Determinants of Commercial Bank Deposits in Ethiopia: A Case of Commercial Bank of Ethiopia

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Addis Ababa University


The survival of every commercial bank highly depends on bank deposit because deposit mobilization is a major activity of all commercial banks. As the result, the issue of banks deposit and its determinants is crucial to the financial sector of developing country like Ethiopia. Therefore, this study aimed to identify and evaluate those factors affecting bank deposit in general by taking Commercial Bank of Ethiopia as evidence. Accordingly, the researcher adopts mixed research approach. The rationale of using such a mixed approach is to gather data that could not be obtained by adopting a single method.Regarding to the qualitative data; questionnaire is used to gather information from the employees of commercial bank of Ethiopia particularly for those employees who actively participated in deposit mobilization tasks in CBE city branches. Regarding to the secondary data; time series data covering 1998 - 2014 was analyzed. First, the time series data were assessed using descriptive statistics for the variables as well as the test for heteroskedasticity, autocorrelation and normality testing to know if the assumptions of CLRM violated or not. Second, estimated model was a single regression equation with deposit as the dependent variable and explanatory variables as deposit interest rate, overall inflation rate, number of branch opening, gross domestic product, individual foreign remittance and dummy variable. Estimation was done using Ordinary Least Squares technique by E-views7 statistical package. The results from economic analysis showed that all the explanatory variables were positively correlated with the explained variable. Among these variables, branch opening is an important strategy for deposit mobilization, it is highly significant than others. Individual remittances from diasporas is also next to branch opening is significantly affects CBE’s deposit. The others are affects positively and can increase CBE’s deposit. And finally, the study had recommended what should be done to encouraging deposits growth by Commercial bank of Ethiopia for the benefit of the domestic deposit mobilization. Key words: Commercial Banks, Bank Deposits, Determinants of bank deposits



Commercial Banks, Bank deposits, Determinants of bank deposits