ISSN: 1998 - 4162

JISR MSSE Journal Contents

Volume 18, Number 1, January 2020


The Effect of Political Instability on Bank Profitability: Evidence from Ethiopia
Mengistu Nega Lakew - , ,

Abstract
The aim of the study is to examine the effect of political instability on Bank profitability. To achieve this object the researcher used World Bank data base and data from annual audit financial statements of 15 selected commercial Banks for the period 2012-2016. The researcher applied generalized method of moments to analyse the effect of political instability on Bank profitability. Both descriptive analysis and inferential statistics are made in this regard. The result of generalized method of moments estimation shows that political instability positively affects Bank profitability. Bank specific variables such as credit risk ratio, Non- interest income to total asset ratio, and Cost to income ratio are important factors for Bank profitability. Growth of gross domestic product and inflation are significant determinants of Bank profitability. Bank size, liquidity and credit risk ratio are insignificant. The study is helpful to higher government officials, policy makers, Banks shareholders, Banks top managements, etc. Moreover, the study contributed to the existing literature by linking the political instability and Bank profitability.

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