International Research Journal of Commerce , Arts and Science

 ( Online- ISSN 2319 - 9202 )     New DOI : 10.32804/CASIRJ

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THE RELATIONSHIP BETWEEN FINANCIAL PERFORMANCE AND CAMEL RATING OF COMMERCIAL BANKS IN ETHIOPIA

    2 Author(s):  TSEGAZEAB T/MARIAM , GANESH MERGU

Vol -  10, Issue- 8 ,         Page(s) : 22 - 46  (2019 ) DOI : https://doi.org/10.32804/CASIRJ

Abstract

Banking sector is the key element in the financial sector and determines development of any country’s economic success. This paper aimed to analyse the financial performance of Ethiopian commercial banks by using CAMEL framework and to rank the banks according to their performance. Census sampling method were used and 15 banks were considered for the study. For measuring performance of the banks data was collected from National Bank of Ethiopia for the period of 2012 to 2017 and ROA and ROE are considered as dependent variables and, Capital adequacy, Asset quality, Management efficiency, Earning ratio and Liquidity ratio were considered as independent variables. Descriptive analysis were conducted by using ratio analysis and econometric analysis were conducted by constructing regression model by using e-views 9 software. The regression result for ROA is explained by independent variables is 62.11 percent, and ROE is explained by independent variables is 82 percent. Capital adequacy, asset quality, management efficiency are significant variables whereas the earning ability and the liquidity position ratios are insignificant in both models.

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