FACTORS AFFECTING THE PROFITABILITY OF OROMIA COOPERATIVE BANK WOLKITE UNIVERSITY

Abstract

This study examines factors affecting the profitability of Oromia cooperative banks by using data of banks over the period of 2010-2021. The explanatory research design and quantitative research approach was applied in the study. Using multiple linear regression model and t-static analysis on yearly data collected from the annual reports of the Oromia cooperative banks. Profitability is measured by return on assets (ROA). The bank-specific factors, which were incorporated into the models, were size of the bank, liquidity, deposit amount and external variables included in the model were inflation rate and GDP growth. It was found that liquidity and inflation were Negative insignificant relation with bank profitability and deposit amount, and GDP growth has statistically insignificant effect on banks’ profitability in a positive relationship. On the other hand, variables like bank size, was found to have statistically significant relationship on bank profitability. As a result, the study recommended that Oromia cooperative banks should on focusing and reengineering the banks alongside the key internal and external drivers and this will enhance their performance and to improve their profitabilit