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Item DETERMINANTS OF PRIVATE COMMERCIAL BANKS PROFITABILITY IN ETHIOPIA(WOLKITE UNIVERSITY, 2024-05) MOHAMMED SEFAThis study investigates the determinants of bank profitability using a panel dataset comprising 150 observations across 15 banks. The primary objective is to identify significant factors influencing bank profitability and provide recommendations to enhance financial performance and sustainability. The methodology employed in this research involves fixed effects panel regression analysis to examine the relationship between various independent variables and bank profitability, measured by Return on Assets (ROA) and Return on Equity(ROE). The independent variables considered include Liquidity Position (LIQ), Deposit(DT), Capital Adequacy Ratio (CAP), Bank Size (BS), Reserve Requirement (RR), GDPGrowth (GDP), and Inflation (INF). The results of the analysis reveal several significant determinants of bank profitability. Liquidity position, capital adequacy ratio, GDP growth, and inflation exhibit statistically significant associations with both ROA and ROE. Specifically, an increase in liquidity position, capital adequacy ratio, and GDP growth positively impacts bank profitability, while inflation exerts a negative influence. Furthermore, the analysis reveals that deposit levels and bank size do not exhibit statistically significant relationships with bank profitability, as indicated by both ROA and ROE. Additionally, reserve requirements show no significant association with bank profitability, suggesting that regulatory constraints may not be significant drivers of bank profitability inthe context of this study. These results underscore the complex interplay of various factors affecting bank profitability and highlight the need for a comprehensive approach to financial management and risk mitigation in the banking sector. Based on the findings, several recommendations are proposed to enhance bank profitability and ensure financial stability. These include optimizing liquidity management, diversifying funding sources for enhancing efficiency and cost management, adapting regulatory changes, maintaining adequate capital buffers, monitoring economic conditions, implementing robust risk management practices, enhancing efficiency and cost management, adapting to regulatory changes, and investing in innovation and digitalization.