Thesis Open Access

Presented in the Partial Fulfillment of the Requirements for the Degree of Masters of Business Administration in Finance

Eden Kebede

The main objective of this study is to examine the impact of NBE regulations on private banks performance through the significant regulatory variables explaining the NBE directives, using bank-specific and macroeconomic variables as control variables. Balanced fixed effect panel regression was used for the data of six private commercial banks in the sample covered the period from 2004 to 2013. Three regulatory factors affecting banks performance in terms of return on asset and net interest margin were selected and analyzed. The results of panel data regression analysis showed that NBE Bill and Credit cap had negative and statistically significant impact on banks profitability but reserve requirement had negative and insignificant impact on profitability. While measuring banks cost of intermediation through Net Interest Margin three of the regulatory variables (i.e. NBE Bills, Reserve requirement and credit cap) had negative and statistically significant effect on net interest margin.

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