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International Journal of Advanced Research in Management and Social Sciences
Year : 2017, Volume : 6, Issue : 3
First page : ( 74) Last page : ( 96)
Online ISSN : 2278-6236.

Bank specific, industry specific and macroeconomic determinants of bank profitability in Ethiopia

Prof. Rani D. M. Sheaba, Zergaw Lemma Nigussie

Department of Commerce and Management Studies, Andhra University, Visakhapatnam, India

Online published on 20 May, 2017.

Abstract

This study was done to analyze the internal (bank specific) and external (industry specific and macroeconomic specific) determinants of profitability in Ethiopian commercial banks. Profitability has been proxied by the return on equity and net interest margin. The data was secondary in nature and was analyzed using descriptive statistics and multiple regression models. The results showed that among the internal variables capital adequacy, management efficiency, earnings and liquidity ratios have affected return on equity significantly whereas the net interest margin was significantly affected only by capital adequacy and earnings ratios. The industry specific variable proxied by the industry growth rate was having significant impact on net interest margin. All the macroeconomic determinants were having positive but insignificant impact both on return on equity and net interest margin of the Ethiopian commercial banks during the study period (2005 to 2015).

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Keywords

Bank specific, industry specific, macroeconomic specific, profitability, Ethiopia.

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