Abstract:
Deposit is one of the resources that commercial banks are highly motivated to get it, and the
most liquid money that is found in the treasury of a bank. As a result, the survival of every
commercial banks is highly dependent on deposit. Poor deposit growth in commercial Banks
lead to inability to disburse loans to qualifying members on demand, inability to meet
operationcosts, inability to service debts etc. Therefore, managing and controlling deposit is
essential for commercial banks to be competitive and attractive. The growth of deposit in
Ethiopian private commercial banks is at its infant stage and historically been low and also
their deposit is not sufficient to meet the required credit as compared to CBE. The main
objective of this study was to empirically examine the macro-economic and bank specific
determinants of deposit growth in Ethiopian private commercial banks. A longitudinal/panel
secondary dataset was used in this study. This study covers those Ethiopian private
commercial banks having available data during the period of 2010/11-2020/21. Explanatory
research design, quantitative research approach, post positivism paradigm and OLS
estimation technique wereemployed to examine the effect of explanatory variables (real GDP
growth, deposit rate, exchange rate, inflation, population growth and branch expansion rate)
on the dependent variable (deposit growth). Ten private commercial banks in Ethiopia were
selected purposively. The CLRM assumptions such as heteroskedasticity, normality,
multicollinearity etc. were tested. The results from the panel multiple linear regression model
revealed that real GDP growth, deposit rate, inflation, population growth and branch
expansion rate had statistically significant and positive effect on deposit growth, in the
contrary exchange rate had positive but insignificant effect on deposit growth. Finally, the
researcher recommends that there shall be stable economic growth, stable inflation,
competitive and attractive deposit interest rate, aggressive branch expansions, and healthy
population growth
