Department of Accounting and cooperative studies
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Item ASSESSMENT ON THE DETERMINANTS OF CREDIT MANAGEMENT AND ITS CREDIT DEFAULT RISK IN THE CASE OF COMMERCIAL BANK OF ETHIOPIA, ALAMATA BRANCH(Mekelle University, 2025-06-28) Halefom AbebeThe purpose of the study is to look Credit Default Risk and its Determinants of In the case of commercial bank of Ethiopia ,alamata branch . To this end, the researcher employed quantitative approach with explanatory research design where the effect caused by the independent variables on the dependent variable is observed through regression analysis. The purposive sampling techniques have been employed by researcher in order to select 100 sample sizes from commercial banks of Ethiopia. The primary data was collected using structured questionnaire. Then, the result of multiple liner regression showed that five variables such as use of collateral, credit risk identification, credit monitoring, and credit policy and credit analysis have positive and statistically significant effect on credit risk management system. The explanatory variables incorporated in the model have only explained 44.7 % of the model. The remaining 55.3% of changes in the on credit risk management system was explained by other explanatory variables that not included in the model .The quantitative data used for econometric analysis are five financial variable that makes the model fit and relating mainly to commercial bank of Ethiopia credit exposure and lending decision quality. The choice of these ratios is based on a survey of related literature on credit risk determinants Based on the findings of the study, the researcher forwarded possible recommendations for the commercial bank of Ethiopia in the study area to work on statistically significant variables due to fact that they have significant influence in improving credit risk management system. For instance, having sound credit policy enhances the credit risk management system. So, that it is recommended to banks should work on sound credit policy to improve credit risk management system that enables to advance the capacity of commercial bank of Ethiopia to deliver different financial services to the public.Item OPPORTUNITIES AND CHALLENGS OF INTEREST FREE BANKING SERVICES IN COMMERCIAL BANK OF ETHIOPIA: A CASE STUDY IN MEKELLE CITY(Mekelle University, 2025-06-28) HELEN EBRAHIMThis study aims at investigating the opportunities and challenges of the interest-free banking services, specifically focusing on the Commercial Bank of Ethiopia (CBE), Mekelle City. These study intendeds to identify the key obstacles hindering the growth of interest-free banking services. The study used descriptive methods of analysis to help organize and summarize data effectively. Both quantitative data (numeric data such as percentages and frequencies obtained from questionnaires) and qualitative data (non-numeric data such as perceptions, opinions, and insights gathered from interviews) were used to provide a comprehensive understanding of the subject. The primary data was collected from the Customers and Employees of the selected banks by using purposive sampling technique through questionnaire and interview while the secondary data was collected by compiling and summarizing the bank’s Annual reports and Journals. Data was collected through questionnaire by using purposive sampling technique from a sample size of 361 customers and 50 employees from the interest free banking in Commercial Bank of Ethiopia properly filled and returned the questionnaire. The study was conducted in Mekelle City in May 2024 G.C. The data collected from the questionnaire were analyzed using SPSS version 23 statistical tools such as percentages and frequency. Apart from this, It has been shown from the analyzes that lack of awareness is the primary challenge faced by interest-free banking sector in CBE at Mekelle City. The findings indicate that awareness is the main obstacle to the sector’s growth. Additionally, customers and employees expressed concerns about the need for improved risk management, financial practices, and educational campaigns to enhance acceptance and understanding of interest-free banking.So that the bank should strengthen robust risk management, sound financial practices, public awareness and education. The findings of this research contribute to the understanding of the interest-free banking sector in Commercial Bank Ethiopia, Mekell City. With this fact, it provides valuable information for policymakers, financial institutions, and researchers.Item Factors Affecting Internal Audit Effectiveness in Wegagen Bank S.C (The Case of Head Office Unit)(Mekelle University, 2025-06-28) Messay Ameha MekonnenInternal auditing is an independent, objective assurance and consulting activity designed to add value and improve an organization’s operations. The main purpose of this study was to examine factors affecting internal audit effectiveness in private commercial bank the case of Wegagen Bank S.C. Head office unit. Descriptive & explanatory research design was employed. A cross sectional data was collected using representatives of the sample respondents by using convenience sampling technique; there by 260 out of 741 survey questionnaires were drawn to collect from the sample respondents. To analyze the collected data both descriptive & inferential statistics of multiple linear regressions were employed. The finding of this study regarding to reliability of this study, shows mean average of variables obtained at (r=0.933) which is consistent, the correlation coefficient also shows ‘strong correlation’ i.e. organizational structure, (r=0.715), independence & objectivity of internal auditors, (r=0.517), competence of internal auditors(r=0.728), top management support (r=0.814), existence of audit committee (r=0.874), approved audit charters,(r=0.833). The beta coefficient shows that, organizational structure (β= 0.068), independence & objectivity of internal auditors (β= -0.068), competency of internal auditors (β=0.090), top management support (β=0.124), existence of audit committee (β=0.415), approved audit charters (β=0.386) and audit work quality (β= -0.088), while since pvalue of all variables were p<0.05, hence, all the hypothesis testing were accepted. Regarding to the model summary of this study shows that, the correlation coefficient (r=0.962), coefficient of determination (r=0.925) & adjusted R squared (adj-r2=0.922). In conclusion, independency & audit work quality was negatively influenced internal audit effectiveness. Moreover to this, regarding to descriptive & inferential statistics of the study all the respondents were replied with disagreement option for all the variables and the diagnosis of assumptions in regression model shows that all the assumptions were not violated. Hence, it is recommended that the bank should observe the necessary measures needed to improve the practice of the internal auditing activities' dimensions towards internal audit effectiveness.Item ASSESSMENT ON THE DETERMINANTS OF CREDIT MANAGEMENT AND ITS CREDIT DEFAULT RISK IN THE CASE OF COMMERCIAL BANK OF ETHIOPIA, ALAMATA BRANCH(Mekelle University, 2025-06-28) Halefom HabtuItem 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 privateinvestors.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.