Empirical Evidence on The Impact of Bank-specific Factors on the Commercial Banks Performance: A case of Ethiopian Banks

Abstract

The study has investigated one of the key research questions: how do bank specific factors are related to bank performance? The model constructed is framed based on the commonly used supervisory tool to monitor bank performance: CAMEL. This consists of elements from Capital Adequacy, Asset Quality, Management, Earning and Liquidity. It has used six variables representing each of the components and run a regression model based on fixed and random models. The outcome shows that many of the bank specific factors have a significant statistical relationship with performance measures. Despite the mixed result in the various models, the study explored that bank’s capital holding, asset quality and business diversification, cost control and liquidity positions are important part of the management decisions to have a significant influence on performances.