Department of Accounting and cooperative studies
Permanent URI for this collectionhttps://repository.mu.edu.et/handle/123456789/113
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Item CURRENT STATUS, CHALLENGES AND OPPORTUNITIES OF INTEREST FREE BANKING IN ETHIOPIA(Mekelle University, 2024-12) TEKLEMARIAM ESTIFANOSInterest Free Banking (IFB) services offer ethical, Shariah-compliant financial solutions and are gaining popularity in Ethiopia among Muslim and non-Muslim clients. This study examines the socio-demographic profile of IFB clients, perceptions of services among stakeholders, managerial insights, and the operational status of IFB. A mixed-method approach was adopted, utilizing structured questionnaires for quantitative data and interviews with IFB division managers for qualitative insights. Descriptive statistics summarized key findings, while thematic analysis interpreted qualitative responses. The study reveals increasing acceptance of IFB services, driven by their ethical principles, but identifies challenges such as limited public awareness, misconceptions, and economic uncertainties. Clients and employees view IFB as a viable alternative to conventional banking, and managers highlight the need for Shariah compliance, fund segregation, and employee training. Key opportunities includeIX product diversification and digital banking solutions to meet evolving client demands. To unlock IFB’s full potential, the study recommends raising public awareness, fostering community engagement, and investing in innovative financial products and digital services. Strengthening Shariah governance and enhancing operational efficiency are essential to promoting ethical financial inclusion in Ethiopia.Item DETEMINANTS OF SELECTED COMMERCIAL BANKS LENDING DECISION IN ETHIOPIA(Mekelle University, 2024-12) TSEGABRHAN TAJEBE SHESHAYThe main objective of this study was to investigate the determinants of lending decision of commercial banks in Ethiopia. In order to achieve the research objectives, the study used secondary data of 14 state owned and private commercial banks of Ethiopia from 2014 to 2023. The study also used quantitative research approach, descriptive and explanatory type of research design by adopting purposive sampling technique. Bank specific; industry specific and macroeconomic variables were analyzed by using the balanced panel random effect regression model. Eleven variables that affect banks’ lending decision were selected and analyzed. The results showed that bank size, real GDP growth rate, volume of deposit, Return On Asset, Bank concentration were positive and statistically significant while liquidity ratio, exchange rate of birr to dollar, lending interest rate, cash reserve requirement ratio and inflation rate were found to be statistically significant with negative effects respectively on total loans and advanced by commercial banks in Ethiopia. However, credit risk ratio was statistically insignificant with negative effects on commercial banks’ lending decision. Therefore, commercial banks should adjust their lending decision in response to the signals from these factors, such that positive signals like bank size , real GDP growth rate, volume of deposit, Return on Asset and Bank concentration in this study make banks become more favorably disposed to lending.Item Assessment of Challenges and Opportunities of Private Investment in Garment &Textile Firms :( A Case study inMekelle City)(Mekelle University, 2024-09) ZenebuFitsumMany Private investments in manufacturing have played their roles to employment creation and poverty alleviation of wider group of the society in general and urban youth in particular.However these sectors have been bound with various complicated and interlocked constraintsThe purpose of this study is thereforeto investigate the opportunities and challenges of private investment in Mekelle citywith particular emphasis to the garment & textile sector. Clear understanding of these will enable to harness the potential benefit and to face the challenges that hindered their growth. The study has used both primary and secondary data source.The target populations of the study were investors & owners involved in the private investment of the garment and textile sector and government officials in the study area. By stratifying the investment stage, samples were selected by employing proportional stratified sampling technique and 188 questionnaires were distributed; out of which 166 were returned. An interview is also conducted with 20 respondents: 10 selected from operators/owners and 10 from investment officials. Data gathered were analyzed based on these 166 responses using SPSS 20 software package. Descriptive research design was employed and Outputs were reported using frequency, percentage and mean results. The findings indicated that even though the investment environment in such sector is improving, still there are problems in the area of financial access, inadequate infrastructure, production inefficiency, influx of smuggled goods, and forex shortages that hinder their growth.These sectors have bright prospects if action is taken by the government. To benefit from opportunities and overcome its challenges, government should control smuggled goods and supportand facilitate these sectors to modernize and further increase their production capacity and enhance human resource capacity through training and working capital.Hence, to promote the performance these sectors, it is essential to take measures that can improve real income of people, and make public investment in basic infrastructures and institutions that are crucial to attract private investment. Besides, ensuring stable investment environment and macro-economic and political stability are necessary to build lasting confidence of private investors.Item DETERMINANT OF LENDING RATE FOR COMMERCIAL BANKS IN ETHIOPIA: CASE OF SELECTED PRIVATE COMMERCIAL BANKS(Mekelle University, 2024-09) SELAMAWIT GEBREEGZIABHER HAGOSThis study examines the determinants of lending rate in Ethiopian private commercial banking sector. The study used panel data collected from annual reports of nine private commercial banks operating in Ethiopia during the period 2013 - 2022. Accordingly, the lending rate of commercial banks is determined by bank, industry and macro-economic related factors. A quantitative research approach and explanatory design were adopted in carrying out this research. Secondary data were collected from annual audited reports of selected private commercial banks using purposive sampling technique. The study employed descriptive and econometric estimation techniques to analyze the influence of bank, industry and macroeconomic factors on lending rate. The analysis conducted using the econometric package STATA V.13. The study revealed that credit risk and market share have a positive and significant impact on bank lending rate; whereas, operating cost, reserve requirements and liquidity risk have a negative and significant effect on lending rate. However, bank size and inflation are not significant determinant of lending rate. The study recommends commercial banks to improve operational efficiency and effectiveness.Item DETERMINANTS OF EFFECTIVNESS OF RISK MANAGEMENT in PRIVATE COMMERCIAL BANKS IN ETHIOPIA.(Mekelle University, 2024-09) KIROS WELDUBanks and other financial institutions usually play a significant intermediary role between borrowers and lenders for the progress of a stable and healthy economy of a nation. In Ethiopian banking industry Commercial banks are the most dominant banks categorized as public and private banks. This study was designed to examine the relationship between risk management effectiveness and its determinants in private commercial banks. Capital adequacy was used as a proxy for risk management effectiveness in commercial banks. Ten explanatory variables namely bank specific factors (credit risk, liquidity risk, profitability, bank size, operating effectiveness, market risk) and Macroeconomic factors (GDP growth, inflation, lending interest rate and exchange rate) were used as independent variables. From the total population of 16 private commercial banks purposive sampling technique was used to select eight private commercial banks in Ethiopia. Secondary data were used to estimate the relationship between independent variables and capital adequacy ratio of banks. Balanced panel data set of ten fiscal years was collected from the audited financial statements of selected private banks in Ethiopia for the period of 2012 – 2022. Both descriptive statistics and econometric model was employed where descriptive statistics were used to describe the variables. In a panel regression analysis random effect model was used to determine the effect of bank specific and macroeconomic variables on risk management effectiveness of banks. The regression result shows that credit risk has negative impact where Bank size and profitability has a positive effect on risk management effectiveness in private commercial banks. The macroeconomic factors have positive effect on risk management effectiveness of private banks where exchange rate has a significant effect. The study concludes that risk management effectiveness of banks is highly determined by bank specific and macroeconomic factors and private commercial banks are recommended to introduce risk based control systems in overall banking system operations and Businesses.Item Determinants of Financial performance of Microfinance institutions (MFIs) in Ethiopia(Mekelle University, 2024-11) Kibrom WeldayThe main objective of this study was to investigate and analyze the Determinants of financial performance in the case of selected micro finance institutions (MFIs) in Ethiopia, with specific emphasis on how Capital to Asset ratio, Firms growth rate, Portfolio at Risk, Operating Efficiency ratio, Age of MFI, real gross domestic product growth, Size of MFI, and Government support affect financial self-sufficiency of the MFIs in Ethiopia. Quantitative research approach was used, and the study included a selected sample of 22 MFIs in Ethiopia covering a time period of nine years from 2015 to 2023 (198 observations). The study employed secondary data collection method and the data were obtained from the financial annual reports of MFIs that were available in the national bank of Ethiopia. Fixed effect was used for the Panel data regression analysis of variables. To test the accuracy of the model, the researcher has employed important classical regression assumption tests. The fixed effect regression model’s result coefficient of determination (R-squared) was 0.706, implying that 70.6% of variation in financial performance is explained by the independent variables used in the study. The result of the study indicated that MFIs’ financial performance is significantly influenced by Capital adequacy ratio; MFIs’ size, MFIs’ growth and Age of MFIs. Whereas, portfolio at risk, operating efficiency, gross domestic product, and government support have no significant effect on financial performance of the selected MFIs in Ethiopia.Item Assessing the Challenges facing External Auditors Auditing Public Enterprises in Ethiopia; the case of Auditors of Audit Service Corporation(Mekelle University, 2024-11) Feven AntoniousThis research explores the major challenges faced by external auditors in auditing public enterprises, specifically focusing on the Auditors of Audit Service Corporation (ASC). Utilizing a descriptive survey research design, the study employs a quantitative methods approach. The quantitative aspect involves the use of structured questionnaires distributed to 95 ASC audit directorate staff whereas 93 questionnaires were returned. Data analysis is conducted using SPSS version 20, presenting results through frequency tables and summary statistics. Key findings reveal significant challenges such as lack of cooperation from management, difficulties in obtaining necessary documentation, complexity of regulations, issues with internal controls, and political influences affecting audit objectivity. Additionally, resource constraints, challenges in assessing risk management practices, and resistance from public enterprises are highlighted. The role of external audit committees, training adequacy, and the impact of technology on mitigating audit challenges are also examined. Results show significant challenges, including resistance from management, difficulties in obtaining documentation, complex regulatory environments, issues with internal controls, and political influences on audit objectivity. The study underscores the need for improved methodologies, regulatory framework changes, and enhanced training programs to better equip auditors in addressing these challenges effectively. Overall, the research provides a comprehensive understanding of the obstacles faced by external auditors in auditing public enterprises and offers recommendations for enhancing the audit process.Item DETERMINANTS OF LOAN DEFAULT IN LEASE FINANCING A CASE OF DEVELOPMENT BANK OF ETHIOPIA(Mekelle University, 2024-09) BELAY TAFESSEThis study identifies determinants of lease loan default, including Lessor related, Lessee related and external factors, on lease loan default. The aim of this research was to examine determinants of lease loan default; there is a causal relationship between each factor and lease loan default. The study utilizes primary data collected through a close-ended questionnaire. The study presents the results obtained from 75 survey questionnaires completed by customers of selected districts of DBE. To present and describe the respondents' demographic characteristics, descriptive data analysis using tables was employed. For examining determinants of lease loan independent variable (Lessor related, Lessee related and external factors) on the dependent variable (lease loan default), an explanatory research design is adopted, employing regression analysis. The collected data is analyzed using descriptive statistics, correlation analysis, and regression analysis through SPSS software. The correlation analysis reveals a Moderate association between Lessor related factors, Lessee related factors weakly related with External factors and lease loan default (r=0.534, 0.0.617, and 0.0895 respectively, p<0.01). The regression result found that independent variables such as lack of credit monitoring, appraisal, KYC and longer lease processing time, lack of educational literacy, managerial experience and inappropriate business location, political instability, foreign currency fluctuation and inflation, significantly and positively influence lease loan default. Therefore, these factors primarily determine the lease loan default in Development Bank of Ethiopia. Therefore, the Development Bank of Ethiopia should prioritize improving its operations to mitigate the risk of defaults and consider location-based risk assessments when extending leases to lessees, particularly in regions with less favorable economic conditions. It is also crucial for DBE to factor external influences when assessing credit risk and designing lease agreements, and government and policy makers should have to maintain external factors in order to have sound finance through lease.