Paper Title
The Influence of Economic Factors on Profitability of Commercial Banks

Abstract
Bank failure is a problem in many countries, worldwide the years, 2007-2013, marked a new wave of bank failure, this period was characterized by high unpredictability and serious consequences due to lack of the effective of analysis of economic factors. The general objective of this study was to analyze the effect of economic factors on profitability of commercial banks in Rwanda. The researcher used the descriptive and analytical design, the target population in this study was 112 including four executives, 12 head of departments, 26 Managers, 70 branch managers. The sample size of population under study was composed by three executives, nine heads of department, 20 managers of main branch and 70 branch managers, sample size was 88 respondents. In collecting secondary data, annual reports were used. Researcher used financial reports of 2010 – 2015 for secondary data. Qualitative and quantitative techniques to get primary data for the research was used, where questionnaire and interview were used. The Statistical Package for Social Sciences (SPSS) and Excel were used in this study. The study revealed that capital adequacy correlate negatively to return on assets, return on equity, net interest margin, where r = -0.655; -258 respectively -0.699. Assets quality correlate negatively to return on assets, return on equity, net interest margin, where r = -0.598; -488 respectively -0.527. Efficiency management correlates positively to return on assets, return on equity, net interest margin, where r = 0.12; 0.609 respectively 0.143. Liquidity correlates positively to return on assets, negatively to return on equity, and positively to net interest margin, where r = 0.432; 0.005 respectively 0.269. Real GDP growth rate correlates negatively to return on assets, return on equity, net interest margin, where r = -0.295; 0.598 respectively- 0.533. Average annual inflation rate correlates negatively to return on assets, return on equity, net interest margin, where r = -0. 0000940 (this figure indicated that correlation between average annual inflation rate and return on equity was around zero); -0. 644 respectively- 0. 669. The study recommended that commercial banks should comply with banking rules and regulations related to economic factors to optimize the influences of external factors to their profitability. Key words- Banks, commercial banks, Economic, Economic factors, internal factors, external factors, profitability.