Factors Affecting Deposit Mobilization In Selected Commercial Banks In Ethiopia (Panel Data Analysis

Abstract

Main area of banking system for depository institutions those are commercial banks is Deposit mobilization with the objective of maximizing profit with loan provision. This study was conducted with the general objective of analyzing the determinants of deposit mobilization for selected commercial banks in Ethiopia. The variables identified are both internal (Bank specific) and external factors at macro level. The study used panel data for six commercial banks namely, Cooperative bank of Oromia, Abay Bank, Nib International bank, Berhan International bank, Awash International Bank and Commercial Bank of Ethiopia. The year span used for the study were 2019-2023 due to data availability problem consistently for some banks. In this study, Fixed Effect Model was used for regression analysis. Accordingly, the study identified return on asset, banks branches and capital adequacy as statistically and significantly affecting the deposit mobilization of banks from bank specific factors at 1% level of significance. Similarly, Real Gross Domestic Product (RGDP) and Interest rate are among external macroeconomic variables affecting deposit mobilization of banks at 1% of significance level positively. Based on the findings, banks by themselves should expand their branches as much as possible, and maximizing their capital and return on assets are also important. For macro variables, government should improve the economic activity of a country and National Bank of Ethiopia should fix appropriate interest rate for banks and for economy as general