College of Business and Economics
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The College of Business and Economics promotes excellence in teaching, research, and community engagement
in the fields of business, economics, management, and development studies.
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Item THE EFFECT OF CREDIT RISK MANAGEMENT ON PROFITABILITY OF SELECTED PRIVATE BANKS IN ETHIOPIA(Hawassa University, 2024-05) TENAYE FANTUThe main objective of this study is to examine the effect of credit risk management on profitability of selected private banks in Ethiopia. The study purposely selected 14 private banks with 10 years dataset ranging from 2013 to 2022. In this study, credit risk is represented by three proxies namely: Nonperforming Loan Ratio (NPL), Loan Loss Provision (LLPR) and Loan to Deposit Ratio (LTR) and ROA and ROE as a measure of profitability. A quantitative approach with descriptive and explanatory design was applied to examine the underlying hypotheses. The dataset of the target banks was obtained from National Bank of Ethiopia. The results reveal that Non-performing loan and Loan loss provision have a negative and statistically significant effect on profitability while Liquidity ratio and bank size have a positive and statistically significant effect on profitability. However, the coefficient of tangibility ratio shows mixed and significant results on the two proxies (ROA &ROE) of profitability and statistically significant effect. The findings of the study has implication for bank managers, policy makers, regulatory body and practitioners in that it would give an important insight help do design a strategic plan. Future studies are suggested to be conducted in this research area by incorporating variables such as Macro-economic factors like: Exchange rate, political influence, etc.Item DETERMINANTS OF LIQUIDITY RISK IN ETHIOPIAN MICROFINANCE INSTITUTIONS(Hawassa University, 2024-04) TEKILE TESEMA KIAStudying 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.Item EFFECT OF CREDIT MONITORING ACTIVITIES ON ASSET QUALITY: A CASE STUDY ON PRIVATE AND PUBLIC BANKS IN ETHIOPIA(Hawassa University, 2024-04) DAWIT BEYENECredit monitoring activities play a crucial role in determining the asset quality of banks. Effective credit monitoring involves regularly assessing the creditworthiness of borrowers, analyzing their financial health, and evaluating potential risks associated with loans and investments. By actively monitoring credit, banks can identify and address any red flags or signs of non-performing or problematic loans at an early stage. This proactive approach allows banks to take appropriate measures to mitigate risks, such as restructuring or refinancing loans, resulting in improved asset quality. Moreover, credit monitoring activities enable banks to make informed decisions regarding credit extension, thereby ensuring that the loans offered are to creditworthy individuals or businesses, further enhancing the overall asset quality of the banks. This study examines the effect of credit monitoring activities on asset quality: a case study on private and public banks in Ethiopia. A response rate of 88.6% was achieved from respondent and both quantitative and qualitative data analysis tools were employed. The study concludes that the independent variables, namely collateral information, business ratings information, customer credit status information, and consumer default information, have a positive impact on asset quality in banks. Based on the study's findings, it is recommended that banks give more weightage to collateral information, business ratings information, customer credit status information, and consumer default information in their assessment of asset quality. By placing greater emphasis on these independent variables, banks can better identify and manage potential risks associated with loans and other credit facilities. It is imperative for banks to regularly update and upgrade their risk assessment models and systems to incorporate these variables effectively. Furthermore, banks should invest in technologies and data analytics tools that can provide accurate and real-time information on these variables, allowing for more informed lending decisions and ultimately improving their overall asset quality.Item THE EFFECT OF LOAN DELINQUENCY ON FINANCIAL PERFORMANCE OF MICRO FINANCE INSTITUTION IN ETHIOPIA(Hawassa University, 2024-03) ASAYE KONTAMOThis study examines the impact of loan delinquency on the financial performance of 11 microfinance institutions in Ethiopia from 2008 to 2021. Using a quantitative research approach with an explanatory research design, the researcher employs regression analysis to investigate the determinants of return on assets (ROA). The findings align with prior research, showing a negative relationship between nonperforming loans (NPL) and ROA. Higher NPLs indicate increased credit risk and potential losses, consistent with theoretical expectations and previous studies. Similarly, a negative relationship is found between credit to deposit ratio (CDR) and ROA, suggesting that greater reliance on credit for funding is associated with higher risk and potentially lower profitability. However, the positive coefficients on capital adequacy (CA) and firm size (FS) confirm prior research indicating that well-capitalized and larger entities perform better financially. Surprisingly, the loan loss provision ratio (LLP) and cost per asset ratio (CPL) were found to be statistically insignificant in determining ROA. These results imply that the significance of these variables may be context-specific or subject to variations across industries or time periods. This study contributes to the understanding of the relationship between loan delinquency and financial performance in the Ethiopian microfinance sector.Item FACTORS AFFECTING EFFECTIVE UTILIZATION OF PUBLIC BUDGET: A CASE OF SELECTED PUBLIC ORGANIZATIONS IN HAWASSA TOWN ADMINISTRATION, SIDAMA REGIONAL STATE, ETHIOPIA(Hawassa University, 2024-03) BETELIHEM NEGASHThe aim of this study was aimed to investigate factors affecting effective utilization of public budget in selected public organizations in Hawassa Town Administration. This study used descriptive and explanatory research design. The research used non-probability sampling technique to select samples. Population of the study was taken from six public organizations in Hawassa City administration who are working in plan preparation directorate, finance administration and internal audit directorate by selecting purposely a total sample of 138 respondents. In the selection, census sampling technique was employed. Primary data was collected using five Point Likert-Scale questionnaires, and out of 138 survey questionnaires 132 responses were properly filled and returned. Then the responses were analyzed using statistical Package for Social Sciences (SPSS) version-25 and Stata-14 and summarized to relate the variables that were collected from questionnaires. Both descriptive and binary logistic analysis was used to analyze the responses. The descriptive analysis result shows that all independent variables such as staff competency, stakeholder’s involvement, information technology, finance rules and regulations and auditing & monitoring had got moderate mean score. These results suggest that a numbers of respondents were not fully satisfied on level practice of these variables. From spearman correlation analysis result, five independent variables have a positive and significant relationship with the dependent variable of effective budget utilization of public sectors in Hawassa City Administration at 99% confidence level. As per the result of binary logistic regression analysis the researcher concluded that the five predictor variables (i.e., staff competency, stakeholder’s involvement, information technology, finance rules and regulations and auditing & monitoring) had significant effect on the dependent variable effective public budget utilization) in the study area. Finally the study recommended that the study public organizations should improve practice of staff competency activities, stakeholder’s involvement, information technology, finance rules and regulations and auditing & monitoring in order to increase the probability of improvement of the existing budget utilization status of public organizations.Collection Collection Collection Collection Collection