Financial Innovation and Its Effect on Financial Performance: The Case of Commercial Bank of Ethiopia, Nekemte Town Branches

Gudata Abara Chali

doi:10.56741/IISTR.jmsd.002018

Authors

Gudata Abara Chali
gudataa@gmail.com
Wallaga University https://orcid.org/0000-0001-8761-7545

DOI:

https://doi.org/10.56741/IISTR.jmsd.002018

Keywords:

Commercial Bank of Ethiopia, Financial Innovation, Financial Performance, Mobile Banking, Remittance Technology

Abstract

This study examines the effect of financial innovation on the financial performance of the Commercial Bank of Ethiopia (CBE) in Nekemte Town. As banking shifts toward revenue-oriented digital strategies, identifying high-impact technologies is essential. A census survey of 56 branch managers and vice-managers from ten branches was analyzed using Pearson correlation and multiple regression (SPSS 26). Five innovation dimensions were evaluated: product innovation, process innovation, mobile banking, technology transfer, and remittance technology. Findings reveal that remittance technology is the strongest predictor of financial performance (β = 0.661, p < 0.01), followed by process innovation (β = 0.213) and mobile banking (β = 0.193). The regression model explains 92.7% of performance variance (R² = 0.927), indicating substantial explanatory power. The results suggest that profitability in regional markets depends largely on efficient payment and fund transfer systems. The study recommends expanding digital onboarding services and exploring blockchain solutions to reduce transaction costs and strengthen competitive advantage.

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Author Biography

Gudata Abara Chali, Wallaga University

is a researcher and assistant professor affiliated with the Department of Management at Wallaga University in Nekemte, Oromia, Ethiopia. He focuses his work on management topics with a particular emphasis on leadership styles and their impact on employee performance within Ethiopia’s public sector. Based in Nekemte, he communicates research findings and collaborates with colleagues to advance understanding of how transformational leadership influences organizational outcomes in public institutions. (email: gudataa@gmail.com).

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