IDEAS home Printed from
   My bibliography  Save this article

Evaluation Of Financial Performance Of Banking Enterprises; The Case Of Construction And Business Bank Of Ethiopia


  • Dejene Mamo Bekana (MBA)

    (Ethiopian Civil Service University Institute of Tax and Customs Administration)

  • Asres Abitie (MBA)

    (Jimma University College of Business and Economics)


This study is proposed to evaluated the financial performance of Construction and Business Bank (CBB) of Ethiopia. The study emphasized on financial performance measurement ratios such as asset utilization/efficiency ratios, deposit mobilization, loan performance, liquidity ratio, leverage/financial efficiency ratios, profitability ratios, solvency ratios and coverage ratios to evaluate the bank’s financial performance. For this study, the researchers dominantly relied on secondary data; eight years (2002/2003 to 2009/2010) from most recent audited financial statements of the bank. Primary data was also colleted by the researchers using unstructured personal interview from key officials; the Planning and Business Development manager and the finance section manager and with the aid of observation as well. The data were cross validated with information from secondary sources; eight years financial statements and other relevant records so as to avoid premature conclusions. Findings of the study revealed that the bank’s financial performance had been almost progressing over the operational periods considered for the study. It is concluded after trend analysis that some important financial ratios computed for analysis of the financial performance of the company are in a going up pattern excluding loan deposit ratio, assets turn over ratio and the long term debt to equity ratios. The commendable performance in profitability of the bank is attributable to such factors as, relocation of the some of the banks outlying branches to better bankable areas and the gradual penetration of the bank in to foreign banking activities. The bank achieved significant hike in revenues over the periods while the cost of operation showed only slight increase comparatively with the increase in revenues. The major problems to be cited for the downside performance in some other ratios were resulted from inherited monopolistic operation system of the bank during the command economic system for which the bank failed to take remedial action and subsequently reported significant declines in receivables and failed to keep available resources revolving following the 1991 semi-liberalization economic policy reform by Ethiopian government that invited competitors(private banks) to the market in the areas previously under monopoly by the share company. The insensitivity of responsible financial experts towards timely observation of financial performance measures and remedial actions had also contributed its part.

Suggested Citation

  • Dejene Mamo Bekana (MBA) & Asres Abitie (MBA), 2012. "Evaluation Of Financial Performance Of Banking Enterprises; The Case Of Construction And Business Bank Of Ethiopia," Revista Tinerilor Economisti (The Young Economists Journal), University of Craiova, Faculty of Economics and Business Administration, vol. 1(18), pages 82-102, April.
  • Handle: RePEc:aio:rteyej:v:1:y:2012:i:18:p:82-102

    Download full text from publisher

    File URL:
    Download Restriction: no

    References listed on IDEAS

    1. Charnes, A. & Cooper, W. W. & Rhodes, E., 1978. "Measuring the efficiency of decision making units," European Journal of Operational Research, Elsevier, vol. 2(6), pages 429-444, November.
    2. Hartman, Thomas E. & Storbeck, James E. & Byrnes, Patricia, 2001. "Allocative efficiency in branch banking," European Journal of Operational Research, Elsevier, vol. 134(2), pages 232-242, October.
    3. Fried, Harold O. & Knox Lovell, C. A. & Eeckaut, Philippe Vanden, 1993. "Evaluating the performance of US credit unions," Journal of Banking & Finance, Elsevier, vol. 17(2-3), pages 251-265, April.
    Full references (including those not matched with items on IDEAS)

    More about this item


    banking enterprises; evaluation; financial; performance;

    JEL classification:

    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • G28 - Financial Economics - - Financial Institutions and Services - - - Government Policy and Regulation


    Access and download statistics


    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:aio:rteyej:v:1:y:2012:i:18:p:82-102. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Ionascu Costel). General contact details of provider: .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.