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Comparing Financial Performance of State Owned Commercial Bank with Privately Owned Commercial Banks in Ethiopia

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  • Wesen Legessa Tekatel

    (Jimma University, Ethiopia)

  • Beyene Yosef Nurebo

    (Jimma University, Ethiopia)

Abstract

The main objective of this study is to examine the effect of ownership structure on financial performance of Ethiopian commercial banks. Hence, the financial performance of state owned commercial bank was compared with privately owned commercial banks in Ethiopia based on key financial performance measures. In order to achieve the stated objective, the study adopts a quantitative research approach by using financial ratio analysis and test for means equality analysis techniques. Samples of fifteen commercial banks were selected based on the year of establishment. Audited financial statement data covering from 2011 to 2017 analyzed. The result reveal that ROEs of public sector bank was higher than those of private banks but the overall performance of state owned bank was not observed sound because other financial ratios including ROA, LDR, CDR, CAR and NIM, of most of the private banks were found superior. Other findings of the study show that there is a significance difference between the financial performance measures like ROE, CDR, LDR, CAR, EIR and NIM between states owned CBE and the privately owned banks in Ethiopia. In terms of ROA, not statically significant difference between state owned and private commercial banks in Ethiopia over the studied period.

Suggested Citation

  • Wesen Legessa Tekatel & Beyene Yosef Nurebo, 2019. "Comparing Financial Performance of State Owned Commercial Bank with Privately Owned Commercial Banks in Ethiopia," European Journal of Business Science and Technology, Mendel University in Brno, Faculty of Business and Economics, vol. 5(2), pages 200-217.
    • Handle: RePEc:men:journl:v:5:y:2019:i:2:p:200-217
    DOI: 10.11118/ejobsat.v5i2.174
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    Cited by:

    1. Bekana Dembel Tura, 2023. "Banking sector performance evaluation in Ethiopia for the period of growth and transformation plan (GTP-II): private vs public commercial banks," Journal of Banking Regulation, Palgrave Macmillan, vol. 24(4), pages 484-494, December.
    2. mohammed, habib, 2023. "Modeling Determinants of Private Banks Profitability in Ethiopia," MPRA Paper 116817, University Library of Munich, Germany, revised 25 Mar 2023.
    3. Nadiia Davydenko & Svitlana Boiko & Olena Cherniavska & Maryna Nehrey, 2023. "Analysis of the Impact of State-Owned Banks on the Sustainability of Public Finances," Economies, MDPI, vol. 11(9), pages 1-23, September.
    4. mohammed, habib, 2023. "Modeling Determinants of Private Banks Profitability in Ethiopia," MPRA Paper 116699, University Library of Munich, Germany.

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    More about this item

    Keywords

    financial ratio analysis; banks; t-test; correlation; descriptive analysis;
    All these keywords.

    JEL classification:

    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • M41 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Accounting - - - Accounting
    • N20 - Economic History - - Financial Markets and Institutions - - - General, International, or Comparative
    • N27 - Economic History - - Financial Markets and Institutions - - - Africa; Oceania

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