IJSRP, Volume 7, Issue 2, February 2017 Edition [ISSN 2250-3153]
Yidersal DagnawDinberu, Man Wang
The study conducted to examine the effect of state and private Ownership on the Profitability of the Commercial Banking Sector in Ethiopia initiated following the emergence of researches, in different economic set ups, with varied results on the effect of Ownership structure on the performance of banks. The research used panel data set of 8 banks operating in the sector for more than 10 years in Ethiopia, where the financial sector is at its enfant stage and closed for foreign investors, for the period covering 2005 to 2014. The mean Profitability of the commercial Banks under study were described, compared, and then tested for the relationship between Banks’ Profitability and Ownership Structure using pooled OLS Regression model with Dummy Ownership Variable. After performing some statistical tests, Return on Equity (ROE) has been used as a measure of Profitability. The result shows that there is a significant outperformance of state owned commercial banks than private competitors during the period. Of the control variables used, bank size, liquidity, loans and advances, and bank capitalization have been found to have significant effect on profitability of the commercial banking.