Determinants of Deposit mobilization of selected Private Commercial Banks in Ethiopia

Abstract

The main objective of this study is to examine factors affecting deposit mobilization of selected private banks in Ethiopia. For this study the panel data of selected 13 private commercial banks have been observed over 12 years (2011-2022). To achieve the research objectives, an explanatory research design and a quantitative research approach were used. The study employed both descriptive and econometric analysis. Stata 15.0 was used for estimation purpose. Before estimation, the data was checked for normality, multicolinarity, heteroscedasticity, autocorrelation problems. In addition, Augmented Dickey–Fuller test was used to check stationary of data the panel data. Regression result shows that two bank specific variables such as bank credit risk and bank liquidity have negative and significant effect on deposit mobilization of private commercial bank of Ethiopia. Whereas real GDP and inflation rate has positive and significant effect on deposit mobilization of private commercial banks in Ethiopia at 1% level of significant. On the other hands, exchange rate and bank profitability have no significant effect on deposit mobilization of private commercial banks. The study suggests that Ethiopian commercial banks need to improve deposit mobilization by paying more attention to bank specific factors such as bank credit risk and bank liquidity.