Determinants of Profitability of Private Banks In Ethiopia

International Journal of Economics and Management Studies

© 2019 by SSRG - IJEMS Journal

Volume 6 Issue 7

Year of Publication : 2019

Authors : Mesele Kebede Manaye

10.14445/23939125/IJEMS-V6I7P114

How to Cite?

Mesele Kebede Manaye, "Determinants of Profitability of Private Banks In Ethiopia," SSRG International Journal of Economics and Management Studies, vol. 6,  no. 7, pp. 92-98, 2019. Crossref, https://doi.org/10.14445/23939125/IJEMS-V6I7P114

Abstract:

The main objective of this study was to investigate factors determining the profitability of private banks operating in Ethiopia. In order to achieve this objective and to test the research hypothesis, causal research design was used. Only secondary data were used for this study purpose. Secondary data was collected from the financial statement of the private banks particularly from income statement and balance sheet for the period of (2008-2017). Quantitative research approach was used. The findings of this study indicated solvency ratio, size of the bank, growth rate of GDP of this study are positively correlated with profitability of private banks in Ethiopia but inflation rate and interest rate are negatively correlated with profitability of private banks in Ethiopia. Based on the findings of this study, gross domestic product have highest impact on the profitability of the private banks in Ethiopia. Out of the independent variables, solvency ratio and company size have the lowest impact on the profitability of the private banks in Ethiopia. The finding of this study shows that company size and interest rate have no significant effect on profitability of the private banks of Ethiopia.

Keywords:

Profitability, Company size, Solvency margin, Leverage ratio, Gross Domestic Product, Inflation Rate, and private banks

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