MSC in Accounting and Finance

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    DETERMINANTS OF NON PERFORMING LOAN: THE CASE OF COMMERCIAL BANKS IN ETHIOPIA
    (HAWASSA UNIVERSITY, 2024-03) Netsanet Engida
    Non-performing loans (NPL) are a critical issue for the banking sector in Ethiopia. NPLs can have a significant negative impact on a bank's profitability, stability, and overall financial health. As such, understanding the determinants of NPL in Ethiopian commercial banks is essen tial for effective risk management and regulatory oversight. Ethiopia has a rapidly growing economy, with a banking sector that has seen significant expansion in recent years. However, this growth has also brought challenges, including an increase in NPLs. Identifying the key fac tors that contribute to NPLs in Ethiopian commercial banks is crucial for developing strategies to mitigate these risks and ensure the long-term sustainability of the sector. This study aims to contribute to the existing literature on NPLs by examining the key determinants of NPL in Ethio pian commercial banks. To achieve this objective, ten banks with ten years of data ranging from 2013-2022 were selected for analysis. A positivism knowledge claim was adopted, along with a quantitative research approach and an explanatory research design. The results of the OLS re gression analysis revealed that five variables, namely loan growth rate (LGR), bank size (BS), return on assets (ROA), interest rate (IR), and inflation rate (INF), have a statistically significant effect on NPL in Ethiopian commercial banks. This implies that factors such as loan portfolio quality, bank size, profitability, and macroeconomic conditions play a crucial role in determin ing the level of NPLs in the banking sector. On the other hand, variables such as return on equity (ROE), capital adequacy (CA), and gross domestic product (GDP) were found to have a statisti cally insignificant effect on NPL. These findings provide valuable insights for policymakers, reg ulators, and bank management in Ethiopia to develop effective strategies for managing NPLs and promoting a sound and stable banking secto
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    DETERMINANTS OF LIQUIDITY RISK IN ETHIOPIAN MICROFINANCE INSTITUTIONS
    (Hawassa University, 2024-04) TEKILE TESEMA KIA
    Studying determinants of liquidity risk in microfinance institutions (MFIs) in Ethiopia is important for several reasons: Liquidity risk refers to the ability of an institution to meet its financial obligations without incurring significant losses. If MFIs are unable to manage liquidity risk effectively, they may face financial instability or even bankruptcy. Hence, studying determinants of liquidity risk in microfinance institutions in Ethiopia is essential for ensuring financial stability, protecting client interests, promoting sector development, and aligning practices with international standards. This study examines the determinants of liquidity risk in Eleven Ethiopian microfinance institutions over the period 2009 to 2022. The study investigates the impact of eight independent variables, namely capital adequacy ratio, non-performing loan, lending interest rate, cost of fund, return on asset, rate of deposit, inflation, and gross domestic product, on liquidity risk. The regression analysis reveals that capital adequacy ratio, non performing loan, cost of fund, return on asset, and rate of deposit significantly influence liquidity risk in these microfinance institutions. However, lending interest rate, inflation, and gross domestic product do not exhibit a statistically significant relationship with liquidity risk. These findings provide valuable insights for policymakers and microfinance institutions in managing liquidity risk and ensuring financial stability.