Effect of E-Banking Service on Financial Performance of Commercial Banks: A Case of Selected Private Commercial Banks in Ethiopia

Research Aims: This study aims to analyze Effect of E-Banking Service on Financial Performance of Commercial Banks: A Case of Selected Private Commercial Banks in Ethiopia. The study investigates ATM, POS, IB, DC and MB banking service as independent variables to look at their effect on ROA and ROE as dependent variable measurements. Design/methodology/approach: The study collected a panel data from six private commercial banks such as Awash Bank S.C., Bank of Abyssinia, Dashen Bank, Cooperative Bank of Oromia, United Bank, and Zemen Bank S.C from 2018 to 2023 using purposive sampling. It employed a quantitative research approach combined with descriptive and explanatory research design. The panel data was analyzed using both fixed and random effect regression models with E-Views version 13 software. Research Findings: The study result revealed that the number of POS terminals negatively and significantly affects both ROA and ROE financial performance proxies, while ATMs, debit cards, and Internet banking positively and significantly impact both ROA and ROE, but mobile banking positively affects ROA; however, it negatively and significantly affects ROE. Theoretical Contribution/Originality: The study provides evidence of contradictory results regarding mobile and POS terminals to earlier research and contributes new insights specific to the Ethiopian banking context and it also contributes to the broader discourse on the role of technology in enhancing financial performance in emerging markets. Keywords: E-banking, Private Banks, ROA, ROE, Ethiopia.