Factors Affecting Deposit Mobilization In Selected Commercial Banks In Ethiopia

Abstract

Deposit mobilization is a critical function of commercial banks, as it supports credit creation, enhances liquidity, and contributes to overall financial sector stability. This study investigates the key determinants influencing deposit mobilization in selected commercial banks in Ethiopia over the period 2019 2023.Using a quantitative research approach, panel data were collected from six banks Cooperative Bank of Oromia, Abay Bank, Nib International Bank, Berhan Bank, Awash Bank, and Commercial Bank of Ethiopia. The analysis employed the Fixed Effects Model (FEM), selected based on diagnostic tests including the Hausman test, to control for unobserved heterogeneity. The findings indicate that internal factors such as Return on Assets (ROA), number of branches (BRCH), and capital adequacy (CAPT) have a statistically significant and positive impact on deposit mobilization. Additionally, macroeconomic variables such as Real Gross Domestic Product (RGDP) growth and interest rates also exert a significant positive influence. Based on these results, the study recommends that banks should expand their branch networks, enhance profitability, and strengthen their capital positions. Furthermore, policymakers are encouraged to maintain macroeconomic stability and adopt interest rate policies that promote savings behavior and financial inclusion