to table 4.1, all variables comprised 100 observations and the NPL measured used
in this study by outstanding principal balance of loans past due more than 90
days to outstanding principal balance of loan. During the previous Ten
consecutive years (2006-2016) private Commercial banks in Ethiopia incurred
9.8% NPLs on averages from its total loan which is above the requirement of 5%
(National Bank of Ethiopia, 2008) and for comparison purpose of its spread the
value of the standard deviation was 9.94 percent. Then as per the
aforementioned statistics of NPLs Ethiopian private commercial banks? loan
failure is a big problem. In the sample period NPL was ranged from 0.24 % to
41.5% the minimum and maximum value respectively and it has a mean of
9.8%.Among the sampled banks incurred 41.5 cents of NPL for a single birr
outstanding principal balance of loan which was in excess of the average 30%
NPLs recorded in sub-Saharan African countries during the 1990s financial
crisis (Fofack, 2005). On the other hand, the least NPL of the sampled banks incurred
0.24 cents of NPL for a single birr outstanding principal balance of loan. This
implies that high ratio of NPLs in banking system or rising tendency leads to a
decrease in the profitability and capital adequacy ratio of the banks and
negatively effects economic growth of the country.

relation to the explanatory variables such as GDP, INFL, EXG, LR, BS, LG, LIQ
and EA tell us some remarkable statistics that have to be mentioned. Among the
Bank Specific Independent variables bank size was measured by natural log of
total asset. Mean value of the size was 22.5 and the maximum and minimum values
were birr 276,286 million and birr 1,073 million for Awash International Bank
(2015) and United Bank (2006) respectively. And also there was a difference
between other Ethiopian private commercial banks asset size because of the
standard deviation of 1.4. The average total assets of Ethiopian private commercial
banks have shown consistent growth throughout the studied period. Hence, the
larger bank size induces economy of scale there by making larger banks more
profitable and will reduce the cost of gathering and processing information.
Since larger banks are more able to solve problems of information asymmetry in
comparison to their smaller counterparts. Skilled employees and quality information
bases, larger banks are more effective in credit analysis and monitoring their
debtors. Therefore larger banks have the positive impact of the banks and the
country’s economy. The second bank specific Determinants is Loan growth was
measured as the annual percentage change in total loans & advances and this
showed a mean of 17.19%. This indicates that, on average, growth rate was
17.59% during the ten years period and growth of total loan throughout the
sample period were ranged from -12.29% to 45.3% with standard deviation of
10.53%. The 10.53% of standard deviation indicates the existence of high
variation in growth rate among private commercial banks in Ethiopia. This implies
that private commercial Banks of Ethiopia have been utilized the liquid assets
effectively and efficiently and not retained more liquid assets which is above
20% deposits ( NBE 2007) and the banks generate income from credit facilities
to borrowers.

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mean value of liquidity of Ethiopian private commercial banks shown as 24% and
standard deviation of 5.5 percent. The study indicated that liquidity of
private commercial banks are decreased for the last 10 years due to increased
of credit facilities and for intended it may happen liquidity risk. Earning
Ability is the last bank specific explanatory variables which are measured by
net income to total asset of the respective private commercial banks. Mean of
the return was indicated 2.64 percent with the standard deviation of 1.2%.Which
specified that the profitability variation between the sample banks were very
small. This implies that during the study period Ethiopian private commercial
banks have highly competition each other by its service and products, and the
credit risk also have similar quality among the banks. Thereby these banks
require to use advanced technology to optimize the use of their assets to
increase the return on their assets. For the total sample banks, the maximum
and minimum values of Return on asset was ranged from 6.19% to -2.1% That means
the most profitable bank among the sampled banks earned 6.19% of profit after
tax for a single birr invested in the assets of the firm. On the other hand,
the least profitable of the sampled banks incurred loss of -2.1 cents for each
birr invested in the assets of the firm. The other independent variables are
macroeconomic indicators that can affect banks NPL over time. The mean value
of inflation was 12.89% and standard deviation of 12.02% the inflation rate of
the country over the past ten years was recorded from 36.4% (2009) to -10.5% (2002).A1 
This indicates that inflation rate was highly dispersed within the study
periods. This implies that due to non moderate inflation rate it arise unsound
economy and it is challenged to enhance the economic growth by mobilizing the
resource of the country (NBE, 2009).Economic policy keep the price of different
products as a result inflation rate is decreased for the last five years (NBE, 2015
Audited report).

per the table 4.1 mentioned the mean value of GDP growth rate is 9.1% ,
standard deviation of 4% and the maximum and minimum value was tells us 12.64% (2005)
and – 2.1% (2003) A2 respectively.
This indicates that the economic growth during the previous ten years remains
sounded and the result of this stable economic growth could have possible
impact for Ethiopian private commercial banks and the country. Exchange rate
shown that standard deviation was 4.438, mean value of 12.51 and maximum and
minimum value revealed 20.09 and 12.51 respectively. Unlike GDP, INFL and other
variables used in this study, EXG rate had the higher standard deviation (4.438).This
implies that the foreign exchange rate in Ethiopia during the study period remains
highly unsound. Since the country’s currency highly devaluated and during the period
the banks client specially importers are highly disputed and failed to repay
the required bank loan repayments. The last independent macro variable is
lending rate. The mean value of lending rate was 11.65% and this is the lowest
standard deviation of 0.8%. The lending rate of the country over the past ten years
was recorded from 12.75% to 10.5%.This highly stable lending rate implies that
the banks profit increased and has a positive impact for the country’s economic

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