http://ir.bdu.edu.et/handle/123456789/1790 Thu, 27 Aug 2026 21:39:40 GMT 2026-08-27T21:39:40Z http://ir.bdu.edu.et/handle/123456789/16976 Risk Exposure and Financial Performance: An Empirical Analysis of Commercial Banks in Ethiopia Ahmedie, Desalegn The primary purpose of the study is to examine how financial, efficiency, strategic, reputational, and interest rate risks affect the financial performance (measured by Return on Assets, ROA) of commercial banks in Ethiopia. The research adopts a quantitative, longitudinal approach using secondary data from audited annual reports of 17 banks over 2015–2024 (170 bank-year observations). Panel fixed effects regression with cluster-robust standard errors is employed. The key findings reveal that reputational risk (deposit growth) has a strong positive effect on ROA, while interest rate risk and financial risk have significant negative effects. Strategic risk (non-interest income ratio) also positively affects ROA. efficiency risk (cost-to-income ratio) is not statistically significant, likely due to measurement limitations. For the field, these findings imply that Ethiopian commercial banks should prioritize financial risk management, asset-liability matching, and reputational capital (customer trust) to improve profitability. Policymakers at the National Bank of Ethiopia should enforce risk-based supervision and mandate repricing gap reporting. Moreover, the study demonstrates that non-interest income diversification is beneficial, challenging the view that it adds unmanaged risk. Future research must develop better efficiency risk proxies and address endogeneity. Mon, 01 Jun 2026 00:00:00 GMT http://ir.bdu.edu.et/handle/123456789/16976 2026-06-01T00:00:00Z http://ir.bdu.edu.et/handle/123456789/16975 Determinants of Financial Stability: The Case of Selected Commercial Banks in Ethiopia Abebe, Dawit Financial stability has become an important concern for banking institutions, regulators, and policymakers due to its role in ensuring the soundness of the financial system and supporting economic growth. This study examined the determinants of financial stability of commercial banks in Ethiopia during the period 2015–2024. A quantitative research approach was used in the study. Balanced panel data were collected from audited financial statements of ten commercial banks. Both descriptive and explanatory research designs were applied. In this study, financial stability was measured using the Z score. The explanatory variables were grouped into three categories: bank-specific factors, industry related factors, and macroeconomic factors. Bank-specific variables included capital adequacy, liquidity, non-performing loans, bank size, and management efficiency. The industry and macroeconomic variables included competition, gross domestic product, and inflation. The regression results showed that liquidity and management efficiency were the only variables that had a statistically significant effect on financial stability. Liquidity had a positive effect, meaning that banks with higher liquidity were more financially stable. Management efficiency, however, had a negative effect, indicating that inefficiency reduces financial stability. The other variables, including capital adequacy, non-performing loans, bank size, GDP, inflation, and competition, were found to have no statistically significant effect on financial stability in this study. Overall, the study concluded that internal bank factors, especially liquidity and management efficiency, play a more important role in determining financial stability than external economic and industry factors in Ethiopian commercial banks. Based on the findings, the study suggests that banks should focus more on improving liquidity management and strengthening operational efficiency in order to enhance their financial stability. Regulators are also encouraged to support policies that improve efficiency and strengthen liquidity monitoring in the banking sector. Mon, 01 Jun 2026 00:00:00 GMT http://ir.bdu.edu.et/handle/123456789/16975 2026-06-01T00:00:00Z http://ir.bdu.edu.et/handle/123456789/16974 The Effect of Diversification on Financial Performance of Private Commercial Banks in Ethiopia ALENE, TEMESGEN The study examines the effect of diversification on the financial performance of private commercial banks in Ethiopia. The main objective is to investigate how different dimensions of diversification namely income diversification, asset diversification, loan portfolio diversification and investment diversification affects financial performance measured by Return on Assets (ROA). The study adopts a quantitative research approach and employs both descriptive and explanatory research designs. Secondary data were collected from audited annual reports of ten selected private commercial banks and official sources covering a ten-year period from 2015 to 2024. A balanced panel dataset was constructed to enable a comprehensive analysis of the relationship between diversification and financial performance over time. Descriptive statistics are used to summarize the characteristics and movements of the variables, while panel data regression techniques including pooled Ordinary Least Squares (OLS), fixed effects, and random effects models are employed to estimate the relationship between diversification and financial performance. The Hausman specification test was applied to select the most appropriate model, and relevant diagnostic tests are conducted to ensure the validity and reliability of the results. The study finding indicates that diversification has a mixed effect on financial performance. Income diversification, asset diversification, and investment diversification shows a positive and significant effect on ROA, while loan portfolio diversification shows a negative and significant effect on ROA. This suggests that although diversification generally enhances profitability, its effectiveness depends on the type of diversification and how it is managed. In conclusion, the study confirms that diversification is a key determinant of financial performance in Ethiopian private commercial banks, but its impact is not uniform across all dimensions. Based on the findings, it is recommended that banks should focus on expanding non-interest income sources, improving asset allocation efficiency, and strengthening investment strategies, while exercising caution in excessive loan portfolio diversification strategies. Mon, 01 Jun 2026 00:00:00 GMT http://ir.bdu.edu.et/handle/123456789/16974 2026-06-01T00:00:00Z http://ir.bdu.edu.et/handle/123456789/16760 Determinates Of Interest Free Banking Services in Some Selected Commercial Banks Operating In Jigjiga City Abdulahi, Mohamed As Islamic finance continues to expand globally, understanding its localized implementation in emerging markets has become increasingly important. This study investigates the determinants, challenges, and opportunities shaping the performance of Interest-Free Banking (IFB) services in Jigjiga City, Ethiopia, where the majority of the population adheres to Islamic financial principles. The primary objective is to explore how institutional, customer related, product based, and technological factors influence the effectiveness and sustainability of IFB services in a culturally distinct and underserved market. To achieve this, a mixedmethods research design was employed, combining quantitative analysis using Partial Least Squares Structural Equation Modeling (PLS-SEM) based on survey data from 98 IFB customers, with qualitative insights drawn from interviews with bank managers and IFB officers. This integrative approach enables both empirical measurement and contextual interpretation of the drivers behind IFB performance. The quantitative findings reveal that institutional readiness, customer engagement, and compliance with Sharia-based product design significantly enhance customer satisfaction and service performance. In contrast, technological infrastructure had a negligible effect, largely due to its similarity with conventional platforms and lack of cultural adaptation. Qualitative data further revealed key challenges, including staff unfamiliarity with local religious practices, limited access to standalone Islamic digital services, and underutilization of strong latent demand for Shariacompliant banking in the region. The study concludes that the success of IFB in Jigjiga is driven less by technological advancement and more by ethical compliance, cultural sensitivity, and institutional trust. Accordingly, it recommends that banks adapt their services and staffing strategies to reflect the religious and cultural values of their target communities, and avoid applying one size fits all digital solutions that may lack local relevance. Tue, 01 Apr 2025 00:00:00 GMT http://ir.bdu.edu.et/handle/123456789/16760 2025-04-01T00:00:00Z