June 1, 2018 Thesis Open Access

Seyoum Tesfaye

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{
  "DOI": "10.20372/nadre:925", 
  "author": [
    {
      "family": "Seyoum Tesfaye"
    }
  ], 
  "issued": {
    "date-parts": [
      [
        2018, 
        6, 
        1
      ]
    ]
  }, 
  "abstract": "<p>The main objective of this study is to examine the effect of leverage on Ethiopian private<br>\ncommercial banks&rsquo; profitability. For this purpose, from private commercial Banks engaged in<br>\ncommercial banking activates ten private commercial banks was studied. The study covered nine<br>\nyears&rsquo; period (2008/09-2016/17). The dependent variable was the return on equity (ROE) used to<br>\nmeasure the profitability. And the independent variables were the degree of operating leverage<br>\nand degree of financial leverage to measure the leverage of the institutions. To ensure the<br>\naccuracy of the result of the regression model used two control variables these were operational<br>\nefficiency and bank size. In order to address the main objectives of this study balanced panel data<br>\nwas used. The panel data were obtained from the audited financial statements of ten private<br>\ncommercial banks&rsquo; and National Bank of Ethiopia. The data were analyzed by using panel data<br>\nanalysis techniques by using Eviews 8. The descriptive statistics and diagnostic tests were<br>\ndiscussed, followed by, regression analysis. Then, regression result indicates that, the degree of<br>\noperating leverage had positive and statistically insignificant impact, the degree of financial<br>\nleverage had negative and statistically significant impact on profitability of private commercial<br>\nbanks. Moreover, operational efficiency also had negative and statistically strongly significant<br>\nrelationship with profitability. Finally, bank size had statistically significant impact on<br>\nprofitability. Therefore, private commercial banks could be increased income to improve<br>\nprofitability since they are operating above breakeven point. They should also give due<br>\nconsideration to manage their debt properly, increase loan and raise equity financing optimize<br>\nprofitability.</p>", 
  "title": "A Thesis submitted to the department of accounting and finance in partial fulfillment for requirement of Degree of Masters Science in Accounting and Finance", 
  "type": "thesis", 
  "id": "925"
}