1 .

Introduction

1.1. BACKGROUND OF THE STUDY

Education is fundamental to enhancing the quality of human life and ensuring social and
economic progress. (Todaro and Smith, 2003). According to Todaro (2003), education is
among the key factors contributing the greater share to human capital development and
human capital development is the underlying issue of Economic progress. This suggestion
implies that critical investigation on educational situations and effective Educational policies
are crucial for the development of a society. Among this situation that need critical
investigation, evaluating the performance of Education at its different level is the important
one.

However, this paper needs to emphasize specifically on the evaluation of performance of

higher education. UNESCO considers higher education as a term used to mean regular
enrolment of students in colleges and universities (Mekedes; 2001:7).

As college students are one major components of higher education, evaluation of

performance of higher education can be done through investigating to factors that determines
college performance of students in higher education.

Performance of students can be in influenced by economic, social and cultural factors [LUL;
1998:1]. School environment, Individual and family back ground, parents' income and
educational level, student's ability, Students working (studying) hour, student's income and
sex are some factors that have direct or indirect impact on the performance of students. In
accordance with all factors affecting student's performance, the researcher would like to give
the highest emphasis to student's income level and its contribution to there college
performance.

However, when one focuses analysis of educational one on performance, it is difficult to

know what the criteria of judging it [LUI; 1998:1]. Analyzing the link between productivities
and efficiency with that of performance will provide answer to the above basic question.
Productivity denotes the trend of productiveness of the factors of production or a relationship
between out put and input over a period efficiency has a number of facets: the rate at which
inputs generate out put, the utilization of inputs to produce output and the potential output
which may be obtained from a specific inputs [David Bailey and Tony Hubert; 1980:101].
In analyzing efficiency of education a combined factors like school environment, individual
and family back ground, Social classes, parental income and educational level, student's
ability and initial level of learning and a variety of pear group pressure can be considered as
inputs of education and grade point averages (GPA) as out put of education. [Atkinson.
Hodder and Stoughton; 1983:124]. In doing so we can measure the degree of success of
students in achieving objectives (scoring good GPA which is out put of higher Education)
there by student's college performance which is influenced by some factors-inputs of
education. Because efficient use of inputs will give competitive out which is GPA in this case
and then lead to good performance.

1.2 STATEMENT OF THE PROBLEM

Education plays a key role in the ability of a developing country to absorb modern
technology and to develop the capacity for self-sustaining growth and development.
According to Todaro (2003), it is the only means of securing modern-sector employment.
Ethiopia as a developing nation faces money challenges on her development programs that
are designed to tackle the problems on some economic and social situations like
unemployment, poverty, Inequality in income distribution, education and etc. The education
sector as one of the component of economic development it also faces challenges to
contribute what it has to contribute.

When we come to higher education in Ethiopia, it has been constrained by so many

difficulties for too long. According to mekedes (2001) shortage of class rooms, inadequate
facilities, low quality provision of education are some difficulties that constrained higher
education in Ethiopia. Many facts reveal that in order to contribute its best to the country's
development level higher education should have good quality of education or appropriate
standard of education. Having this all facts in mind critical investigation on the performance
and out comes of higher education is unquestionable.

Education is a means of securing modern-sector employment and graduates of higher

education are considered as one of the outcomes of education. And hence modern-sector is
secured by graduates of higher education This implies that quality and performance of
graduates to the sector they employed and then to the economy. Graduates of such
institutions are supposed to influence the overall economic wellbeing through the decision
they make in their own profession. Having this fact in mined it is important to investigate
factors affecting performance of student's in higher education. The outcomes of there
decision on the overall economic wellbeing will depend on the quality of the decision they
made which is the relation of student's performance in colleges. Survey made in Addis Ababa
University's library specifically in FBE library and education libraries indicated that this
critical issue is left un examined and the few attempts are limited there scope. They only tried
to investigate situations like male-female performance differentials, problems and trends of
student's enrolment in higher education and etc. This paper basically needs to fill this gap
through examining specific factors affecting student's performance in colleges. Facts from
macro and micro economic theories like consumer choice behaviour and utility maximization
and individuals investment decisions in the money market suggests that income is an
important economic factor that influence behaviour of individuals in many aspects. So the
effects of income on student's performance will be the underlying interest in conducting this
study.

The other important thing which was concluded from the survey is that, all papers conducted
on the issue suffer from there methodological defects in analyzing the data they gathered.
While conducting the research, all papers and findings in the Libraries lacks use of
econometric the techniques which is the most important instrument lo analyze data for
economists. Econometrics is based up on the development of statistical methods for
estimating relation ship, testing economic theories and evaluating and implementing
government and business policy. Econometric methods are relevant in virtually every branch
of applied economics. [Jeffrely M. wooldrige; 10:1]. According to wooldrige through use of
empirical analysis which uses data to test a theory or to estimate a relationship, econometric
methods can be used to infer that one variable has a casual effect on the other When research
works are lacking econometric techniques faille to have a consolidated explanation for the
casual effect of one variable to the other which leads to mistaken conclusion and policy
recommendation. Therefore this paper tries to improve these methodological defects and tries
to reach on abetter conclusion and to give appropriate recommendation by utilizing
econometric techniques in analyzing the relationship between college GPA and the
influencing factors making income of student's interest of variables.

1.3 OBJECTIVE OF THE STUDY

1.3.1 GENERAL OBJECTIVE

The general objective of this study is to assess the impact of some major factors on students
college performance. After identifying the impact of these factors on college performance,
the study also tries to formulate mechanisms through which performance of students
enhanced.

1.3.1 SPECIFIC OBJECTIVES OF THE STUDY

The specific objective of the study will be as follows

A. identifying the effect of each variables on CGPA (cumulative grade point average)
by taking the case of students in AAU
B. Examining particularly the effect of student's income level on there CGPA holding
the influence of other factors constant which can be made possible through the use
of econometric techniques.
C. To give conclusion and some possible suggestions relating to the case at hand.

1.4 THE WORKING HYPOTHESISS

The study is based on the following two hypotheses.

A. Student's CGPA positively affected by there income level so that as there income
level increases there CGPA improves.
B. Student's income level in turn based on family's income level is high with that of low
family's education levels it contributes positively to student's income level.

1.5 SIGNIFICANCE OF THE STUDY

As tried to explain in the above sections graduates of universities have get enough power
to influence the wellbeing of overall economic situation through the decision they made
in there profession, Students who were performing well in school will graduate with
expected quality which able them to make decisions that can bring desired outcome. So
that there should be a strong need to investigate problems posed on college performance
of students. The result which will be obtained after analyzing set of data using
econometric methods can provide possible actions that should be taken by different
parties in the colleges.

Beside to this, the existing findings are old aged with there methodological defects and
this is another fact adding to the significance of the study.

1.6 SCOPE LIMITATION OF THE STUDY

In the study quality of information heavily depends on the willingness of the respondent
to co operate. The respondent may interpret a question differently from what was
intended to and he/she may deliberately give false information. In addition respondent
are reluctant to provide information on personal matters like family back ground, his/her
income level, his/her CGPA and the likes. To tackle these problems at the beginning of
the questionnaires there will be introduction which ensures confidentiality and which
encourage respondent's to give accurate reply. The study also based on students in few
specific faculties which able the researcher to give a short notice about the purpose of the
study before distributing the questionnaires each time the survey is made. The researcher
also tries to explain some questions that seem to be misleading. Therefore the problem of
respondent giving none or false information is tackled from this angle. The other thing to
note is that the result of the study will not lead to a generalized conclusion since it is a
specific case study. This paper therefore does not try to come up with conclusive result.

Some problems will also arise with use of econometric techniques as instrument to
analyze the data collected in conducting the study. The notion of citreous paribus which
means "other (relevant) factors being equal" plays an important role in causal analysis. If
we succeed in holding all other relevant factors fixed and then find link between
variables of interest, we can conclude that one variable has a casual effect on another.
However, except in very special cases it will not be possible to literally hold all else
equal. This problem can be solved by using different econometrics approach and by
making different realistic economic assumptions sampling the complication.

1.7 DATA SOURCE AND METHODOLOGY

1.7.1 SOURCE OF DATA

In this st6udy a cross sectional data will be used. According to Wooldridge a cross
sectional data set consists of sample of individuals at a given Pointe in time. As the study
entirely depends on data’s obtained from sample of individual's use of this data set is
appropriate using random sampling technique samples will be drawn from faculties of
business and economics (FBE) and from few selected faculties in the Maine campus of
AAU. The data collection considers all AAU's students who have complicated one
semester and above. This will be done to capture the desired variation of variables under
question.
The researcher planned to use questionnaires as a tool, to collector information on the
variables of the study most of the time a closed question format is used to reduce the
difficulty in coding and analyzing and to assure mutual exclusiveness.

1.7.2 METHOD OF ANALYSIS

In analyzing organizing and interpreting the data; tables Graphs different tactical
techniques (mean valance. Correlation) and econometric models will be the important
instruments. But econometric model should be the major instrument in analyzing data to
hit the central goal of this study and the model specification will be as follows. The first
step in an empirical analysis is specifying economic model which consists of
mathematical equation that describes various relation ship and the following is to
represent the economic model

A) CGPA = f(pcmon, satres, prob, age, punc, female)

B) CGPA= B. +B1 pcmon +B2 satres + Bß3 prob +B4 age +B5 punc +B6 female
+B7U

Where:

CGPA= cumulative grade point average

Pcmon = students' monthly pocket money

Satres = students' Scholastic Aptitude test scores

Prob = problems faced by students Age = students' age

Punc = punctuality of students in attending classes

Female = dummy variable accounting for female students

U = the error term

Ordinary Least Square (OLS) method for cross sectional data is used for estimating the
above model.

1.8 ORGANIZATION OF THE PAPER

This paper contains for chapters. Chapter one is introduction of the paper chapter two
will be literature survey and data presentation, regression and interpretation will be
included in chapter three. Chapter four will be conclusion and recommendation.

industrialized countries and concentrates in improving institutional quality and efficiency

in poorer countries (World Bank, 1990). This shows that it has no norm of it is own and
therefore it has to assume basic functions to the improvement of society, to the discovery
of truth to the dissemination of findings so that human kind in general and Africans in
particular may shed the shackles of ignorance. 2.1.2 Higher Education and Economic
Development According to Ralp Stinebrickner and Todd R. Stinebrickner (2009), the
most important outcome of education is development. The OECD 1964 publication
accounted Dr. Mushkin's three approaches which dealt with correlation of economic
contribution. The first approach is the investment yield at education growth (Shultz
Approach), which claims that education can have return which is greater than the cost
incurred to it. The second approach deals with the relation of educational growth to rising
income (The Dension Approach). Here the main idea is that a person is able to get a
greater income if he is educated. However, there are people who oppose this idea. They
claim that there are accidents of birth that makes some millionaire even though they were
not to school before (OECD, 1964: 51). The third approach deals with the relation of
man power needs and education (Vaizey approach). Here education has a role to play in
supplying the labor requirement for different work space in the economy. The opposing
view to this idea as accounted by the OCED 1964 publication is Poignat's elaim that the
qualification for different kinds of occupations rise as the number of graduates increases.
If this fact is true, education cannot be the main supplier for different work space
available in the economy when qualifications for different kinds of job rise with the rise
of number of graduates, graduates will fail to get a place to work with and education will
fail to be the main supplier in such a way. However, in most cases education is treated in
the least possible way (chabaid, 1970]. In many developing countries education is
oriented towards preparation for work in the modern urban sector and this can distorts
student's aspiration [Todaro, 2003]. 2.1.3 Determinants of Students Performance
Educational performance can be influenced by so many factors. Different researcher's
tried to identify different factors that have different influence on educational
performance. But this study focused on the following college performance determinants
by taking cumulative grade point average (CGPA) as a measure of educational
performance. * Educational outcomes of student's from low-income family Issues related
to schooling attainment of children form low income families arise frequently in current
education policy debates. There has been a specific increase in understanding why a very
high percentage of children from low income families do not graduate from college and
why the college graduatio n rates of children form low income families are substantially
lower than those of children from other families [Ralph Stinebrickner and Told r.
Strinebrickneer, 2009: 591]. Although these issues span the entire spectrums of schooling
levels, a recent increase in a relative wages of college graduates has contributed to a
particular interest in understanding two interrelated (stylized) fact's associated with
college with attainment. First a very high percentage of the children from low-income
families who graduate from high school do not graduate from college. Second among
high school graduates, the percentage of chilaren from low-income families who
graduate from college is substantiallv lower than the percentage of children from other
families who graduateReasons for Attrition Differences Between Income Groups It is
found to be important to asses Brea' (2003) regression result so as to examine the clear
cut effect of familiarly environment on student's college performance holding other
characteristics like person's inherent ability, school inputs For example , stinebrickner etc
constant. and stnebriekner's (2009), work took scholastic Aptitude Test (SAT) in the
regression model to capture a person's inherent ability at birth. In doing so, they tried to
explain the difference in retention rate along with different income group even in the
presence of full tuition subsidy. After having this all steps the regression result from Brea
Art College showed that, the coefficient on family income, 0.040, implies that the GPA
of an individual with a family income of $ 40,000 is on average 0.16 higher than an
individual with $ 0 of family income holding other observable characteristics constant.
Further, the coefficient is statistically significant with a t-statistic of 10.0. Although the
regression results are not shown, the effect of family income on term grade point average
is also significant (at a 0.10 level of significance or lower) for four of the subsequent five
semester with point estimate of 0.023,0.036, 0.041, 0.014, and 0.028. Thus income is a
significant predictor for cumulative grade point average and evidence form this study
revealed those low income individuals are at a disadvantage because of their family back
ground. Finally the work of stnebrickner and stinebrickner (2009) conclude that, the high
attrition rate at Bera college, where all students receive a füll tuition subsidy, exist often
occur for reasons that are unrelated to the direct cost of college. Given the statistically
significant and quantitatively large relationship that is found between family income and
performance at Brea reasons related to family environment are the most
importantdeterminants of the difference in college performance by family income that
have concisely been found in the literature. * College Performance of Student's From
Rural Areas Educational performance can be affected by different socio-economic
factors, and consequently, it will have different educational out-comes. Under this sub
title, the paper tries to determine the type of relationship between living in rural areas and
educational performance by examining the role of local opportunities in educational
performance of students. The attitude of individual parent's and peers about education
has a significant influence on academic performance. (David E.Broom Hall and Thomas
G.Johnson, 1994: 558). It is worthwhile to keep in mind that the socio economic
conditions exists in rural areas differs from those in urban areas. If all the above facts are
true student's academic achievement will be different in accordance with there living
area. I.e. living in urban and rural areas. According to Becker's (1975), Human capital
theory, education is one of the important components of human capital development.
This theory suggest that, individuals maximize the present value of their life time
earnings stream by perusing education up to the point at which the returns to additional
educations are no linger greater than the cost of obtaining the education. In reality,
individual decisions and behavior are based on expectations for the future. These
statements implies for two options, which are, working to earn income or investing in
education. Becker (1975) in his utility function stated that, if a set of assumptions about
rational behavior stated that, in the ranking and choice of various states holds true,
individuals always tries to maximize by makingEvaluation of Factors Influencing
Students Class attendance and performance Under this sub-title the paper tries to
examine the effect of student's behavior, teacher attribute and course characteristics on
elass attendance and performance. Student's absenteeism is a major concern for educators
at institution of higher learning. "Absenteeism disturb the dynamic teaching learning
environment and adversely affects the over all well-being of class. Absences create a
"dead' tiresome, unpleasant classroom environment that makes students who came to
class's fee uncomfortable and the instructor irritable" (Devadess and Foltz, 1996: 501).
Adding to the above idea, Romer (1993) found that students who attend only a quarter of
the lectures on average earned a 'C' grade while students who attend the entire lecture
earned a B*". Beside to this students attitude was the most important determinants of
learning and then to performance. Martin, studied reasons for large difference in
attendance rates while he was giving agricultural price course analysis and he explained
the difference by the following factors. First, because class sizes in agrieultural
economics are smaller than those in general economics, agricultural economics classes
provides opportunities for more frequent student-teacher interactions. Thus, students may
fecl there absence is more conspicuous in these smaller classes and, consequently, tend to
come class more frequently. Second, agricultural economics courses generally taken by a
relatively homogenous group of students specializing in that field, where as general
economics courses (particularly introductory courses) are comprised of more diversified
group of students from other disciplines who may be less enthusiastic than students
measuring in economics . (2.1.4 Theoretical Literature Review in Ethiopia The eventual
establishment of an Ethiopian university was fully intended by the Emperor Haile
Sellassie, as a necessary and logical age of education fabric he commended to build.
When on march 1950, Haile Sellassie laid the foundation stone of the university college
and as a Minster of Education; he issued the decree of its establishment. He made
abundantly clear that the college was to grow towards to full university: comprising all
the faculties appropriate to the university and awarding degress at all levels (Pankhurst ,
1958: 195). After the establishment of higher institutions such as AAU, the expansion of
education through higher education institutions observed in the country. But the
provision of higher education services was the main concern of the public only. The
present day government of Ethiopia is trying to expand the provision of higher education
service through allowing private investors who want to use their resources in h igher
institutions and through opening of new higher education institutions in various parts of
the country. These higher educational institutes undertake studies and researches which
are important to the economy and contribute to the increment of student's enrollment in
the higher education institutions. To be eligible for admission to a university, students
must have taken the Ethiopian school leaving certificate examinations (ESLCE) and
obtained the required point by the university. Ethiopian students (regular) admitted to the
university pay no fess for tuition or boarding since the establishment of the university in
1950. Different researches identified many problems related to higher education
institutions in Ethiopia. For example the existence of insufficient laboratories and
workshops for practical shows; the libraries are small in size and don't have enough and
up to date reading material that can enrich the skills of the student are still major
problems related to the higher education institution in Ethiopia (MOE, 1997: 6). As
Caleo(1968), indicated the higher education curriculum of Ethiopia was designed based
on the experience of other countries. He further stated that the higher education
curriculum of Ethiopia was designed based on the experience of other countries. He
further stated that the Ethiopian higher education curriculum is copied form that of Great
Britain and the United States. And this means the curriculum was not designed to deal
with the Ethiopian higher educational intension. This may imply the education system to
be not problem solving or need oriented. The curriculum also presented beyond the
student's level of was understanding which does not give the institutions towards creative
activities. As a result efforts of graduates of higher education institutions to help the
national development may not satisfactory (Mekdes, 2001: 23). The higher education
institutions in Ethiopia also found with problems related to economic situations. The
higher education system of a country is of course, shaped by its economic activity. It
must, therefore, reflect the economic realities of the country. For example the Ethiopian
economy is largely agrarian. So the higher education system of the country must provide
workers who can contribute to the country's agricultural productivity in the best way. As
economic factors affect the orientation and structure of higher education system, they
also influence its quality. In other words, the financial conditions a country concerning
higher education system, that is the percentage of national revenue devoted to the higher
education, may be an index of its dedication to educational excellence (Abdulatif, 1998:
143).Capital spending on higher education has increased from birr 7.4 million in 1990/91
to about birr 227 million in 1994/96.This is a remarkable improvement showing a 48.5
percent annual growth rate over the period 1990/91 to 1995/96.But an increase of
government on higher education does not mean that quality will increases. Because even
if the expenditureincreases it may not be used to address the existing problems of the
institutions such as lack of very well developed curriculum, shortage of up to date books,
etc. But it can help simply to undertake their day-to- day activities. As stated by
Fethanegetest (1997), in addition to the capital budget expenditure by the government
economic factors such as costs of education affects student's access to higher education
services and their performance. The costs are assumed to be direct cost and indirect.
Fethanegest (1997) further explained that direct costs are costs that an individual, his/her
family and/or the government incur during the period of the students education such as
the cost of books, exercise books and pen transport, clothing miscellaneous expanse etc.
The other cost is the indirect cost, which is explained as the earning forgone while
receiving higher education during the working age period (Ibid, 1997). Therefore, the
educational costs are the sum of direct and indirect costs. But what limits student's access
or enrollment in the higher education institutions is that of their ability to afford direct
cost or not. 2.2 Empirical Literature Review 2.2.1 An Empirical Model of Human Capital
!nvestment in Rural Areas. As Discussed in the above paragraphs a student's decision to
stay in school and to work hard will be determined in part, by his or her expectations
about opportunities with and without education. But an empirical model of human capital
investment in rural areas which is formulated by broomhall and Jhonsen (1994) started
its analysis by suggesting that, human capital decision also depends on individual test
and preference. Of particular importance are attitudes towards one's move away from the
community, community, the willingness to preference regarding employment in the
community's traditional occupations, and the utility gained directly from education.
These preferences must be carefully distinguished form expectations such as the
anticipated rate of return. Preferences are part of one's utilityFigure 1 illustrates this
process. On the right hand side are those community related factors that influence the
child's valuation of education, while on the left-hand side are family related factors. The
value that the child places on education is influenced by his or her own attitudes and
refer to such things as: attitudes about school; the willingness to remain in, or move out
of the community; and attitudes regarding the quality of life in the community. The
child's attitudes are influenced by his or her parents through the process of socialization.
The value that parents place on education together with socio-economic back ground,
personal characteristics, attitudes, and Childs expectations of local employinent
opportunities, influence the value that the child place on education. The value that the
child places on education determines in part, how well the child will perform in school.
A community factor in this instance refers to the institutional structure of education in
the community which facilitates learning. Achievement is also influenced by personnel
characteristics such as mental ability and gender. Previous studies have shown a high
correlation between socio-economic back ground and various measures of mental ability,
including academic performance (Bach man, 1970. 140). But this model used socio
economic background as a proxy for mental ability which warrants the relationship
between socio-economic background and educational performance in figure 1. From the
concept offered by human capital theory and the model of educational performance, two
empirically testable equations are derived . VC= + (S,C,M,Vp,Ac,Ec).. 1 Gc= +(C, M,
Vc).. . .2 Where F.B, E. V= Valuation of Education S Socio-economic Back ground
AIBRAYC-Community Influence A= Taste and Preference E= Employment Expectation
M= Personnel Characteristics G= Educational Performance P= Parent C= Child Of the
various hypothesized relationship in 1 and 2, four are of particular interest: A) Those
youths whose parents place a higher value on education will themselves place a higher
value on education than those youths whose parents place a lower value on education B)
The perceived availability at local employment opportunities influence the value that
youths place on education C) Those youths who are more willing to move place higher
value on education than those D) Those youths who place a higher value on education
exhibit higher educational performance. The three hypotheses are drawn from equation
(1) while the fourth follows form (2). 2.2.2 Result of the Empirical Models This model
used house hold income, parent's education, parent's occupation; whether the child lives
in a one parent family (dummy variables set equal to one for those children who live with
only one parents) as a measurement for socio-economic back ground. Community
variable was included by considering local job market than factors such as the local
unemployment rate it is expectations of future job opportunities that influence individual
decision making and not actual job opportunities. Student's cumulative grade point
average (GPA) wasused as measure of educational performance. Preference and
valuation measures also incorporated in some ways. The regression result of the model
helped to identify factors that influence educational performanne in rural communities
the empirical result supported that local joh opportunities influence the value that youth
people place on education The evidence also suggested that one's willingness to leave the
local community to obtain employment and the value that one's parent place on
education influence how the child value education. The major point that we can conclude
from the empirical results is that higher valuation of education of implies higher
educational performance. According to the result of empirical model, the relatively weak
performance of socio- economic variables indicates that family background may not be
such an impediment to improve educational performance as is generally believed
(Broomhall and Johnson, 1994). 2.2.3 Empirical Review: The Case of Ethiopia Even
though there is limited research works conducted on the issue, some researchers tried to
identify college performance affecting variables and their effect on educational
achievement on the Ethiopian higher educational context. In addition to the other
variables sex was found to be the main variable to educational performance in Ethiopia.
Male Female Performance Differential in AAU Not many but some studies tried to asses
main reasons for performance difference in AAU. For example Lul Alebachew (1998)
tried to identify some factors attributed performance difference by having a model with
ive variables:. And this work gave the greater emphasis to performancedependent
variable in the model. The regression result proved that women's performance has lagged
behind the male students. Girls CGPA was found to be lower than male students in some
selected faculties found in AAU (Lul Alebachew, 1998: 46). As generally believed, the
problems of female students are time constraints, physiological, social in nature which
indicate that they have an effect on the educational performance of female students.
Academic performance and Financial Position of students in AAU In Lul's work the
covariance between CGPA and students financial position was computed first to see the
association between this two variables. Accordingly the obtained covariance was 0.23 for
male students and 3.97 for female students. This indicates that the two variables have a
movement side by side. The obtained correlation was 0.003 and 0.131 for male and
female students consequently. This result indicates that the independent variable which is
monthly pocket money is positively related with CGPA. One thing mentioned as a reason
for the above fact is that students who are financially well established will become more
enabled to concentrate on their studies. The time deviation from their studies will be
lower because one of the difficulties of student's financial problem is already solved.
Academic Performance and time use of Students in AAU Performance which is the
output and time devoted to study per day, the input of education, are correlated for both
male and female students are 0.26 and 0.03 respectively (Lul, 1998). This result implies
there is a positive relation between the dependent and independent variable, the greater
approximation of correlation to 1 being for the male students. 3. Data Presentation and
Analysis 3.1 Introduction The education sector in Ethiopia has been facing problems ever
since it came into function. In the previous governments, both in the Imperial as well as
the Dergue regimes, a considerable emphasis has not been given for the problems that
were encountered by higher education. The first problem being the internal inefficiency
of the education system, which is characterized by extremely high dropout rate. Poor
quality in the Education system which retains instructors with unsatisfactory
qualification and availability of resources are also other problems that exist within the
Ethiopian Higher Education. There also exists external inefficiency which incorporates
problems related to the educated human resource supply and employment opportunities
similar to what happened in the late 1980's. Employment opportunities have direct
impact on students' valuation of education. When the labour market for educated (college
graduates) is inefficient, which means when the market fails to accommodate college
graduates, students will not have motivation to perform well in college. Low
performance of students attributes to low quality outcome of education. Apart from
employment, there are so many factors such as family backgrounds and students'
personal affinity towards educationn which has a direct impact on students' valuation of
education. The unfair 3.2. Data Source and Methodology The data utilized in this study
were collected from students in AAU, Faculty of Business and Economics, which
registered, in the academic year 2008/09, a total enrolment of 2,680 at undergraduate
level in both regular and extension programs. The sample for this study excluded
freshman students since we can not apply cumulative GPA as a measure of educational
performance for such students. Extension and post graduate students were also excluded
from the sample because most students in these programs are typically older and matured
than regular undergraduate students. In addition most of them earn sufficient income to
support themselves which is not a similar case when it comes to regular undergraduate
students. Hence exclusion of extension and postgraduate program students can enable the
study to examine the problem on similar grounds. Thus the final population size consists
of around 700 individual students i.e. graduating and third year students in the four
departments of Faculty of Business and economics. To investigate the effects of different
factors on college performance, 101 questionnaires were distributed to students enrolled
in the four departments of faculty of business and economics. To keep the randomness,
the questionnaires were distributed to students while they were following classes. Giving
emphasis on students' income level, the questionnaire survey attempted to gather
information on basic factors influencing cumulative GPA by raising 20 relevant
questions. While conducting the survey, failure on the side of the respondents to provide
the correct answer posed as a major problem. The researcher has tried to tackle this
problem by reassuring the respondents about the confidentiality of the survey. In
analyzing the data, the variables included in the questionnaire are assigned to be the
explanatory variables to the performance variationdistribution of education opportunity is
also a significant problem u(CGPA). As can be observed in the literature review or
model specification of this study, all explanatory and dependent variables are continuous.
Hence, by utilizing econometric analysis, data processing is done using simple Ordinary
Least Squares (OLS) econometric estimation modcl. The STATA version 9 software is
utilized by the researcher for this reason. 3.3 Model Specification and Expected Results
The literature section of the paper has incorporated different economic theories which
reflect relationships between the dependent and independent variables in the regression
model. 3.3.1. The Dependent variable Students' educational achievement /performance/
was taken as independent variable in the regression model. Based on concepts discussed
in the literature, students' cumulative grade point average (CGPA) is used as a proxy
measure of educational performance. 3.3.2. The Explanatory Variables Different
arguments and explanations that were discussed in detail in the literature review
facilitated the identification of the explanatory variables of the model. The researcher
believes that these variables can best explain the difference in school performance across
students. The explanatory variables can be broadly classified in to the following four
categories: like math's score on national examnination, result of verbal exams and result
of SAT exam a measure of IQ. According to Ethiopian as educational policy SAT exam
is offered at grade 12 national examination and SAT result is found to be a good measure
of IQ for this study. Based on the literature SAT result expected to be significant and
positive for CGPA. After giving the above explanation about the dependent and
independent variables, the model can be presented as follows: CGPA= B. +ß1 pcmon
+B2 satres + B3 prob +B4 %3D age +B5 punc +B6 female +B7U Where: CGPA=
cumulative grade point average Pcmon = students' monthly pocket money Satres
students' Scholastic Aptitude test scores Prob = problems faced by students Age =
students' age Punc = punctuality of students in attending classes Female dummy variable
accounting for female students U = the error term Ordinary Least Square (OLS) method
for cross sectional data is used for estimating the above model