ST.

MARY'S UNIVERSITY

SCHOOL OF GRADUATE STUDIES

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RESEARCH TITLE: THE IMPACT OF ASSET DIVERSIFICATION ON FINANCIAL

PERFORMANCE OF PRIVATE BANKS IN ETHIOPIA.

Major Thematic Area: Financial Performance of Private Banks in Ethiopia

Sub-thematic: The Impact of Asset Diversification

Concept Note:

Introduction:

The financial performance of private banks plays a crucial role in the overall economic development of
Ethiopia. As competition intensifies in the banking sector, private banks need to explore strategies that can
enhance their profitability and stability. One potential strategy is asset diversification, which involves spreading
investments across different asset classes to manage risks and generate higher returns. This concept note aims to
explore the impact of asset diversification on the financial performance of private banks in Ethiopia.

Research Objectives:

1. To examine the levels of asset diversification among private banks in Ethiopia.

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2. To analyze the relationship between asset diversification and financial performance indicators, such as return
on assets (ROA) and return on equity (ROE), of private banks in Ethiopia.

3. To identify the challenges and opportunities associated with implementing asset diversification in the
Ethiopian banking sector.

4. To provide recommendations for private banks in Ethiopia on effectively utilizing asset diversification to
enhance their financial performance.

Methodology:

This research will adopt a quantitative approach, utilizing both primary and secondary data. Primary data will
be collected through structured questionnaires distributed to private banks in Ethiopia, aiming to assess their
asset diversification strategies and financial performance indicators. Secondary data will be collected from
financial reports, academic journals, and relevant publications. Statistical analysis, such as correlation and
regression analysis, will be used to analyze the data and test the relationship between asset diversification and
financial performance.

Expected Outcomes:

1. A comprehensive understanding of the current levels and patterns of asset diversification among private
banks in Ethiopia.

2. Insights into the impact of asset diversification on financial performance indicators of private banks, such as
ROA and ROE.

3. Identification of the challenges and opportunities associated with implementing asset diversification in the
Ethiopian banking sector.

4. Practical recommendations for private banks in Ethiopia on how to effectively implement asset
diversification to enhance their financial performance.

Significance:

This research will contribute to the existing knowledge on the relationship between asset diversification and
financial performance of private banks in Ethiopia. It will provide valuable insights for private banks,

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regulators, and policymakers in understanding the potential benefits of asset diversification and addressing the
challenges associated with its implementation. Ultimately, the findings of this study can serve as a roadmap for
private banks in Ethiopia to optimize their investment strategies and improve their financial performance.

Conclusion:

The impact of asset diversification on the financial performance of private banks in Ethiopia is a pertinent area
of research. The findings of this study will provide valuable insights into the efficacy of asset diversification
strategies in enhancing profitability and stability in the banking sector. Ultimately, this research aims to
contribute to the overall development and growth of private banks in Ethiopia, thereby facilitating the economic
progress of the country.

RESEARCH TITLE : THE IMPACT OF DIGITALIZATION ON BANK PROFITABILITY: THE

CASE OF SELECTED COMMERCIAL BANKS IN ETHIOPIA

MAJOR THEMATIC AREA:

The major thematic area of this research study revolves around exploring the impact of digitalization on bank
profitability in Ethiopia.

Sub-thematic:

Within the major thematic area, the sub-thematic focus will be on selected private banks in Ethiopia. This
implies that the study will specifically analyze the selected private banks and their profitability in relation to
digitalization.

Concept Note:

This research aims to comprehensively examine the influence of digitalization on the profitability of selected
private banks in Ethiopia. With the advancement of technology and the increasing reliance on digital platforms,
the banking sector has witnessed significant transformations. The adoption and integration of digital

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technologies have altered traditional banking practices and revolutionized the way financial services are
provided.

In this context, the study will investigate the extent to which the digitalization initiatives undertaken by selected
private banks have influenced their profitability. It will delve into various aspects such as the implementation of
digital banking channels, the deployment of innovative financial technologies, and the adoption of online
banking systems.

The research will employ a mixed-methods approach to collect and analyze both qualitative and quantitative
data. Primary data will be collected through interviews, surveys, and focus group discussions with bank
employees, managers, and customers. Secondary data will be sourced from annual reports, financial statements,
and other relevant published materials.

The findings of this research are expected to provide valuable insights into the relationship between
digitalization and bank profitability in the context of Ethiopia. The results will not only contribute to the
existing literature but will also offer practical recommendations for policymakers, bank executives, and other
stakeholders on how to optimize the benefits of digitalization and enhance bank profitability.

Overall, this study aims to contribute to the knowledge base on the impact of digitalization in the banking
sector, specifically within the Ethiopian context. By focusing on selected private banks, it will offer an in-depth
understanding of the challenges, opportunities, and strategies related to digital transformation in the Ethiopian
banking industry.

RESEARCH TITLE: ASSESSMENT OF CREDIT RISK MANAGEMENT PRACTICE IN THE

BANKING INDUSTRY THE CASE OF BANK OF ABYSSINIA

MAJOR THEMATIC AREA: Credit Risk Management Practice in the Banking Industry

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Sub-thematic: The Case of Bank of Abyssinia

Concept Note:

Introduction:

This concept note outlines the proposed research study on credit risk management practices in the
banking industry, focusing specifically on the case of Bank of Abyssinia. Credit risk, defined as the
potential for financial loss due to borrowers' failure to repay their obligations, is a critical concern for
banks, as it affects their profitability and stability. Effective credit risk management is paramount for
banks to maintain a healthy loan portfolio and mitigate potential losses. This study aims to assess the
credit risk management practices of Bank of Abyssinia and provide valuable insights and
recommendations for improvement.

Background and Rationale:

The banking industry plays a crucial role in the economic development of countries by channeling funds
to various sectors. However, lending activities expose banks to credit risk, which can stem from factors
such as borrower default, economic downturns, and inadequate. Therefore, it is imperative to evaluate
the credit risk management practices of individual banks to ensure their resilience in the face of financial
challenges.

Bank of Abyssinia, one of the leading commercial banks in Ethiopia, has a substantial loan portfolio.
Understanding the bank's credit risk management practices is of great importance to ensure its long-
term stability and contribution to Ethiopia's economic growth. By conducting a comprehensive
assessment, this study aims to identify strengths and weaknesses in credit risk management and provide
suggestions to enhance the bank's risk mitigation strategies.

Objectives:

1. To evaluate the existing credit risk management framework employed by Bank of Abyssinia.

2. To identify the key challenges and potential vulnerabilities in the credit risk management process.

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3. To analyze the effectiveness of credit risk measurement tools and methodologies utilized by the bank.

4. To examine the credit underwriting practices and loan portfolio diversification strategies of the bank.

5. To recommend best practices and strategies for enhancing credit risk management at Bank of
Abyssinia.

Methodology:

This research study will adopt a mixed-methods approach, combining both qualitative and quantitative
research methods. The study will gather primary data through structured interviews and surveys with
key bank officials responsible for credit risk management. Additionally, secondary data from the bank's
annual reports, financial statements, and internal credit risk management documentation will be
analyzed. The qualitative data will be analyzed thematically, while quantitative data will be subjected to
statistical analysis for a comprehensive evaluation of credit risk management practices.

Expected Outputs:

This research study aims to produce the following outputs:

1. A comprehensive assessment report on the credit risk management practices of Bank of Abyssinia.

2. Identification of key strengths and weaknesses in the bank's credit risk management framework.

3. Recommendations for enhancing credit risk management strategies and practices.

4. Contribution to the body of knowledge on credit risk management in the banking industry,
particularly in the Ethiopian context.

Conclusion:

This research study intends to shed light on the credit risk management practices of Bank of Abyssinia,
helping the bank identify areas of improvement and strengthen its risk mitigation strategies. By assessing
the existing framework, challenges, and potential vulnerabilities, this study aims to contribute to the
overall understanding of credit risk management in the banking industry. The findings and

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recommendations drawn from this study can serve as a guideline for both Bank of Abyssinia and other
financial institutions facing similar challenges in credit risk management.