EFFECT OF RISK MANAGEMENT ON BANKS’ FINANCIAL PERFORMANCE: EVIDENCES FROM ETHIOPIAN COMMERCIAL BANKS

The purpose of this study was to examine the effect of risk Management aspects such as, managing credit risk, managing operational risk, managing Liquidly risk and managing Market risk on Financial performance (Return on asset and Return on equity) of banking sectors in Ethiopia. The data of five years from 17 Ethiopian commercial banks was taken and the regression result showed that non performing loan ratio and Loan Loss Provision Ratio (Managing Credit risk) has significantly impact both Return On Asset and Return On Equity but Capital adequacy ratio has significance only if financial performance is measured by ROA. Loan to deposit ratio, exchange rate and inflation rate didn't indicated significance effect on Ethiopian commercial banks