Department of Accounting and Finance

URI for this collectionhttps://rps.wku.edu.et/handle/123456789/45801

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DETERMINANTS OF TAX COMPLIANCE OF MICRO AND SMALL BUSINESS ENTERPRISE (MSE) CATEGORY “C” TAXPAYERS, THE CASE OF SOUTHWEST SHOA ZONE, ETHIOPI
(WOLKITE UNIVERSITY, 2018-01) GETAHUN AYANSA BIRAE
This study sought to identify the determinant of tax compliance in Ethiopia, specifically focusing on Micro and Small business enterprises operating in South west shoa zone. The researcher outlined a detailed literature review and identified the variables for this research to be tax rate, tax knowledge, tax compliance cost; attitude of Micro and small enterprises and tax system. The research employed both descriptive and explanatory research design. A sample size of 325 were used from a population of 1726 micro and small business enterprises category “C” taxpayers in south west shoa zone. Data was collected using questionnaires and structured interview. Thecollected data was consequently analyzed using Statistical Package for Social Scientist softare (SPSS V.22) and the findings of the research presented using tables, various chart types ad graphs. The results showed that tax rate, tax knowledge, tax compliance cost, attitude of SME’s and tax system significant determine tax compliance of taxpayers. Tax rate, Tax system and compliance cost predominantly affect tax compliance. With regard to cost of tax compliance, the study revealed that Micro and Small businesses incur different costs such as salary of accountants, fees to tax consultants, cost of stationeries, etc. that contributed for their noncompliance and estimation of Micro and Small Enterprises tax is another problem related tax system. However, the taxpayers do feel and strongly agree that the taxation system in Ethiopia is in great need of improvement. The study then recommended that the current tax law should be amended to incorporate provisions that grant special tax incentives to MSEs in order to improve voluntary tax compliance by MSE taxpayers. The study also recommended that the ERCA should disseminate information on tax rate and tax system more frequently in order to improve the levels of tax knowhow for voluntary tax compliance.
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, Getachew
The 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.
ASSESSMENT OF TAX AUDIT PRACTICE AND ITS EFFECTIVENESS IN ENHANCING TAX REVENUE THE CASE OF LARGE TAX PAYERS BRANCH OFFICE OF ETHIOPIAN REVENUE AND CUSTOMS ATHORITY
(2018-06) MELAKU KINFE
The purpose of this study is to assess the tax audit practice and its effectiveness in enhancing tax revenue of large tax payers’ office. The study examines tax audit practice and its effectiveness with dimensions of experience and capable audit staff, tax payer’s record keeping, tax payer’s office information system, audit case selection and examination method, the type of audit used and frequency of tax audit influence audit effectiveness in LTO. In light of this objective the study adopted mixed research method of research approaches. Specifically, the study used survey of questionnaire analysis offices’ on tax auditors and team leader, and interview analysis on team leaders and process owners. Then tax auditors and team leaders were selected based on Census method, because, the target population studied is small. In large tax payer’s office there were 80 tax auditors supervised and lead by 10 team leaders managed by two process owners. Then the researcher distributed those questionnaires to the 90 tax auditors and team leaders, only 80 of them were returned. Consequently, Data was then analyzed on quantitative basis using inferential statistics (Anova and linear regression analysis) and descriptive statistics (frequency, percent, mean and standard deviation). Qualitatively interview was presented to process owners. The results of the study enable us to conclude that tax audit type, experience and capability of audit staff and audit case selection and examination method as a linear combination significantly influence tax audit effectiveness in the organization studied. However, tax payers record keeping, tax payers information system and frequency of tax audit were not significantly to undermine tax audit effectiveness. In the end, the study forwards the possible measures to be taken by the Ethiopian Revenue and Customs Authority to mitigate problems in tax audit operation. The authority should conduct further study to alleviate the problems which are related to tax audit.
IMPACT OF WORKING CAPITAL MANAGEMENT ON PROFITABLITY: EVIDENCE FROM SELECTED MANUFACTURING COMPANIES IN SNNPRS, ETHILOPA.
(wolkite university, 2019-01) Abiyot Gossaye Teka
Working capital management is the administration of current assets and current liabilitiesand it is directly affects the liquidity and profitability of company. Hence, efficient workingcapital management involves excessive planning and controlling and it is very important toequalize between current assets and current liabilities to eradicate the risk of insolvency.The objective of this study is to examine the impact of working capital management onfirms’ profitability and review the statistical significance between components of working capital management. In light of this aim the thesis implement quantitative method of research approaches to test the study hypothesis. Hence, the study used survey of companies audited financial statements. The purposive sampling method was used. Consequently, the study selected a sample of 11 companies for the period of eight years(2010-2017). Data was analyzed on quantitative basis using descriptive and regression analysis (Pooled ordinary least square) method was used. It observe the components of working capital for instance accounts receivable management, inventory holding period, accounts payable period, and cash conversion cycle in relation to ROA. In addition the study observes current ratio, company size, company growth and debit ratio as control variables. The key results from the study are; a negative significant at 5 percent relationship between account receivable management and profitability. Cash conversioncycle have a negative and statically significant at 5 percent relation with profitability. Opposed to the research hypothesis, account payable period has a negative statically significant at 5 percent relation with profitability. The manufacturing company of SNNPRS ,Ethiopia managers can increase profitability of their firms by limiting the time gap between company’s expenditure for purchases of raw materials and the collection of sales of finished goods. In general the study recommended that firms should minimize working capital management components in order to maximize profitability.
Determining Factors of Liquidity of Private Commercial Banks in Ethiopia
(WOLKITE UNIVERSITY, 2019-06) Abenezer Tesfaye
This study intended to examine the determinants of Liquidity in Private Commercial Banks in Ethiopia. In view of that, this study determined the bankspecific and macro-economic factors affecting bank liquidity for Six Private commercial banks in Ethiopia, covering the period of 2000-2017 by usingbalanced fixed effect panel regression. The findings of the study showed thatcapital adequacy, and inflation had statistically significant and positive relationship with banks’ liquidity. Bank size had a negative and statistically significant impact on Private Commercial banks .Loan growth had positive and statistically insignificant impact on Private Commercial banks. GDP growth rate has statistically insignificant and positive influence on the liquidity of private commercial Banks. Inflation had positive and significant impact on banks liquidity.On the other hand, the results of the study profitability were quite surprising. The result is conflicting with researcher’s expectations and also a finance theory which emphasizes the negative correlation of liquidity and profitability. Moreover, the coefficient of profitability was not statistically significant, implying that its Influence is insignificant. This positive relation shows that, higher profitability leads to increase banks liquidity. Conclusion about the impact of Ethiopian bank’s profitability on liquidity remains ambiguous and additional investigation is required. The researcher recommended that to maintain adequate system for managing liquidity of private commercial banks in Ethiopia.
Factors Affecting Internal Audit Effectiveness in Governmental Sectors: Case Study in Guraghe Zone
(WOLKITE UNIVERSITY, 2019-06) Abidlemewella Bedewi
The main purpose of this study was investigating factors affecting internal audit effectiveness in governmental sectors in guraghe zone, SNNPRS. As a result, the study used 13 randomly selected sectors (four out of eleven regional sectors with IA work process, one & the only federal sector and eight out of fifteen zonal sectors with IA work process) out of purposively selected 27 governmental sectors that have IA work process. The sectors were stratified into three strata (federal government, regional government and zonal government related sectors). Simple random sampling was applied on each stratum to get sectors that were used to form the sample size. Distributing two types of prepared questionnaire to 128 top management & IA, primary data was collected from 116 respondents (response rate 90.625%). Descriptive statistics & OLS multiple linear regression to measure IAE and to identify factors affecting IAE were applied respectively. Internal audit independence, management support, adequate and competent internal audit staff, sufficiency of budget, level of objectivity, approved IA charter, unrestricted information access and professionally competent team leader were hypothesized factors to be investigated and all of these factors were expected to have positive and significant impact on IAE. Out of these eight factors, internal audit independence, sufficiency of budget and unrestricted information access, were factors identified to have positive and significant contribution to IAE & internal audit independence was identified to be the most important deriver of IAE. But management support, level of objectivity, approved IA charter and professionally competent team leader were investigated to have insignificant positive contribution to IAE. Beta sign to adequate and competent internal audit staff showed that the variable has negative and insignificant contribution to IAE. Regression output of the analysis showed that 62.3% of the study is explained by the model and it showed that all of the variables collectively could play very important role to contribute for IAE.
FACTORS AFFECTING THE EFFECTIVNESS OF SAVING & CREDIT COOPERATIVES IN GURAGHE ZONE
(WOLKITE UNIVERSITY, 2019-06) GINBARU TEKLE, GINBARU
he main purpose of this study was to investigate factors affecting the effectiveness of saving and credit cooperative in Guraghe zone. The study followed simple random sampling research design. Using simple random sampling, 109 sample SACCOs were taken from the study area. Data used primary data collected from board chair person based on designed questionnaires and also data used the logistic regression model was used for the analysis. The major factors that affecting effectiveness of SACCOs are favorable for saving, fair policy and regulation, amount of saving to members, working time, and membership size which has a strong association and statistically significant. In addition the major factors that affect SACCOs effectiveness and statistically significant is level of Equib and Edir. Therefore the researcher recommends SACCOS should give high attention in attracting members to increase their source of fund by providing awareness about the benefit of joining SACCOS by using different social Medias, by creating training programs, through distribution of brochure to clients if fund is available should encourage members to take loan to increase dividend for idle funds, should charge compatible interest rate on loan to members to attract members, and also the government establishes cooperative bank then bank of cooperative to regulate SACCOs cooperative every activities. Finally Federal cooperatives agency should pay attention to decide for the government to establish cooperative bank of SACCOs as they help many people in providing loan as well as saving services and they are one of the financial service providers that highly contribute for effective financial services for the country
DETERMINANTS OF NON-PERFORMING LOANS: EVIDENCE FROM PRIVATE COMMERCIAL BANKS IN ETHIOPIA (IN CASE OF AIB, DB, BOA, NIB, CBO, WB, LIB AND UB)
(WOLKITE UNIVERSITY, 2019-07) GEMECHU TUNUNU, GEMECHU
This study examined the bank-specific and macro-economic determinants of Non-performing loans (NPLs) of Ethiopian commercial banks. The study adopted a quantitative research approach. The study uses data collected from the National Bank of Ethiopia, Central Statistical Agency and financial statement of nine commercial banks. Data covers the period from 2007- 2016. Descriptive and multiple regression analysis employed to analyze the unbalanced panel data. For the purpose of this study seven variables have been taken, categorized under bank specific factor and macro-economic factor .Under bank specific factor there are five variables .These variables are; net interest margin, capital adequacy, return on asset, loan to deposit ratio and return on equity. And macro-economic factors are Gross domestic product and inflation rate
FACTORS AFFECTING COMMITTING OF ACCOUNTING FRAUD IN PUBLIC AND PRIVATE BANKS IN WOLKITE TOWN OF GURAGE ZONE, ETHIOPIA
(Wolkite University, 2019-08) YALEW KIBRU SHIRGA
A study entitled factors affecting committing of accounting fraud in public and private banksin Wolkite town of Gurage zone, Ethiopia was conducted with the aim of identifying the types of accounting frauds committed and identifying major motivating factors for employees responsible for committing accounting frauds. Data for this study were collected using asemi-structured questionnaire. Both descriptive and econometric methods of data analysis were used for analysing data. Multiple linear regression model as part of the econometric analysis was used to analyse and identify factors affecting committing of accounting fraud in bank. The result of descriptive analysis showed that employees in bank are forced to commit frauds because of the motivation, the opportunity they accessed and rationalization. The result of econometric analysis also revealed that variables namely adherence to accounting rules, internal control effectiveness management morality, information asymmetry, and suitability of the motivational rewarding system were found to significantly determine the commitment of accounting fraud in private and public banks in the study area. The study finally recommended that limiting employees’ access to only the assets, systems, and information necessary for them, keeping in the morality of management, providing different incentive and compensation mechanisms, strengthening the internal bank controlling systems, communicating the employees in a bank with uniform information, and improving awareness of the employees to obey for the accounting rules for minimizing the accounting fraud in private and public banks
BENEFITS AND CHALLENGES OF USING INTERNATIONAL FINANCIAL REPORTING STANDARDS (IFRS): A STUDY ON ETHIOPIAN PUBLIC ENTERPRISES
(WOLKITE UNIVERSITY, 2020-06) BEKELE JARSA NESHIER, BEKELE
International Financial Reporting Standards (IFRS) are set of Accounting Standards developed by International Accounting Standard Board (IASB) that is the global standards recognized for thepreparation of companies’ financial statements. This study examines benefits and challenge of implementation of IFRS in Ethiopian public enterprises which establish in accordance with financial reporting proclamation # 847/2014, the study also identifies the factors that facilitate implementation of IFRS in Ethiopian public enterprises. Primary data were collected through five Point Likert-scale questionnaires. The study used non-random sampling of judgmental technique to select 10 enterprises from 22 enterprises based on nearness of the company and time of establishment.SPSS used to analyze a data collected through questionnaire the questionnaire data were analyzed using descriptive statistics, correlations, parameter estimiat and Ordinal Logistic Regression analysis. The findings revealed that IFRSimproves effectiveness of financial reporting, provides greater reporting transparency,it reduce cost of capital, It provides better information for decision making, make confidence for lender,enables better risk management and provides greater creditability.The study also foud that IFRS Implementation have challenges. It is costly, IFRS increases the complexity of financial reporting, Lack of IFRS implementation guidance affects the implementation of IFRS and increases the risk for manipulation in interpretation of financial statements, IFRS increased volatility of earnings, Tax driven nature of previous standards is a challenge for IFRS implementation, lack of proper instructions from regulatory bodies and Problem with IT system. The study also revealed Management support, Institutional readiness, Educational level, and Enforcement capacity significantly affect the quality of IFRS implementation in Ethiopian public enterprises. The findings suggest that a rigorous IFRS capacity building program should be embarked by the government, allregulatory bodies, enterprises and training institutions in order to provide the needed manpower for IFRS implementation.
DETERMINANTS OF BANKS’ INTERNAL AUDIT QUALITY: A STUDY ON SELECTED COMMERCIAL BANKS IN ETHIOPIA
(Wolkite University, 2020-06) JEMAL AWOL
This study examines the determinants of internal audit quality in selected commercial banks in Ethiopia. The study used purposive sampling method and covered the head office internal auditors of selected Ethiopian commercial banks. Mixed approach method was adopted in the study. Data were collected by self-administered questionnaire to 130 internal audit department staffs of the commercial banks. These questionnaires were constructed in 5-pointLikert scale, distributed to internal auditors of selected Ethiopian commercial banks. Multiple Regression(OLS) has been employed to regress the data obtained. The result of this study shows that top management support, promotion and reward, physical work environment and auditors’ performance were strong and has statistically significant effect on internal audit quality. As the regression results shows availability of budget, training and development autonomy to implement internal audit techniques have insignificance effect on internal audit quality. The study recommends that Ethiopian commercial banks must work to ensure the availability of the key factors to achieve the quality of internal audit function
FACTORS AFFECTING CREDIT ACCESSIBILITY OF SMALL AND MEDIUM ENTERPRISES IN SOUTH WEST SHOA ZONE
(WOLKITE UNIVERSITY, 2020-07) DEBEBE WORKINEH OLGA, DEBEBE
The purpose of this study is to investigate factors affecting credit accessibility of small and medium enterprises in south-west shoa zone. The main research objectives addressed in this study were: - To identify the extent of collateral requirement, how credit facility non-awareness, structure of financial sector, and distances from financial institutions affect credit accessibility, and to what extent management competency and small business support influences credit accessibility of small and medium enterprises in South West Shoa Zone. The study adopted both descriptive and explanatory research design. The population of the study consists of 1,193 Small and medium enterprises registered on Enterprise and Industry Development office of south-west shoa zone and Woliso Town Enterprise and Industry Development office. Stratified sampling technique has been used by dividing the population into two geographical areas to determine the total sample size of 299 enterprises. Both quantitative and qualitative data were used in the study. Data was collected using research questionnaires from sample selected of SMEs based on sampling techniques and structured interviewees conducted with 9 Banks and 6 microfinance institutions operating in the zone. Descriptive statistics was used to analyze data including frequencies, percentages, mean, standard error and confidence interval. Quantitative data were entered; cleaned and analyzed using stata13 version statistical software and using econometrics model; correlation and multiple regressions were used to show the relationship between variables. The study was employed credit accessibility as a dependent variable; while collateral requirement, credit facility non-awareness, structure of financial sector, distance from financial institutions, management competency and small business support were used as independent variables. The findings of the study shows collateral requirement, credit facility non-awareness, and structure of financial sector and distance from financial institutions have significant negative relationship, and management competency and small business support have positive relationship with credit accessibility of small and medium enterprises. The study recommended; financial institutions needed to consider receivable, inventory, equipment, and personal guarantee can be pledged as collateral, small and medium enterprises themselves take time to search for other financial institutions than limiting themselves to government microfinance, the concerned government body needed to make small and medium enterprises exhaustive awareness about credit facility in order to minimize his burden on small and medium enterprises in the country, financial institutions were needed to make exhaustive advertisement about credit terms and types they were providing, financial institutions needed to recognize small and medium enterprises up on organization of their structure, setting cost of financing, credit risk mitigation, setting credit policies and procedures, and liquidity risk calculation, financial institutions were needed to open their branches near to small and medium enterprises location, small and medium enterprise owners or managers needs managerial training to make sure their businesses are stable, and government needed to support small and medium enterprises in giving resources, market linkage, legalization and leasing.
DETERMINANTS OF FINANCIAL INCLUSION IN GURAGE ZONE
(WOLKITE UNIVERSITY, 2021-06) HANA ABEBE, HANA
The main objective of this study is to investigate the determinants of financial inclusion in Gurage zone of Ethiopia. The research design for this study is explanatory with inferential study with collected primary data. Subsequent review of previous works a thorough review of previous empirical studies, a research questionnaire was also developed by the researcher is developed as a means of data collection. Necessary data for this study has been collected from a total of 422 respondent of Gurage zone .Available data analysis was analyzed using Binary Logistic Regression and the finding implies that residence, financial literacy, awareness, accessibility, availability, employment status, interest rate, and gender have significant influence on financial inclusion. On the basis of this study finding the study has also crucial recommendation. It is enhanced to corporate with other responsible bodies have to develop comfortable financial inclusion of the society
CORPORATE GOVERNANCE AND ITS IMPACT ON PERFORMANCE (SOCIAL AND FINANCIAL): EVIDENCE FROM MFIs IN ETHIOPIA
(WOLKITE UNIVERSITY, 2021-07) SANI NISRANE MOHAMMED
The study was aimed to look at the effect of corporate governance attributes on the social and financial performance of in MFIs Ethiopia. Explanatory research design with quantitative research approach was employed to carry out the study. From 35 legally registered microfinance institutions at NBE and AEMFIs, 16MFIs were selected based on the availability of data to investigate the effect of corporate governance variables such as board size, board educational qualification, board experience in the financial sector, meeting frequency of the board, board audit committee size and CEO with dual responsibility on social (breath of outreach and depth of outreach) and financial performance of MFIs measured by Number of Active Borrowers, Gross Loan Portfolio and Return on Assetrespectively. In addition to main explanatory variables, control variables MFIs Size were also included within the study variables. Both primary and secondary data were used in which primary data regarding board characteristics was collected through questionnaire and secondary data was obtained from MFIs, NBE and AEMFIs. Panel data covering six year from 2014-2019 was analyzed for sixteen microfinance institutions. The regression results revealed that board size, board educational qualification, meeting frequency and CEO with dual responsibility have positive relationship with financial performance of MFIs while board experience in the financial sector, board audit committee size and firm size has statistically negative relationship. Board educational qualification, meeting frequency, audit committee size and firm size have positive relationship with social (breath of outreach) while board size,board experience in the financial sector, and CEO with dual responsibility have negative relationship. Board size, Board educational qualification, audit committee size and firm size have positive relationship with social (depth of outreach) while board experience in the financial sector, meeting frequency and CEO with dual responsibility have negative relationship. Based on empirical result of the study, it is recommended that CEO with dual responsibility should be separate for better performance. Furthermore, in order to reduce the problem of management failures which put at risk the money obtained from the public and other sources, the governance mechanisms of MFIs have to be effective (i.e. creating and maintaining a business environment that motivates managers and entrepreneurs to maximize firm’s operational efficiency, returns on investment and or on equity and long term productivity).
Determinants of Management Accounting Implementation: Evidence From Selected Manufacturing Companies in Ethiopia
(Determinants of Management Accounting Implementation: Evidence From Selected Manufacturing Companies in Ethiopia, 2021-07) SHUMET MITKU, SHUMET
n the era of globalization, the world has already been changed in to a small villege. Thus, being able to compete as per the demand of the existing business environment especially for business organizations is mandatory but not alternative choice. In other words, if large business organizations not able to be familiar with MAPs, they will lack power to be competent enough to assure survival. As a result, this research paper is conducte to investigate determinants of MAPs in selected large manufacturing companies in Ethiopia. To do so, the researcher used primary data that was collected from accountants and managers of selected large manufacturing companies in Ethiopia. Since implementation of MAPs increase as size of a company increase, the researcher purposively selected his sample elements from larger companies. Purposive samling was also applied to select directly related respondents out of all of the employees in a selected company. Amharic version of questionnaire was distributed to selected respondents like managers, dupty-managers, financial directors, chief accountants, senior management accountants or chief executivesetc. The questionnaire was prepared using a five level likert- scale type and each of the variables in the study were measured using this 5-point Likert scale which is ranged from lowest(“Strongly Disagree”) to highest (“Strongly Agree”) scale. The study used descriptive statistic, multiple linear regression(OLS) and hypothesis testing to get proper output of the study. Size of a company, production technology, strategy of a company, qualification of accounting staffs and intensity of market competition were hypothesized factors to be investigated and all of these proposed determinants were expected to have positive and statistically significant effect on MAPs. It was identified from the analysis that, size of a company and qualification of accounting staff are the two important determinants to affect management accounting practices out of these proposed five determinants. However, production technology, strategy of a company and intensity of market competition were determinants identified not to have statistically significant effect on MAPs. Regression output of the analysis showed that 50.81% of the study is explained by the model and it showed that all of the variables collectively could play crucial role to contribute for MAPs in large companies. Depending on findings of the study, the researcher would like to recommend that all concerned bodies should give attention to improve limitations of MAPs in all leveled Companies as it is important to be familiar with concepts and principles of management accounting to increase competitiveness of the companies in Ethiopia.
CORPORATE GOVERNANCE, RISK MANAGEMENT, AND BANK PERFORMANCE: EVIDENCE FROM COMMERCIAL BANKS OF ETHIOPIA
(WOLKITE UNIVERSITY, 2021-07) SOSINA SHEWASEMA
This study intended to examine the effect of corporate governance and risk management on bank performance using 10 years data from the year 2010 to 2019 which total populations consists of 17 banks operating in Ethiopia and using purposive sampling techniques select a sample of 13 Ethiopian commercial banks. The dependent variableROA and ROE were used as the bank performance indicators. Besides the independent variable corporate governance incorporated board size, board gender diversity, audit committee size and frequency of board meeting. In addition the risk management proxies were credit risk, liquidity risk and operational risk. The Explanatory research design was employed. The study used secondary source of data collected from NBE. The study used panel data with random and fixed effect regression model analysis for ROA and ROE respectively by using Eviews 9, 2021 software in drawing conclusion about the study. The finding shows that board size and board gender diversity had insignificant relation with ROA and ROE. But the frequency of board meeting was negatively influence the bank performance. While, the audit committee size was negative significant effect on the ROE: but insignificance effect on ROA. The risk management proxies liquidity risk andoperational risk negatively affect the bank performance. But the credit riskshow insignificant relation with bank performance. Furthermore, the results of effect of corporate governance and risk management on the bank performance together shows that board sizeand frequency of board meeting were positively affect the bank performances. Whereas audit committee size, liquidity risk and operational risk were negatively associated with bank performance but, the board size and credit risk failed to show a significant relation with bank performance. Finally the researcher recommended that, based on the significant effect of the corporate governance mechanism and risk management factors on the performance of the bank, the Ethiopian commercial banks should construct a corporate structure technically and as per the directives and also managing the banks risk effectively in order to better attainment of the objectives of the bank and to encourage their performances.
DETERMINANTS OF INTERNAL CONTROL SYSTEM: A STUDY ON SELECTED COMMERCIAL BANKS IN ETHIOPIA
(WOLKITE UNIVERSITY, 2021-08) LAKECH ERCHAFO MADEBO
Internal controlling systems are the mechanisms, rules, and procedures implemented by a company to ensure the integrity of financial and accounting information, promote accountability, and prevent fraud. The purpose of this study is to examine determinants of effective internal control system in selected commercial banks in Ethiopia. The descriptive reseaarch design was used and the mixed research approach was used to collect data; while, questionnaires used to collect primary data. The survey was taken commercial banks through random sampling techniques 120 employees for empirical examination. The data was analyzed by using statistical package SPSS version 21 and descriptive and econometrics tool OLS; All independent variables (POER, WOC, IND, GOR, WIECM and WEDOS) were 59% explained the dependent variables (ICS). The study revealed that there existed significant and positive relationships between the Remuneration of internal control staff (β =0.397 prob. = 0.000), organizational structure (β =0.429 prob. = 0.000) and independency of IC staffs (β =0.130 prob. = 0.018) with internal control system. On the other hand, enforcement control (β =-0.379 prob. = 0.000) have a negative and statistically significant relationship with internal control system. However, workers competency (β =0.042 prob. = 0.624), Early report presentation (β =-0.049 prob. = 0.564)have positive relation but not significant effect on internal control system. Based on the findings of the study the banks management emphasize on the role of remuneration internal control staff because of a key to controlling system. This study provides useful information to practitioners and academics who are interested in identifying the determinants of internal control system
EFFECT OF LOAN PORTFOLIOS’ ON FINANCIAL PROFITABILITY OF COMMERCIAL BANKS IN ETHIOPI PANEL ANALYSES
(WOLKITE UNIVERSITY, 2021-11) REDWAN ABAGARO ALIE
Banks play very significant role in the economies of the nation. The well-being of the economy is highly related to the soundness of its banking system. Loans comprise the single largest asset for commercial banks. The purpose of this study is to investigate the effect of loan portfolio on thefinancial profitability of commercial banks in Ethiopia. To achieve this objective explanatory research design with a quantitative approach was used. The study fully employed strongly balanced panel data from the period 2011-2020.Collocated data from 12 commercial banks audited financial statement purposively and by using Eviews-9 software packages analyzed through panel data regression analysis methods. The study employed a random-effect model as confirmed by the Hausman test. The study found that loan portfolio growth (LPG) and loan portfolio profitability (LPP) have statistically significant and a positive effect on commercial banks‘ financial profitability measured by ROA, ROE and NIM. Whereas, loan portfolio operational efficiency (LPOE) and loan portfolio asset quality (LPAQ) has a positive and statistically insignificant effect on Commercial banks‘ financial performance. That is LPAQ, LPG, LPOE and LPP are jointly explaining 58.35%, 65.46% and 53.4% of the change in ROA ROE and NIM respectively The researcher recommended that to increase loan portfolio asset quality (LPAQ) the bank has to revise and the fill gap of Credit Policy & Procedures within a short period of time and also to establish strong follow up mechanism to insure strict adherence to the Policy and Procedure.
ASSESSING THE EFFECT OF CORPORATE GOVERNANCE ON THE INDEPENDENCY OF INTERNAL AUDIT FUNCTION: A CASE STUDY ON ETHIOPIAN PRIVATE COMMERCIAL BANKS
(WOLKITE UNIVERSITY, 2021-12) ABUBEKER SEFA
The concept of internal audit independence is an area of concern for all commercial banks, it will continue to be an important issue that must be addressed.. Therefore, the study has established how the independence of internal audit is affected by various corporate governance factors among commercial banks in Ethiopia. Data was collected using structured questionnaires distribute to all internal audit department managers, heads of audit and inspection division and risk and compliance officers/managers of the 16 private commercial banks in Ethiopia. Data collected was analyzed by descriptive statistics aided by SPSS version 20 data analysis tool. A regression model was used to analyze the relationship between internal audit independence and level of corporate governance factors within a test of significance of 95% confidence level. The study has revealed that there is positive linear relationship between independence of Internal audit function and the corporate governance factors; corporate governance setting (CGS), senior management support (SMS),effect of Remuneration committee(ERC),effect of Qualification and Experience of internal audit staff(EQEIAS)), Effectiveness of audit committee (EAC)) and Perception of Internal audit independence (POI) among private commercial banks in Ethiopian ,The results of this study can inform bard of directors on the extent to which important factors factor are considered in the establishments of corporate governance they help the independency of internal audit
Factors affecting loan repayment performances of micro, small and medium-sized enterprises (The case of Wolkite Town Gurage Zone South Ethiopia
(Wolkite University, 2022-05) ALI SHERIF AWOL
This study was aimed to examine factor affecting loan repayment performances of micro, small and medium enterprises in wolkite Town Adminstration Ethiopia. This research designed to assess enterprises related factors, lender related factors and external related factors. Both descriptive and explanatory research design were employed by using both primary and secondary sources of data. Quantitative and qualitative data would be used. Stratified simple random sampling was used to select proportional numbers of sample from each stratum in the study area. Both close and open ended questionnaire was used to collect the required data from 176 respondents. The data was collected, coded, quantified and analyzed by using statistical package for social science (SPSS v.20). The binary logistic regression model was used to show the effect and relationship between explanatory variables and explained variables. The finding of this research revealed that the selected independent variables significantly explain the variation in the dependent variable at 5% level of significance. The econometric result indicated that loan repayment period, follow up and supervision, market accessibility and enterprises services sectors and age were positively and statistically significant association with loan repayment performances of MSMEs in the study area. Whereas, factors like training, saving habit, gender, education level, marital status, enterprises member size, loan size, interest rate can affect loan repayment performances positively or negatively but their impact on loan repayment performances was insignificant. The study recommended that the town of enterprise and industry development office should be communicate and integrate with regional and federal government to create between financial institution (micro finance) and MSMEs for setting suitable loan repayment period, OMFI and other stake holder should make continuous follow up and supervision on loan utilization and repayment. The town administration should provide market linkage in around the town specially with macro project and governmental institutions, incentive like tax free for some limited time, excess land for working area, promote market and MSMSE should work hard to market demand for their product and services by preparing different market exhibition.