African Journal of
Business Management

  • Abbreviation: Afr. J. Bus. Manage.
  • Language: English
  • ISSN: 1993-8233
  • DOI: 10.5897/AJBM
  • Start Year: 2007
  • Published Articles: 3959

Full Length Research Paper

Measurement of bank profitability, risk and efficiency: The case of the Commercial Bank of Eritrea and Housing and Commerce Bank of Eritrea

Fitsum Ghebregiorgis*
  • Fitsum Ghebregiorgis*
  • Department of Business Management and Marketing, College of Business and Economics, P. O. Box 3963 Asmara, Eritrea.
  • Google Scholar
Asmerom Atewebrhan
  • Asmerom Atewebrhan
  • Department of Accounting, College of Business and Economics, P. O. Box 3963 Asmara, Eritrea.
  • Google Scholar


  •  Received: 08 April 2016
  •  Accepted: 11 September 2016
  •  Published: 28 November 2016

Abstract

This study aims at measuring the profitability, risk, and efficiency of the banking sector in Eritrea. In this study, performance is measured in terms of profits generated, risk, and efficiency. We have employed the major financial ratio analysis to evaluate the performance of the Commercial Bank of Eritrea and the Housing and Commerce Bank of Eritrea. The results obtained indicate that both banks generally are not scoring significant improvement of their respective performances throughout the sample period (1997-2007), as it is indicated by most of the profitability, risk, and efficiency measures. It is obvious that a number of bank specific factors like size, ownership, capital structure, equity, age, and experience significantly affect bank’s performance.

Key words: Bank profitability, risk, and efficiency, commercial banks, and housing and commerce bank, Eritrea.