| Abstract: | Objectively the study examines the effect of e-banking on the performance of commercial banks in Ethiopia. The study adopted a quantitative research approach with explanatory design. ROE, NII_A and NIE_A was used to measure and explain the performance of selected commercial banks. The explanatory variables were VATMT, NDCU, VMOBT. And also control variable bank size and Inflation was adopted to investigate their effects on bank performances.
Secondary data was collected in panel form for 10 purposively selected commercial banks from NBE and audited financial statements of commercial banks for 6 years (2014-2019). Multiple linear regression models were adopted to examine the relationship between the study variables. Data was analyzed using descriptive statistics and inferential analysis using E-views 9 software.
The finding of the study confirmed that from bank specific variables value of ATM transaction had significant and positive effects on financial performance of commercial banks in Ethiopia measured by return on equity and non-interest income. Even though, VATMT had positive effect on non-interest expense measurement the effect was significant. In the contrary inflation had significant negative impact on financial performance measured by return on equity and non-interest income. The rest variables number of POS terminal, value of mobile banking transactions were not significant or powerful variables to influence financial performance of commercial banks in Ethiopia. Moreover, almost all variable except inflation were not significant or powerful variables to influence operational performance of commercial banks in Ethiopia measured by non-interest expenses (NIE).
The finding generally concludes that value of ATM transaction was the main contributors of bank profitability in Ethiopia measured by (ROE and NII_AA) as well as the number of DCU was the main contributors of bank profitability in Ethiopia measured by (ROE). While, VPOST has not significant effect on bank profitability in Ethiopia measured by both (ROE, NII_A and NIE_A). Also, evidence from previous studies on E-banking showed that there was mixed results based on the operating environment and the level of adoption,
The study recommend that Banks should invest more on new e-banking channel for automating their banking system and it is imperative to devise strategies that involve alliances and collaborations between commercial banks, since e-banking requires promising activity to increase the profitability of Ethiopian commercial Banks fascinatingly. |
