accounting research paper in ethiopia pdf

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College of Business and Economics Department of Accounting and Finance (Graduate Program) Risk Management Practice of Ethiopian Commercial Banks

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International Journal of Advanced Research (IJAR), 2019

This study tried to asses factors that affect credit risk management practices of some selected private commerial banks in Ethiopia. In light of this, the study identified some dimensions of service quality such as , credit granting process, credit risk measurment and monitoring process, market risk, operational risk, legal risk, the establishment of credit risk environment. So as to come up with the desired results data were collected from four private commercial banks, namely; Oromia, Birhan, Debub global and Anbessa. A total of 106 respondents participated in this study selected purposively. In the study both descriptive and explanatory designs were used. Frequency percentage, mean, standard deviation, pearson correlation cofficient as well as regression were used for data analysis process using SPSS version 20. The result of correlation cofficient showed that all variables are statistically significant and positively correlated with the credit risk management practices of the mentioned private banks. Hence, the banks credit risk management practices were significantly affected by lack of appropriate credit environment, followed by challenges of credit appraisal measurment and monitoring, lack of market risk analysis , operational risk and challenges of sound credit granting process. Legality of risk assessment is found to have a negative relation and insignificant impact on credit risk management practices of the mentioned banks. As per the regression cofficient which vividly shows the effect of the independent variables on dependent variables , lack of appropriate credit risk environment (beta = .993, t = 9.612, p = < .000), followed by lack of operational risk management (beta = .713, t =1.003, p = .318) and lack of credit measurement and monitoring process (beta =.610, t= -571, p < .569) respectively and significantly affect credit risk management practices of the studied private banks. Having all this big crystals of truth in hand,the study gave some recommendations that the management body may need to take so as to come up with a more effective and efficient risk management practices.

This study aimed at establishing the influence of the financial risk management practices on performance of commercial banks, the study sought to establish the effect of interest rate risk management, credit risk management, foreign exchange risk management and liquidity risk management on the financial performance of the commercial banks. The study established that financial risk management practices influenced the financial performance of commercial banks in Kenya. From the findings, the researcher recommends that all the banks should embrace the concept of credit risk management practices. This will help these banks to be able to lower the risks associated with credit in the banks. The study also recommends that for efficient and effective credit risk management systems credit policy in the banks should be reviewed regularly for example quarterly.

Effective risk management system will minimize the complexities involved in planning, executing and controlling overall running of a business which is critical to success and this maximizes profitability in a business. This study examined the effect of financial risk management on the corporate performance of deposit money banks in Nigeria. In order to achieve the objective of the study, data were extracted from annual reports and accounts of fifteen (15) deposit money banks quoted on the Nigerian stock exchange, the period covered in the study is 2012-2016. Data for financial risk management proxied by bank size was extracted and corporate performance was represented by return on equity. In testing the research hypothesis, the study adopted both descriptive statistics and simple regression techniques analyzed with the aid of Statistical Package for Social Sciences (SPSS) version 20. The findings revealed that bank size have insignificant effect on the return on equity of deposit money banks in Nigeria during the year under review. Consequent upon this study, it was recommended that the CBN and other regulators should endeavor to enforce risk identification, assessment, measurement and control mechanism, in line with best global practices in other to avoid financial crisis and also improve on banks' performances.

Financial risk is inherent in every financial institution, but those institutions that embed the right financial risk management strategies into business planning and financial performance management are more likely to achieve their strategic and operational objectives. This study sought to fill the existing research gap by answering the research question. The specific objectives of the study were to determine the influence of credit risk management practice, to assess the influence of liquidity risk management practice, to examine the effect of market risk management practice, and to determine the influence of foreign exchange risk management practice on the growth of financial institutions in Garowe Puntland. The research design of this study employed descriptive survey design. The target population was 178 respondents of financial institution managers and other employees both private and public, the sample size of the study consisted of 123 of respondents which was obtained using Slovene's formula and the sampling procedure of this study was employed stratified random sampling and purposive random sampling techniques. The research instrument by this study to collected data is questionnaire in terms of time and size and the questionnaire is none standardized. The validity and reliability of the research instruments was proved by expert, contents validity index ensured by subjecting the researcher devised questionnaires on risk and growth of financial institutions to judgment by the content expert. The findings of the study suggested the effect of the risk management practice and growth of selected financial institutions have significant effect correlated indicated by Pearson's linear correlation, result that there is relationship between the variables. The researcher suggested that the risk management are clearly assigned and mitigated by operational managers of the banks which lead to growth of financial institutions. As researcher, recommends in the financial institutions to make a technical assistance in the preparation of risk management in order to analyze effective and efficiency of the all types of risk management and also seek new ways to improvement and mitigation of risk. Financial institutions have to make clear follow ups procedure on borrowers and to also to emphasis their credit limit with having collateral security.

This is to certify that the thesis prepared by Habtamu Negussie, entitled: Determinants of Banks Profitability: An Empirical Study on Ethiopian Private Commercial Banks and submitted in partial fulfillment of the requirements for the degree of Degree of Master of Business Administration in Finance complies with the regulations of the university and meets the accepted standards with respect to originality and quality. Signed by the examining committee: Advisor________________________Signature_________________Date_____________ Examiner_______________________Signature_________________Date____________ Examiner_______________________Signature_________________Date____________ Chair of department or graduate program coordinator iii ABSTRACT Determinants of Banks Profitability: An Empirical Study on Ethiopian Private Commercial Banks Habtamu Negussie Addis Ababa University, 2012 The purpose of this study is to investigate determinants of private commercial banks profitability in Ethiopia by using panel data of seven private commercial banks from year 2002 to 2011. The study used quantitative research approach and secondary financial data are analyzed by using multiple linear regressions models for the three bank profitability measures; Return on Asset (ROA), Return on Equity (ROE), and Net Interest Margin (NIM). Fixed effect regression model was applied to investigate the impact of capital adequacy, asset quality, managerial efficiency, liquidly, bank size, and real GDP growth rate on major bank profitability measures i.e., (ROA), (ROE), and (NIM) separately. Beside this the study used primary data analysis to solicit mangers perception towards the determinants of private commercial banks profitability. The empirical results shows that bank specific factors; capital adequacy, managerial efficiency, bank size and macro-economic factors; level of GDP, and regulation have a strong influence on the profitability of private commercial banks in Ethiopia. Thus, management bodies of private commercial bank should strive to strengthen the identified significant factors and government bodies should also see the adverse effect of tight polices imposed on the existing private banks as well as for the new entrants.

Research Journal of Finance and Accounting, 2014

While credit risk is one of the main risks of banks and affects the development of the financial system, little study is done to examine its determinants. This study examined the bank-specific determinants of credit risk in Ethiopian commercial banks. The quantitative research approach was adopted for the study. A balanced panel data of 10 commercial banks both state-owned and private owned for the period 2007 through 2011 has been analyzed using random effects GLS regression. The regression results revealed that credit growth and bank size have negative and statistically significant impact on credit risk. Whereas, operating inefficiency and ownership have positive and statistically significant impact on credit risk. Finally, the results indicate that profitability, capital adequacy and bank liquidity have negative but statistically insignificant relationship with credit risk.

The survival of every commercial bank highly depends on bank deposit because deposit mobilization is a major activity of all commercial banks. As the result, the issue of banks deposit and its determinants is crucial to the financial sector of developing country like Ethiopia. Therefore, this study aimed to identify and evaluate those factors affecting bank deposit in general by taking Commercial Bank of Ethiopia as evidence. Accordingly, the researcher adopts mixed research approach. The rationale of using such a mixed approach is to gather data that could not be obtained by adopting a single method.Regarding to the qualitative data; questionnaire is used to gather information from the employees of commercial bank of Ethiopia particularly for those employees who actively participated in deposit mobilization tasks in CBE city branches. Regarding to the secondary data; time series data covering 1998 -2014 was analyzed. First, the time series data were assessed using descriptive statistics for the variables as well as the test for heteroskedasticity, autocorrelation and normality testing to know if the assumptions of CLRM violated or not. Second, estimated model was a single regression equation with deposit as the dependent variable and explanatory variables as deposit interest rate, overall inflation rate, number of branch opening, gross domestic product, individual foreign remittance and dummy variable. Estimation was done using Ordinary Least Squares technique by E-views7 statistical package. The results from economic analysis showed that all the explanatory variables were positively correlated with the explained variable.

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