of CFA Measurement Model of Digital Marketing Success with Business Performance: The Mediating role of Customer Loyalty: The Case of Commercial Banks of Ethiopia (CBE), Ethiopi

Financial Innovation and Its Effects on Bank Financial Performance: Evidence from Ethiopian Commercial Banks

The objective of this study is to evaluate financial innovations and their impact on the financial performance of commercial banks. To this end, descriptive and diagnostic research designs with a qualitative approach were used. To collect primary data, the researcher used a questionnaire. The questionnaires were prepared in Likert-scale format. The study examined the validity of the data collection instruments by testing content, convergent, and discriminant validity. Content validity was ensured by reviewing the relevant literature and conducting pilot tests with the data collection instruments. By testing the value of factor loadings, Cronbach's alpha, composite reliability, and average variance extracted (AVE), convergent validity was established. The Fornell-Larcker criterion, heterotrait-monotrait ratio (HTMT), and cross loadings were used to test discriminant validity. The study used purposive sampling techniques to select 18 commercial banks that have a high reputation and have invested heavily in financial innovation. On the other hand, convenience sampling was used to select 1,249 branches of commercial banks. Pearson correlation, analysis of variance, and multiple regression analysis were performed to determine both the nature and strength of the relationship between financial innovation and financial performance. Findings indicate that mobile banking, online banking, and agency banking have positive and statistically significant effects on the financial performance of commercial banks. This implies that financial innovations have positive and significant effects on the financial performance of commercial banks.

Assessment of behavioral maintenance for organizational change in the context of Ethiopian commercial banks

Behavior change maintenance can guide the development and evaluation of interventions promoting sustained behaviors in organizational changes. This research aims to examine the factors that influence behavioral maintenance for organizational change in Ethiopian commercial banks. The study developed a comprehensive model to explain the mechanism of behavioral maintenance for organizational change by employees, using self-determination theory with two additional exogenous constructs, value congruence and excessive work demands. Applying mixed-analytical approaches, including SEM and fsQCA, advances the knowledge of how employees motivate to maintain their behavior regarding the organizational change. The target population consists of lower-level managers and 317 valid responses were retained for further analysis. In our findings, the SEM results reveal that perceived relatedness, perceived competency, perceived autonomy, and perceived enjoyment influence employees' behavioral maintenance for organizational change, the fsQCA results indicated that value congruence must always be combined in these variables. The findings suggested an alternative path that might serve as the basis for sustaining organizational change.

Exploring the drivers towards behavioral support for organizational change: a qualitative investigation

Research has indicated that problems related to behavioral support for organizational change must be re-addressed to provide an improved implementation of changes. It is essential to explore factors for the complex implications of organizational change before implementing it in practice. This research aims to explore predictors of behavioral support for organizational change in Ethiopian commercial banks. In-depth interviews with purposive and convenient sampling techniques were conducted with employees (n=43) because qualitative research provides opportunities to explore employee experiences and get detailed information about how they perceive behavioral support for organizational change. This study used grounded theory and thematic analysis to explain behavioral support for organizational change and to establish a theoretical basis for further investigations. Our findings indicate that traditional predictors for behavioral support for organizational change might not be enough. This study suggested three new predictors: "perceived cost," "reward," and "prior change experience" to explore behavioral support for organizational change. The study tried to clarify organizational change drivers from employees' perspectives, which offered an alternative avenue that could provide the foundation for accepting organizational change.

Banking sector performance evaluation in Ethiopia for the period of growth and transformation plan (GTP-II): private vs public commercial banks

The main objective of this study was to evaluate and compare the financial performance of commercial banks in Ethiopia during the implementation of growth and transformation plan II. Moreover, determinants of financial performance were examined. The study was conducted using secondary data obtained from the National Bank of Ethiopia, and the official website of each commercial bank. Multiple panel regression and independent sample t tests were used to show the relationship and to compare the financial performance of commercial banks between the study periods. The ratio of non-interest expenses to total expense, log_net profit per employee, interest income to total income, and exchange rate were variables with a positive and significant effect on the financial performance of commercial banks, while log_total loans per branch and inflation affected negatively the financial performance measured by return on assets. Whereas, the ratio of debt to equity, log_net profit per employee, total liquid assets to total deposits, interest income to total income, and exchange rate have a positive and significant impact, while the ratio of loan loss provision to total loan, log_total loans per branch, and inflation negatively and significantly affected financial performance measured by ROE. The independent sample t test shows that except for the ratio of total loans to total deposits and total capital to total assets, the remaining variables did not show significant differences between state and publicly owned banks.

Factor Influencing Customer Attitude towards Use Interest-free financial products and services of Commercial Banks in Ethiopia

Islamic banking has become one of the global financial industries' fastestgrowing segments. This study analysis of Customer Attitudes towards the Use of Interest- Free Financial Products and Services of Commercial Banks in Ethiopia (The Case of Jigjiga City). 398 sample respondents were chosen from commercial banks in Ethiopia utilizing multistage staged sampling processes. Both of the original sources were used to gather the study's data. Interviews and structured questionnaires were used to gather primary data. The results of multiple regressions revealed that relative advantage and compatibility have a significant positive impact on the attitude toward interest-free banking products and services in commercial banks in Ethiopia. The data were used for descriptive analysis (frequency, percentile, mean, and standard deviation) as well as econometric analysis (correlation and multiple regressions). Similarly, complexity has no obvious influence on attitude, whereas perceived trust and customers awareness have a negative influence on attitude. .

Resource-based productivity in the closed banking sector: the case of Ethiopian banks

PurposeThe current paper's goal is to examine the productivity of the closed banking sector evidenced from Ethiopia. In addition, the inclusion of intangibles on productivity was examined in the current paper.Design/methodology/approachFirst, the standard Malmquist Productivity Index (MPI) was employed for 13 commercial banks for both stages. Second, by excluding the state-owned commercial bank, the analysis employed a bootstrapped MPI for the robust and comprehensive conclusion. Furthermore, from 2010 to 2019, the fixed effect Ordinary Least Square (OLS) regression with balanced panel data was used.FindingsThe standard MPI in both stages shows that the productivity of Ethiopian commercial banks is declining. The technological shock was the main reason for the loss. The catch-up in both stages scored above unity, mainly due to the pure efficiency change. Besides, when combined with tangible resources, the inclusion of resource-based view (RBV) proxy variables reduces technological shock regress and ultimately improves productivity change. The bootstrapped MPI also reveals that technological shock is the primary source of the productivity decline. However, efficiency change also contributes to the productivity decline based on this estimation.Research limitations/implicationsFuture research could examine the more extensive productivity analysis by considering the primary sources of data collections for resource-based variables.Practical implicationsAccording to the study's results, banking regulatory authorities and bank management, including the shareholders, should continue to invest in cutting-edge technology to improve the productivity of the banking sector.Originality/valueThis is the first comprehensive study of productivity for Ethiopian commercial banks based on the standard MPI, bootstrapped MPI, and OLS by incorporating all resources into the analysis.

Deposit mobilization and its determinants: evidence from commercial banks in Ethiopia

Deposit mobilization is the most important service and an integral part of banking operations. In Ethiopia, mobilizing savings through intense deposit collection has been regarded as the major task of banking. However, managing deposits is impossible without understanding and controlling the factors that influence them. Thus, this study examined the bank-specific and macroeconomic determinants of deposit mobilization in Ethiopian banking sectors using balanced panel data of 14 commercial banks from 2011 to 2020. Secondary data sources from sampled commercial bank audited financial statements were used to achieve the stated objective. A quantitative approach and explanatory design were employed. The model result demonstrated that loan to deposit ratio, capital adequacy, economic growth, inflation, population growth, and political stability have a negative and statistically significant effect on commercial bank deposit mobilization. On the other hand, the bank's profitability has a positive and statistically significant impact on commercial bank deposit growth. The study suggests that Ethiopian commercial banks need to improve deposit mobilization by paying more attention to internal factors controlled by management, while keeping in mind the influence of the overall economic and political dynamic. This study provides useful insights for bank managers, owners, analysts, policymakers, depositors, and other stakeholders on the deposit growth of commercial banks and its determinants. Meanwhile, academic researchers and students may use the findings and suggestions to conduct a study in the banking area. Unlike the previous studies, the present study examined the effect of population growth and political stability on deposit mobilization and contributes to the limited stock of existing knowledge in the area.

Does intangible assets affect the financial performance and policy of commercial banks' in the emerging market?

In a digital and knowledge based economy, intangible assets are predominant and their role along with age and knowledge has become key success factors for firms. However, a very little attention was given to the intangible assets in the banking sectors’ in Ethiopia and the effect still not studied yet. Therefore, the aim of this study is to empirically examine the effect of intangible assets on the financial performance and policy of 17 commercial banks in Ethiopia from the year 2017 to 2020. Return on asset and equity were used to measure the financial performance and debt as a measure of financial policy. The intangible asset is used as the main explanatory variable and asset size and liquidity as control variables. Random effect estimation technique for panel data was used. The result revealed that intangible asset has positive effect on the financial performance measured both by ROA and ROE at 5% significance level while, negative effect on the financial policy of commercial banks in Ethiopia at 1% significance level. Moreover, the study found asset size has significant and positive effect on ROA and ROE at 1% and 5% significance level respectively. Liquidity ratio has also significant positive effect on the financial performance measured both by ROA and ROE at 5% significance level. Finally, the finding revealed asset size and liquidity ratio has significant positive effect on the financial policy of commercial banks in Ethiopia at 10% and 1% significance level respectively. Therefore, the study concludes that financial performance and policy is achieved not only by using physical assets but also using intangible assets. Thus, the boards and mangers of commercial banks’ ought to plan and maintain the appropriate ratio of intangible assets to total assets for securing sustainable development in achieving the maximization of shareholders wealth and to have optimum debt.

Determinants of Commercial Banks Profitability: The Case of Commercial Banks in Ethiopia

Banks are the most crucial financial intermediaries in our country and the economy that have profitable banking industry are better able to withstand negative shock and contribute to the stability of the whole economy. Both internal and external determinants of Bank profitability affect the profitability of Commercial Banks in Ethiopia. The purpose of this study is to investigate determinants of commercial banks profitability in Ethiopia by using panel data of eleven commercial banks from year 2009 to 2018. The bank's Audited financial statement, National Bank of Ethiopia and Ministry of finance and Economic Cooperation has been the main source for the study. The study had a population of 18 commercial banks in Ethiopia and out of the total population only 11 commercial banks were included by using judgmental sampling technique. The study used quantitative research approach and secondary financial data were analyzed by using panel regressions models for the bank profitability measure, Return on Asset (ROA). Random effect regression model was applied by using stata13 software. The findings of the study show that bank size, capital adequacy, liquidity risk, operational efficiency, gross domestic product and income diversification have statistically significant and positive effect on bank’s profitability. On the other hand, variables like liquidity risk and operational efficiency, banking sector development have a negative and statistically effect on banks’ profitability .However, funding cost, inflation, and foreign exchange rate are found to be statistically insignificant. The study suggests that focusing and reengineering the banks alongside the key internal and external drivers could enhance the profitability as well as the performance of the commercial banks in Ethiopia Keywords: profitability, Return on Asset, Bank size, Capital Adequacy, Liquidity risk, operational efficiency, Funding cost, RGDP, Inflation rate , Foreign exchange rate, income diversification, and commercial banks. DOI: 10.7176/RJFA/13-11-04 Publication date: June 30 th 2022