Determinant Of Lending Decision Of Private Commercial Banks In Ethiopia

Abstract

The study was aimed to investigate the determinant of lending decision of private commercial banks in Ethiopian’ lending or loan and advances in the period eleven years from 2011/12 to 2021/22. In order to achieve research objective the researcher used exploratory research design & descriptive and quantitative research approach. The analyses were performed using panel data derived from the financial statements of sampled Ethiopian private commercial banks. A random effect (RE) model was applied to determine the factor affect independent variable on dependent variables in private commercial bank lending by using latest stata version 14.6. In the study return on asset, return on equity, volume of deposit, interest income, liquidity of asset, GDP growth, exchange rate, and exchange rate, and inflation of the country were considered as independent variables whereas private commercial banks’ lending or loan and advances was considered as dependent variable. The correlation findings provided enough evidence to suggest that there was linear relationship between gross domestic products, deposit, exchange rate, interest income, and liquidity with loan and advance of the selected private commercial banks.