Department of Accounting and Finance
URI for this collectionhttps://rps.wku.edu.et/handle/123456789/45801
Department of Accounting and Finance
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Item THE EFFECT OF BOARD DIRECTORS COMPOSITIONS PRACTICES ON FINNANCIAL INNOVATION ON ETHIOPIAN COMMERCIAL BANKS(WOLKITE UNIVERSITY, 2021-11) MUSLIHA MUSTEFA UMEROne of the many challenges the business world is facing currently is installing sound and proper board directors composition in an organization. This might lead to economic failure if not managed and addressed properly and timely. This study aims at evaluating the effect of board director’s compositions practices on financial innovation on Ethiopian commercial banks using five years data from the year 2016 to 2020. The study assessed the effect of corporate governance variables on financial innovation of Ethiopian commercial banks as measured by natural logarithm of e- banking products and services. To achieve the objectives of the study the researcher used descriptive research design. The Corporate governance variables used in this study were females representing in the board, educational qualification of board of directors, board size, audit committee size and board meeting frequency. In the study firm size and bank age were used as control variables. Mixed research approach was employed to understand the effect of corporate governance on financial innovation on Ethiopian commercial banks. The study uses both primary and secondary source of data. Primary data was collected through interview of board secretaries of Ethiopian commercial banks used in this study. The study used panel data and pooled regression model to analyze the relationship between corporate governance mechanisms and financial innovation using a data set of 15 Ethiopian commercial banks. The findings showed that, females representing in the board and educational qualification of board directors have positive and significant effect on financial innovation of the banks. On the other hand, audit committee size and board directors meeting had negative and significant effect on financial innovation of the banks. Based on the findings of the study, it can be concluded that female’s directors in the board, educational qualification of board of directors, audit committee size and board directors meeting frequency influence financial innovation of Ethiopian commercial banks. Thus, the study recommends commercial banks should improve their board director’s educational qualification by providing the chance to upgrade their academic status and increases the size of female’s board directors to enhance financial innovation in the banks.Item THE EFFECT OF WORKING CAPITAL MANAGEMENT ON FIRM‟S PROFITABLITY: EVIDENCE FROM SELECTED MANUFACTURING COMPANIES IN ADDIS ABABA ETHIOPIA.(WOLKITE UNIVERSITY, 2021-11) ABDULAZIZ BEREDAThe main purpose of this study was to determine empirically the impact of working capital management on profitability. To indicate relationship between these two, the author collected secondary data from 19 manufacturing companies in Addis Ababa, Ethiopia for the period of 2015 to 2019. Inventory holding period, Accounts receivable period and accounts payable period are used as independent working capital policy variables. However, cash conversion cycle (CCC) and current assets to total assets ratio are used as comprehensive measures of working capital investment policy. On the other hand, current liabilities to total assets ratio is used as measure of working capital financing policy. The regression results show inverse relationship between inventory holding periods and accounts receivable with profitability. However there is statistically insignificant relationship between accounts payable period and profitability. The results also show that there exists significant negative relationship between profitability of the sampled firms and cash Conversion cycle (CCC). In hence to that there is significant positive relationship between current assets to total assets ratio and profitability measures has been observed. The other hand, results show that a significant positive relationship between current liabilities to total assets ratio and profitability. To be profitable, firms must try to keep these numbers of days account receivable and inventory turnover days to minimum level. This also helps to minimal the cash conversion cycle (CCC). Since aggressiveness of working capital management investment policies is inversely related to profitability, and aggressive investment policy positively related with profitability, the financial managers of manufacturing Companies should follow conservative investment policy and aggressive financing policy in their working capital management in manufacturing companies. Data and Data Collection to gather the necessary data copies of audited financial statements in the form of income statement and statement of financial position over the period of five years has been use. The population of study will comprised 19 manufacturing share companies in Addis Ababa Ethiopia. The E – views-9 software has been used to analyse financial data and Researcher used panel Least Squares methods for analysis.Item THE EFFECT OF ELECTRONIC BANKING ON FINANCIAL PERFORMANCE EVIDENCE FROM SELECTED COMMERCIAL BANKS IN ETHIOPIA(WOLKITE UNIVERSITY, 2024-06) TESHOME BEKELE MEREZUThis paper investigates the effect of electronic banking on the financial performance of commercial banks in Ethiopia. The study aims to analyze how the adoption of electronic banking channels, including Automated Teller Machines (ATM), Point of Sale (POS) terminals, mobile banking, and Internet banking, influences banks' profitability and return on equity (ROE). Panel data regression models with a period ofeight years, from 2015 to 2023 were employed to examine the relationship between electronicbanking transaction volumes and financial performance indicators, controlling for bank size. The findings reveal significant associations between certain electronic banking channels and financial performance metrics. Specifically, higher transaction volumes through ATM channels are positivelycorrelated with both return on assets (ROA) and ROE. Conversely, increased usage of POS terminals exhibits a negative impact on ROA, suggesting potential challenges associated with POS transactions. Mobile banking and Internet banking transaction volumes demonstrate positive relationships with ROE, underscoring the importance of these channels in enhancing banks' profitability and shareholder value. Furthermore, the study identifies bank size as a significant determinant of financial performance, with larger banks exhibiting higher profitability. Based on these findings, recommendations are provided for Ethiopian banks to strategically leverage electronic banking channels to improve their financial performance. These recommendations include investing in technological infrastructure, enhancing cybersecurity measures, and tailoring electronic banking services to meet the diverse needs of customers. Overall, this study contributes to the growing body of literature on electronic banking and provides valuable insights for policymakers, bank executives, and researchers interested in the Ethiopian banking sector.Item DETERMINANTS OF FINANCIAL REPORTING QUALITY IN CASE OF INSURANCE COMPANY IN THIOPIA(WOLKITE UNIVERSITY, 2024-05) SEYOUM YILMAThis study intends to assess the determinants of financial reporting quality in case of insurance company in Ethiopia over a period of 2014-2022. Consequently, the study used document review of insurances’ audited financial statements. The explanatory variables used in this study were Leverage (LE), Profitability (ROA), Liquidity (LQ), Auditor Change(AC), Firm Age (FA) and Firm Size(FS).In this study sixteen Insurance companies were selected from a total population of sixteen insurances companies to accomplish a study for the period of nine years (2014-2022) with the total of 144 observations. Moreover, The secondary data were analyzed using descriptive statistics, correlation analysis and panel data analysis and data from document reviews were interpreted quantitatively. The study used panel data and random regression model to analyze the Determinants of Financial Reporting quality of Ethiopian insurance companies. The study found that profitability ratio has positive and insignificant effect on financial reporting quality. While, auditor changes and firm ages had significant effect on financial reporting quality, leverage and liquidity were found to be insignificant effect on financial reporting quality of Ethiopian insurance companies.Item THE EFFECT OF FINANCIAL INNOVATION ON PROFITABLITY OF ETHIOPIAN COMMERCIAL BANKS(WOLKITE UNIVERSITY, 2024-05) SELAM TADEMUFinancial innovation is considered to be a critical requirement for the growth and profitability of organizations. It enhances technological provisions, product constituents, integrated software and consumer friendly as well as incorporating additional1useful features. The aim of this study was to examine the effect of financial innovations on profitability of commercial banks in Ethiopia. The researcher used exploratory research design and quantitative research approach was used. The independent variables were mobile banking user, internet banking user, agent banking, ATM machine, pos machine and dependent variable was profitability. Beside these, in the study firm size and bank age were used as control variables. The study uses only secondary source of data. The pooled regression model was used to analyze the relationship between financial innovation and profitability. Agent banking; age of the firm and bank size has positive and significant effect on return on equity while, ATM and posm has negative statistically significant effect on ROE. Only mobile banking has positive and significant effect on ROA while other has negative and significant effect on ROA except mobile banking. Moreover, pos and mobile banking has positive and significant effect on profitability that were measured in NIM while the remaining other variables has negative and significant effect on profitability (NIM). From the study, it can be concluded that investment and asset in pos machine terminal has negative and statistically significant impact on ROE and ROA. The asset of pos machine terminal has positive and significant impact on net interest margin. The asset of mobile banking increase profitability (NIM). From the findings it can be conclude that, the investment on internet banking has Positive effect on banks performance that was measured by ROE. The greater investment on ATMs deployment has negative effect on banks profitability and investment on deploying ATMS lead to increase banks performanceItem FACTORS AFFECTING THE QUALITY OF EXTERNAL AUDIT SERVICE: EVIDENCE FROM PRIVATE AUDIT FIRMS OF ETHIOPIA(WOLKITE UNIVERSITY, 2024-04) SEADA MOHAMMEDThis research delves into the determinants influencing external audit quality in Ethiopian private audit firms, concentrating on five pivotal dimensions of auditors' professional ethics :independence, competence, objectivity, integrity, and confidentiality of information. The study ,encompassing 120 private audit firms, adopts a mixed research methodology and employs ordinal logistic regression to analyze the intricate relationships between these ethical dimensions and the perceived Quality The researcher was employed a quantitative research method which allows gathering numerical data, measuring variables, predicting and using statistical procedures. To determine the relationship among the variables and to test the research hypothesis correlation and regression analysis method was used by meeting the ordinary least square (OLS) assumptions of the linear regression. The correlation analysis revealed significant positive associations between auditor competence, integrity, objectivity, confidentiality of information, and the overall external audit quality. The model's robust fit, within 88.4% explanation of variability in external audit quality, underscored the effectiveness of the selected determinants in predicting audit outcomes. Multiple linear regression analysis identifies competence and integrity as substantial predictors of external audit quality, supported by robust methodology as indicated by high R-square values and adherence to assumptions. In conclusion, this research highlights the crucial roles of auditor competence and integrity in external audit quality in Ethiopian private audit firms. While auditor independence showed no significant correlation, the study emphasizes context-specific factors. It offers valuable insights and practical recommendations for improving audit practices. Implementing these can enhance audit quality and the integrity of the profession in Ethiopia. The study recommended targeted improvements in auditor competence and integrity to enhance overall external audit quality in Ethiopia. Acknowledging limitations such as a focused scope and methodological constraints,6the research underscores the need for cautious interpretation of results while offering valuable sights for the improvement of auditing practices in the Ethiopian private sector. Keywords :Audit, Quality, Factor, Private firmsItem DETERMINANTS OF BANKS’ LIQUIDITY ON SELECTED COMMERCIAL BANKS IN ETHIOPIA(WOLKITE UNIVERSITY, 2024-05) GEREMEW TSEGAYE ADELAIn banking sector, liquidity has one of the major concerns for both public and privatecommercial banks. Therefore, achieving the maximum level of liquidity is considered as the ultimate goal of most CBs. The main objective of this study was to examine determinants of banks’ liquidity on selected commercial banks in Ethiopia. The study adopted descriptive andexplanatory research design with quantitative approach. The study used non - probability sampling method – purposive to select the CBE and five private banks with at least twenty five years of establishment. Data source was secondary balanced panel data of the CBE and the five private commercial banks in the period of 2011 to 2022 which was obtained from NBE. Descriptive statistics, Pearson correlation coefficient and multiple linear regression model were employed to analyze the quantitative data using E – view 9. The findings of the study revealed that ROA, GDP, INF, and RR have significant and positive effect on liquidity of both public and private CBs, whereas BS, LG, and NPL have significant and negative effect, however, AQ has no significant effect. In this regard, 74.16% of the variations in the liquidity of the banks were jointly accounted by the eight variables at 5% level of precision. Therefore, those significant determinant factors are crucial to maintain the optimal level of liquidity of the banks. Therefore, it is recommended that commercial banks in Ethiopia are better not only be concerned about internal structures, policies and procedures, but also on both the internal environment and the macroeconomic environment together along with the industry factors while developing their strategies to efficiently manage their liquidity position.Item THE DETERMINANT OF OPERATIONAL AND FINANCIAL SELF SUFFICIENCY AN EMPIRICAL EVIDENCE OF ETHIOPIA MICROFINANCE INSTITUTIONS(WOLKITE UNIVERSITY, 2024-05) MAHDER MARKOSOperational and financial self-sufficiency are tools to measure the self-sufficiency of MFI in Ethiopia. The main objective of this study was to identify the determinant of operational and financial self-sufficiency in Ethiopia. In order to achieve the research objectives, data was collected from a sample of nineteen MFI in Ethiopia over the period from 2013 to 2022. MFI internal and external factors of operational and financial variables were analyzed by using ordinary least square(OLS) multiple linear regression analysis in the balanced panel fixed effect regression model. The findings of the study help to MFI in their policy. The study also discovered that, number of active borrower, female borrower and age of MFI have positive and significant impact on operational self-sufficiency and debt to equity ratio and cost per borrower have negative and significant effect on operational self-sufficiency. Similarly the size of MFI, deposit mobilization and age of MFI have positive and significant effect on financial self-sufficiency and operational expense ratio has negative and significant effect on financial self-sufficiency however, Labor cost to total asset ratio and Average loan size per average borrower haves no statistically significant effect on the operational self-sufficiency and Cost per borrower, Labor cost to total asset ratio and inflation have not statically significant effect on financial self-sufficiency of MFI. Thus, the study suggests that MFI age and operational expense ratio have high impact on the MFI sustainability to compete with the other MFI therefore as possible reduce operational expense in the market.Item ASSESSMENT OF WORKING CAPITAL MANAGEMENT PRACTICE IN FIKIR SPRING WATER(WOLKITE UNIVERSITY, 2023-05-15) AMANUEL SHUMYEThis study's primary objective was to assess the working capital management practice of FikerSpring Water, a privately owned company it locate Agena near Wolkite town. This study wasconducted by taking the whole target population as respondents (census method) For this study. primary data collection was done by the researcher. The student researcher gathered primary data sources through structured interviews with the finance manager and by distributing an open and closed-ended questionnaire to respondents. Primary data sources were analyzed and interpreted through descriptive research analysis using tables and percentages about working capital management practices in Fiker Spring Water. The researcher uses the descriptive method of data analysis. The finding of the study showed many strengths and weaknesses of the company (Fiker Spring Water). Finally, the finding of this paper showed that even if Fiker Spring Waterselects many appealing cash control, inventory control, and receivable management techniques its overall working capital management practice in recent periods is weak and require further work. The student researcher recommends that organization should think of hiring qualified personnel for the position of financial management in their organizations.Item DETERMINANTS OF BUDGET CONTROL IN PUBLIC ORGANZATION A STUDY WITH REFERENCE TO SOUTHERN NATIONS, NATIONALITIES, AND PEOPLES’ REGIONAL STATE (SNNPRS)(WOLKITE UNIVERSITY, 2018-04) Getachew Mamo, GetachewThe main purpose of this study was to investigate the determinants of budget control in the Southern Nations, Nationalities, and Peoples’ Regional State public organizations. This investigation was focus on five purposely selected public organization that are expected to represent all other bureaus. From the total population, (watson 2001) formula was used to determine sample of respondents. The management team, the internal and external auditors, budget experts, finance officers, tax and planning experts of the selected public organization were the sources for the required data to the study through questionnaires adminstered. The STATAS software was used to analyze the data using descriptive statistics, including mean, standard deviation and logistic regression used to analysis inferential output. For this study, eight independant variables were identified including budget planning process, management support, competent internal audit staff, organizational commitment, budget monitering and evaluation, information and communication, cost reduction and competency of human resource in budget department. The dependent variable is degree of budget control which was measured under Binary logistic regression. According to the logistic regression output, budget planning process, competent internal audit staff, organizational commitment and competency of human resource in budget department were contributed for the budget control in the public sector significantly and positively but budget monitoring and evaluation for the budget control was negatively and significantly related. The other variables organizational commitment were positively related with the budget control, but its contribution for the budget control were statistically insignificance at 5% level and management support also positively related with the budget control, but its contribution for the budget control were statistically insignificance at 5% level. All of these eight independent variables are making 50.93% of the contributions for budget control in the public organization. Then, the researcher recommend that public organizations should understand the contributions of these five variables collectively significant and their odd ratio were greater than one to infinity indicate the relationship between those predictors and the outcomes and add values for the budget control in the public sector offices.