-
Research Article
The Impact of Asset & Liability Management on Profitability: Evidence from Selected Private Commercial Banks in Ethiopia
Hussein Abdulkadir Roba,
Habtamu Alebachew Legass*
Issue:
Volume 10, Issue 6, December 2024
Pages:
104-117
Received:
5 October 2024
Accepted:
29 October 2024
Published:
28 November 2024
Abstract: This research meticulously investigates the intricate interplay between Asset and Liability Management (ALM) practices and the profitability dynamics of selected private commercial banks in Ethiopia over the period spanning 2011 to 2023. Employing a comprehensive fixed effect balanced panel regression analysis across a time horizon of 13 years and encompassing data from ten meticulously chosen banks, this study sheds light on critical aspects of financial management in the banking sector. Utilizing a quantitative approach and an explanatory design rooted in secondary data extracted from audited financial statements, the study rigorously examines a spectrum of key variables. These variables include income diversification, liquidity, bank size, GDP, asset quality, capital adequacy, loan and advance, and operational efficiency, all meticulously analyzed using E-view 12 econometrics software. The research findings underscore the pivotal significance of certain factors in enhancing bank profitability. Notably, asset quality, liquidity ratio, GDP, loan and advance, and bank size emerge as positive influencers on bank profitability, exhibiting statistically significant impacts. Conversely, operational efficiency and income diversification were found to exert negative effects on profitability. Surprisingly, capital adequacy was established as statistically insignificant in this context. This study accentuates the critical importance of asset quality, operational efficiency, liquidity management, bank size, GDP, income diversification, and loans as fundamental drivers of banks' return on assets. By accentuating the strategic significance of these variables, bank managers are equipped to navigate the complex financial landscape, leveraging effective ALM strategies to optimize profitability and ensure sustained financial viability.
Abstract: This research meticulously investigates the intricate interplay between Asset and Liability Management (ALM) practices and the profitability dynamics of selected private commercial banks in Ethiopia over the period spanning 2011 to 2023. Employing a comprehensive fixed effect balanced panel regression analysis across a time horizon of 13 years and ...
Show More
-
Research Article
The Influence of Cultural Factors on Financial Decision-Making in Ghana
Issue:
Volume 10, Issue 6, December 2024
Pages:
118-125
Received:
29 August 2024
Accepted:
21 September 2024
Published:
19 December 2024
DOI:
10.11648/j.ijfbr.20241006.12
Downloads:
Views:
Abstract: This study investigates the role of cultural factors in shaping financial behaviors in Ghana, focusing on elements such as family obligations, communal traditions, religious beliefs, and traditional practices. It examines how these cultural dynamics influence decisions related to savings, borrowing, investments, and the use of informal financial systems like "susu," a widely trusted savings method in Ghanaian society. Through a mixed-method approach combining qualitative and quantitative techniques, the research provides a holistic view of the cultural influences driving financial decision-making. The analysis reveals a strong cultural preference for financial practices rooted in community trust and collective responsibility, often favoring informal systems over formal financial institutions. Family structures and societal expectations strongly influence financial priorities, emphasizing the needs of the group over individual goals. Religious values also play a significant role, shaping attitudes toward financial ethics, debt management, and charitable contributions. This reliance on cultural norms reflects the high level of trust in traditional methods that align with familiar and accessible systems. The findings underscore the necessity of culturally tailored financial solutions to bridge the gap between informal practices and formal financial services. Policymakers and financial service providers must consider these cultural intricacies when designing products and strategies to improve financial inclusion. Culturally aligned financial education and services can foster trust and encourage broader participation in formal financial systems, supporting economic growth and stability. This research not only advances academic understanding of the intersection between culture and finance but also offers actionable insights for creating financial policies and services that resonate with the cultural realities of Ghanaian society. By aligning modern financial systems with traditional values and practices, financial inclusion can be enhanced, fostering a more inclusive and equitable financial environment.
Abstract: This study investigates the role of cultural factors in shaping financial behaviors in Ghana, focusing on elements such as family obligations, communal traditions, religious beliefs, and traditional practices. It examines how these cultural dynamics influence decisions related to savings, borrowing, investments, and the use of informal financial sy...
Show More
-
Research Article
Assessing Legal Independence of the National Bank of Ethiopia: An Analytical Framework Using Advanced Metrics
Hamza Abdu Kiyar*
Issue:
Volume 10, Issue 6, December 2024
Pages:
126-138
Received:
21 November 2024
Accepted:
4 December 2024
Published:
23 December 2024
DOI:
10.11648/j.ijfbr.20241006.13
Downloads:
Views:
Abstract: Ethiopia is recognized as the first African country to establish an independently owned central bank. This article evaluates the legal independence of the National Bank of Ethiopia (NBE), tracing its evolution from inception to the present day. Various studies provide robust evidence that an independent central bank is crucial for maintaining price stability without adversely affecting economic growth. The primary objective of this article is to analyze the extent to which the NBE maintains legal autonomy and effectively executes its monetary policy mandate amidst governmental influences. Utilizing contemporary metrics developed by Tobias Adrian, Ashraf Khan, and Lev Menand in 2024, the analysis is anchored in ten indicators of central bank independence, including institutional autonomy, policy-making authority, budgetary independence, and financial independence. A critical examination of the legislative frameworks governing the NBE assesses both existing laws and the proposed Draft National Bank Proclamation. Findings indicate that while the NBE has made significant strides in enhancing its legal independence, such as emphasizing price stability as its primary objective and allowing the board to set remuneration, substantial challenges remain. Persistent governmental control over appointments and financial resource allocation continues to undermine its operational effectiveness. This research underscores the necessity of a robust regulatory framework to enhance the NBE’s autonomy and promote economic stability and growth. By integrating historical insights with contemporary assessment metrics, this study advocates for targeted reforms that strengthen the NBE’s mandate in an increasingly complex economic landscape.
Abstract: Ethiopia is recognized as the first African country to establish an independently owned central bank. This article evaluates the legal independence of the National Bank of Ethiopia (NBE), tracing its evolution from inception to the present day. Various studies provide robust evidence that an independent central bank is crucial for maintaining price...
Show More
