| Abstract: | The purpose of this study was to determine the impact of trade finance operation on the financial
performance of Commercial Bank of Ethiopia as representative of the commercial banking industry.
Its objectives were to describe the trade finance revenue streams of the Bank and establish the
relationship between the dependent variable i.e. return on asset and the independent variables,Fees
and commission, interest income, Foreign exchange trading income and capital adequacy as
moderating variable. Descriptive and explanatory research designs were used and the target
population comprised on Commercial Bank of Ethiopia. Data was collected from reports of the CBE
spans from 2006 to 2021 for sixteen years of the Bank’s operations. The data was analyzed using the
Statistical Package for Social Sciences (SPSS) version22. Descriptive and inferential methods helped
incoming up with statistical results from the quantitative data. The findings revealed that interest
income, non-interest income and foreign exchange trading income had been increasing over the years
although there were slight fluctuations. The total Capital and the total assets had also been increasing
over the years although there have been slight fluctuations. There was a strong, positive and
statistically significant relationship between fees and commission, interest income, foreign exchange
trading income with return on asset of Commercial Bank of Ethiopia. It was concluded that income
sources of trade finance, that is, foreign exchange gain were key in enhancing the financial
performance of CBE. The study recommends that trade finance operation shall give further attention
to SME and micro customer to further leverage the performance of the Bank. |
