Factors Affect Profitability
Factors Affecting Profitability: An Empirical Study on Ethiopian Banking Industry
Amdemikael Abera
A Thesis Submitted to The Department of Accounting and Finance
Presented in Partial Fulfillment of the Requirements for the Degree of Master of Science (Accounting and Finance)
Addis Ababa University Addis Ababa, Ethiopia June 2012
Addis Ababa University School of Graduate Studies
This is to certify that the thesis prepared by Amdemikael Abera, entitled: Factors Affecting Profitability: an Empirical Study on Ethiopian Banking Industry and submitted in partial fulfillment of the requirements for the degree of Degree of Master of Science (Accounting and Finance) complies with the regulations of the University and meets the accepted standards with respect to originality and quality.
Signed by the Examining Committee:
Examiner Ato Abebe Yitayew (Asst. Prof) Signature______________ Date _____________
Examiner Ashenafi Beyene (PhD) Signature_____________________ Date ____________
Advisor Wollela Abehodie (PhD) Signature______________________ Date ____________
__________________________________________________________________ Chair of Department or Graduate Program Coordinator
1
ABSTRACT
Factors Affecting Profitability: An Empirical Study on Ethiopian Banking Industry
Amdemikael Abera Addis Ababa University, 2012
This study examines the bank-specific, industry-specific and macro-economic factors affecting bank profitability for a total of eight commercial banks in Ethiopia, covering the period of 2000-2011. To this end, the study adopts a mixed methods research approach by combining documentary analysis and in-depth interviews. The findings of the study show that capital strength, income diversification, bank size and gross domestic product have statistically significant and positive relationship with banks’ profitability. On the other hand, variables like operational efficiency and asset quality have a negative and
Amdemikael Abera
A Thesis Submitted to The Department of Accounting and Finance
Presented in Partial Fulfillment of the Requirements for the Degree of Master of Science (Accounting and Finance)
Addis Ababa University Addis Ababa, Ethiopia June 2012
Addis Ababa University School of Graduate Studies
This is to certify that the thesis prepared by Amdemikael Abera, entitled: Factors Affecting Profitability: an Empirical Study on Ethiopian Banking Industry and submitted in partial fulfillment of the requirements for the degree of Degree of Master of Science (Accounting and Finance) complies with the regulations of the University and meets the accepted standards with respect to originality and quality.
Signed by the Examining Committee:
Examiner Ato Abebe Yitayew (Asst. Prof) Signature______________ Date _____________
Examiner Ashenafi Beyene (PhD) Signature_____________________ Date ____________
Advisor Wollela Abehodie (PhD) Signature______________________ Date ____________
__________________________________________________________________ Chair of Department or Graduate Program Coordinator
1
ABSTRACT
Factors Affecting Profitability: An Empirical Study on Ethiopian Banking Industry
Amdemikael Abera Addis Ababa University, 2012
This study examines the bank-specific, industry-specific and macro-economic factors affecting bank profitability for a total of eight commercial banks in Ethiopia, covering the period of 2000-2011. To this end, the study adopts a mixed methods research approach by combining documentary analysis and in-depth interviews. The findings of the study show that capital strength, income diversification, bank size and gross domestic product have statistically significant and positive relationship with banks’ profitability. On the other hand, variables like operational efficiency and asset quality have a negative and