July 18, 2020 Thesis Open Access

Getachew Tamiru Tarfasa,

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{
  "description": "<p>Dr. Arega SiyumThe financial profitability of any business can be assessed using the well-known concept of liquidity measures. The significance of liquidity to bank performance (profitability) such as Return on asset, Return on Equity, Net Interest Margin might lead to the conclusion that it determines the financial profitability (performance) level of Financial Institution. Although a number of studies have been done, the nature of liquidity indicators that have effect on profitability is still not entirely recognized and standardized. Hence, the main purpose of this study was to assess the effect of liquidity on financial profitability of the selected private commercial banks in Ethiopia from 2007 to 2018. Secondary data was collected from selected private commercial banks in Ethiopia, financial statement data and multiple regression analysis used in the data analysis. The study revealed that liquidity ratio indicators were negatively significant and insignificant effect on the financial profitability ratio indicators of selected private commercial banks in Ethiopia in 12 years. The study established that Liquid asset to deposit ratio and total customers deposit to total asset ratio have negative significant and positive significant effect on the financial profitability particularly on NIM and ROE of selected private commercial banks in Ethiopia in the study period respectively and also Loan to deposit ratio has negative insignificant relationships on financial profitability of NIM, ROA and ROE. On the other hand the study also revealed that Liquid asset to deposit ratio and total customers deposit to total asset ratio have negative insignificant relationship on the financial profitability of ROA and NIM of the selected private commercial banks in Ethiopia in last 12 years from 2007 to 2018 while loan to deposit ratio has negatively insignificant effects on the financial profitability (ROA, ROE and NIM) of selected private commercial banks in Ethiopia in the study period. The study recommends that there is need for financial institution to decrease their liquid asset to deposit ratio but increasing their total customer&rsquo;s deposit to total asset ratio so as to decrease and increase their liquidity as it was found that negatively and positively affect the financial profitability such as NIM and ROE of the selected private commercial banks of Ethiopia respectively. The study further recommends on how to achieve the optimal liquidity level in a Banks with short term obligations.&nbsp;</p>\n\n<p>Key words: Liquidity, Liquidity Risk, Financial Profitability and Private commercial Banks.</p>", 
  "license": "http://www.opendefinition.org/licenses/cc-by", 
  "creator": [
    {
      "@type": "Person", 
      "name": "Getachew Tamiru Tarfasa,"
    }
  ], 
  "headline": "The Effect of Liquidity on Financial Performance of Commercial  Banks: A Study on Selected Private Commercial Banks in Ethiopia", 
  "image": "https://zenodo.org/static/img/logos/zenodo-gradient-round.svg", 
  "datePublished": "2020-07-18", 
  "url": "https://nadre.ethernet.edu.et/record/17637", 
  "@context": "https://schema.org/", 
  "identifier": "https://doi.org/10.20372/nadre:17637", 
  "@id": "https://doi.org/10.20372/nadre:17637", 
  "@type": "ScholarlyArticle", 
  "name": "The Effect of Liquidity on Financial Performance of Commercial  Banks: A Study on Selected Private Commercial Banks in Ethiopia"
}