Factors Affecting Deposit Mobilization practices of Ethiopian Banking Sector

Abstract

This study investigates the factors influencing deposit growth in Ethiopian commercial banks between 2010 and 2022. Ten senior banks were selected from a pool of 31 active commercial banks. Secondary data was gathered from bank annual reports and the National Bank of Ethiopia (NBE). Employing a quantitative research approach and a balanced panel fixed-effects regression model, the study analyzes both bank-specific and macroeconomic variables. The findings highlight the positive and statistically significant impacts of branch expansion, total loans and advances, net interest margin, bank liquidity, and bank size on deposit growth. Conversely, bank profitability demonstrated a negative and significant influence. While GDP, money supply, and inflation exhibited insignificant positive effects. Lastly depending on result of finding all commercial banks can always paying their attention on bank specific factors rather than macro-economic factors because deposit is highly affected by bank specific factors. From the macro economic factors money supply have significant impact on deposit during issuing of new notes government should a complain strong policy and procedure unless money laundry(ML) ,financial terrorism(FT) and forged note(FN) may also established they totally affect deposit of the banks.