Browsing by Author "Taye, Haile"

Now showing 1 - 1 of 1
  • No Thumbnail Available
    Item
    Determinants of Private Commercial Banks Lending in Ethiopia
    (A.A.U, 2020-06) Taye, Haile; Sewale, Abate (Phd)
    The objective of the study was to investigate the determinant factors of private commercial banks lending in Ethiopia. Balanced panel data was collected from audited annual financial statements of private commercial banks, National Bank of Ethiopia (NBE) and Ministry of Finance (MoF) to analyze the bank-specific determinants as well as the macroeconomic determinants of private commercial banks lending. The collected balanced panel data was analyzed with descriptive statistics, and multiple linear regression analysis. Random effect panel regression model was used for the data of ten private commercial banks in Ethiopia for the sample covered the period from 2009 to 2018. Ten explanatory variables that affect banks lending were selected and analyzed with STATA 11 econometrics software package. The results of panel data regression analysis showed that Capital adequacy ratio (CAR), Volume of deposit (VD), Return on Asset(ROA) and Lending interest rate(LIR) had positive and statistically significant effect on bank’s lending .Credit risk(CR), Cash reserve requirement (CRr) and Liquidity ratio(LQr) had negative and statistically significant effect on bank’s lending. Management quality (MQ), Gross Domestic Product (GDP), and Inflation rate (INFr) had negative correlation but statistically insignificant with commercial banks lending. The study suggests that Ethiopian private commercial banks should/need to work more to improve their volume of deposit, capitalization, reduce their credit risks and consider macroeconomic environment when extend loans.