Factors Affecting Deposit Mobilization: The Case Of Commercial Banks Of Ethiopia

Abstract

The purpose of this study is to determine the factors affecting deposit mobilization of commercial banks in Ethiopia. The purpose of this study was to examine factors affecting deposit mobilization of commercial banks in Ethiopia. The researcher used a purposive sampling technique to select those commercial banks of Ethiopia. The data covered from the period 2012-2021 was used for analysis. The data was collected from annual report of bank, annual report of national bank of Ethiopia. Since the data was continuous in nature, a quantitative approach was used. From multiple linear regression models, fixed effects estimation technique was employed for regression analysis. Except life expectancy rate and branch expansion rate, all variable were statically significant at 5% significant level. Customer growth rate, capital adequacy, branch expansion, profitability, life expectancy rate and deposit interest rate affect deposit mobilization of commercial banks positively, whereas, the impact saving growth rate was negative. The researcher concluded that, customer growth rate, deposit interest rate, profitability, GDP growth rate and capital adequacy were the most powerful variables which affect deposit growth rate of private commercial banks in Ethiopia. Finally, the researcher recommended that those commercial banks should build their image to attract more customers and government should give a little bit of freedom to those commercial banks to increase their deposit interest rate