assets are the most important for most banks. Money and earning interest income
in return, are usually paid back as equated monthly installments. The bank also
has an interest cost for earning this interest component. An uncollectible loan
for the banking business is not only a loss of revenue but also loss of capital
which specifically describe the uncollectible interest receivable as the loss
of revenue and uncollectible principal as the loss of capital (Podder and AIMarnun,
2004). A1 

financial performance is adversely affected by the level of NPLs have been
widely used as a measure of asset quality among 
lending institutions and are often associated with failures and financial
crises in both the developed and developing countries, because the loans
supposed to be earned interest for financial institutions like banks, will turn
to burden for the banks by adding additional cost in order to manage those collaterals
until it will disposed in the form of sailing A2 by
auction or transferring the loan to other interested borrower by receiving a
small part of the loans and rescheduling it again as a new loan. This will
affects the quarterly, semi-annually, and annually income of the banks. As a result,
the investment decision will be changed (Guy, 2011).

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instance, the biggest state owned Commercial Bank of Ethiopia (CBE) reported
NPLs of 53% of its total loan (NBE report, 2012). In the same year the two
private banks Awash International Bank (AIB) and Bank of Abyssinia (BOA) also
reported NPLs of 25% and 28.5% respectively (NBE report, 2012). Eventually, the
government of Ethiopia being worried about the potential crisis associated with
credit risk, though imposed restriction on the proportion of NPLs not to exceed
5% of their total loan outstanding (NBE, 2008). Despite this, ratio of NPL for
Cooperative Bank of Oromia (CBO) stood at 10.50% on December 31, 2014 which is relatively
very high when compared with the set threshold or the industry average. On the
other hand, during the same period banks like Lion International, Zemen, Oromia
International, Birhan International and Buna International banks have had an
average of less than 4.08% NPL ratio (NBE report, 2014). In Ethiopia there are
a good number of studies that examine the factors  affect NPL like Wondimagegnehu, Gadise (2012),
Gezu (2014) and Gebru (2015). The study of Wondimagegnehu was examined bank
specific factors affecting NPLs and the research of Gadise notified mainly on
tax rate and bank specific factors like loan to deposit ratio, ROE, ROA and
capital adequacy ratio by fixed effect model. Gebru (2015) indicated on poor
credit analysis on the part of lending banks, unsound lending practices,
failure in loan monitoring and follow-up, borrowers’ undesired culture, compromised
integrity, fund diversion, and the like are the major causes of NPLs.

there are number of empirical studies conducted on commercial banks in Ethiopia
that has intensively investigated the relationship between the factors and NPLs.
?The findings of the studies identified that the determinants of NPL which have
categorized under Macro level and specific to the bank are; Inflation, GDP,
Unemployment rate, foreign currency exchange poor credit assessment, failed loan
monitoring, Under developed credit culture, lenient credit terms and
conditions, aggressive lending, Compromised integrity, weak institutional
capacity, poor auditing practices of the society, government regulation, unfair
competition among banks, willful default by borrowers  and their knowledge limitation, fund
diversion for unintended purpose, over/under financing by banks and lending
rate, effective tax rate , loan to deposit ratio, capital adequacy, ROA and ROEA3 .

the determinants of NPL’s are many and more the researcher will study the
relevant and timely determinants as well as their positive and negative effect on
NPL focusing on both macro and bank specific variables which are GDP, Inflation
Rate, Lending rate ,Exchange Rate, bank Size Liquidity, Loan growth and Earning
ability. The reason that the researcher gives due attention for the above mentioned
variables is that those variables will enable the researcher to examine the
factors of NPL broadly and interchangeably, and also most of the researchers
focuses only on one of the categorized determinants either macro or bank
specific, both bank specific and macro level determinants has not been exhaustively
examined by the other researchers, additionally, most of the focus area of
research relies on state owned commercial banks the above mentioned factors
initiate the researcher to examine both selected bank specific and macro level determinants
of NPLs on focusing private commercial banks operating in Ethiopia. In light of
the research gap the purpose of this study is to examine the determinants of
NPLs in Ethiopian private commercial banks, to this end  this study will  provide real information about the determining
factors affecting NPLs of private commercial banks and feasible recommendation
for the impact of identified variables on the levels of NPLs.A4 

repetitions and unrelated concepts with your theme should be corrected.

this word is?


shallow paragraph. Your reason should be based on evidences (previous studies).
Show what factors are examined so far and variables yet be examined.


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