| Abstract: | The objective of this study is to assess the impact of credit risk management on selected private commercial banks financial performance in Ethiopia. Qquantitative data was gathered from secondary data sources which are financial data for the years of 2013 up to 2019 from annual reports of the stated eight selected private banks namely Awash International Bank (AIB), Dashen Bank (DB), Bank of Abyssinia (BOA), Wegagen Bank (WB),Oromia International Bank(OIB), Lion international bank (LIB), United bank (UB) and Nib international bank (NIB). Having been collected these data; it was analyzed and processed through CAMEL approach and ROE to test the existence of the relationship between the selected CAMEL factor measurements with the performance measures for the case of interpretation. A linear regression model was applied to examine the impact of independent variables on the dependent variable for one performance measures. Regression outputs were obtained by using STATA. The regression results revealed that, Capital adequacy ratio and management efficiency ratio has negative significant relationship with ROE but Asset quality ratio has positive significant relationship with ROE and liquidity ratio and earnings ratio has negative in significant relationship with ROE at 95% confidence interval and at 5% level of significance. On the basis of these findings, the study recommends that all CAMEL variables are the key driver of profitability of private banks in Ethiopia similarly the study also identified capital adequacy , management efficiency
,earning ability and therefore, Bank managers are advised to give due attention to those variables and to use other mechanisms to improve profitability. |
