Abstract: This study was conducted with the aim of finding the determinants of financial distress in the Ethiopia banking sector. The study mainly employed a quantitative research approach from 2012-2016 using sample data of 15 banks. To comply with the research objectives, the researcher used secondary sources of data. To measure the effect of determinants on financial distress multiple regression analysis would be adopted. The finding shows that Profitability and liquidity have a positive and significant influence on Debt Service Coverage. On the other hand, average inflation, solvability, and firm size have a negative and significant impact on Debt Service Coverage. Therefore, it concluded that micro and macro factors extracted from variables significantly correlated and have even better ability to determine financial distress of Ethiopia banking sector.