European Journal of Business Science and Technology 2019, 5(2):200-217 | DOI: 10.11118/ejobsat.v5i2.174

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

Wesen Legessa Tekatel1, Beyene Yosef Nurebo1
1 Jimma University, Ethiopia

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.

Keywords: financial ratio analysis, banks, t-test, correlation, descriptive analysis
JEL classification: G21, M41, N20, N27

Published: December 23, 2019  Show citation

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Legessa Tekatel, W., & Nurebo, B.Y. (2019). Comparing Financial Performance of State Owned Commercial Bank with Privately Owned Commercial Banks in Ethiopia. European Journal of Business Science and Technology, 5(2), 200-217. doi: 10.11118/ejobsat.v5i2.174
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