Abstract:
This study explores the key determinants influencing deposit mobilization in Ethiopian private
commercial banks, a crucial function that ensures liquidity, promotes financial intermediation,
and fosters economic growth. Despite its importance, private banks in Ethiopia face ongoing
challenges in mobilizing deposits effectively. Previous studies have mainly focused on the
Commercial Bank of Ethiopia, leaving a critical research gap regarding private commercial
banks operating under varying institutional and structural conditions. To address this, the study
adopts a quantitative research design using secondary data from financial reports of commercial
banks, the National Bank of Ethiopia, and other financial publications. Using Fixed Effect
regression models, the study examines the impact of variables such as Gross Domestic Product,
net interest margin, return on average asset, and return on average equity, liquidity ratio, loanto-
deposit ratio, inflation, and exchange rate on deposit mobilization. Data analysis was
conducted using STATA14 and EViews9 software to ensure statistical rigor. The results reveal
that GDP, net interest margin, return on average asset and equity, liquidity ratio, and loan-todeposit
ratio positively influence deposit mobilization, emphasizing the importance of
macroeconomic stability and strong bank performance. In contrast, inflation and exchange rate
volatility negatively affect deposit accumulation by reducing the real value of savings and
encouraging foreign currency preferences. Based on these findings, the study recommends that
policymakers focus on stabilizing inflation and exchange rates, while banks should enhance
profitability, improve liquidity management, and offer innovative deposit products. Furthermore,
expanding financial inclusion through digital banking and branch networks is suggested to
increase deposit mobilization. Overall, the study contributes meaningful insights into deposit
mobilization dynamics in Ethiopia and offers strategic recommendations for strengthening
financial stability and enhancing the operational effectiveness of private commercial banks
