| dc.description.abstract | The main objective of the study was to examine determinant of financial performance on private
commercial Banks in Ethiopia. Banks with 11 years of operation (service) since 2011 up to 2021;
and who declared cash dividend were included. The researcher used both descriptive and
explanatory research design to analyze and present data and quantitative research approach
was used. Before making the regression analysis, the study went through all below listed
diagnostic tests; including multicollinearity, heteroscedasticity; normality and autocorrelation.
Regression Analysis was identified as the most appropriate tool for econometric analysis of
financial data. On top of this the assumptions needed to be fulfilled for OLS were tested; the data
was found to be homoscedastic, free of autocorrelation and free of Multicollinearity and
residuals were normally distributed. The mean value of variables were 22.43 for return on asset
as measurement of profitability serve as financial performance measurement, 7.078 for capital
growth, 24.67 for deposit growth, 23.68 for loan growth, 0.4349 for liquidity, 5.995 for leverage,
23.94 for exchange rate, 0.067 for interest spread rate and 15.25 for inflation. According to the
correlation output profitability or financial performance was positively correlated with capital
growth, deposit growth, loan growth, liquidity, leverage, and size from the listed firm specific
factors which means all firm specific factors are correlated with profitability. The regression
analysis result shows R-squared statistics and adjusted R squared statistics value of 67.95% and
61.86% respectively. From total of nine incorporated variables, six variables are significant at
different level which are capital growth, leverage, liquidity, firm size from bank specific and
inflation and exchange rate from macro level determinants, whereas deposit growth, loan growth
and interest rate spread were insignificant factors for financial performance. Banks also should
strive to increase their capital through different mechanism such as actively involved in
secondary market, to foreign market and stock dividend to increase the capital than cash
dividend and cash bonus. Foreign currency exchange and inflation should be managed by policy
amendments of National Bank of Ethiopia | en_US |
