Abstract:
In the world of finance, deposit mobilization refers to the process employed by banks and other
financial institutions to encourage people to deposit their money. This study investigates the
factors affecting deposit mobilization in commercial banks in Ethiopia using panel data for the
period of 2019-2023 on selected ten banks through purposive sampling based on the availability
of data required for this study in which More banks have this period data . The research employs
a multiple linear regression model to identify the key drivers and potential roadblocks for the
deposits’ expansion. The analysis identifies variables which positively and negatively influences
deposit mobilization. Increases in return on asset, return on equity, net interest rate, capital and
service, gross domestic product are all correlated with positively. This suggests increasing these
variables has a crucial role in propelling the forward bank growth. However, Inflation and
exchange rate are negatively impacting the deposit mobilization. This highlights the need for
measures to control inflation and exchange rate. Based on these findings, the study offers
valuable recommendations for policymakers aiming to accelerate and sustain the banks’ deposit
mobilization. These recommendations focus on mitigating inflation rate as well as exchange rate
and increasing gross domestic product, return on asset, return on equity, net interest rate and
capital and service. More study is advised to establish a causal relationship in order to reinforce
the relationship between deposit mobilization tactics and financial institution attributes.
Ultimately, this will facilitate the development of a more robust and efficient deposit mobilization
landscape by enabling policymakers to create more focused and effective actions that directly
address the unique strengths and limitations of various institutions.
