Factors Determining Deposit Mobilization Performance: In the Case of Private Commercial Banks in Ethiopia
No Thumbnail Available
Date
2016-10
Authors
Journal Title
Journal ISSN
Volume Title
Publisher
Addis Ababa University
Abstract
The aim of this study is to examine factors influencing deposit mobilization in private commercial banks in Ethiopia. In doing so, the study adopted quantitative methods research approach using secondary data. The study had found variables that can affect the total deposits of the banks. Seven variables are regressed with the dependent variable i.e. total deposit. The explanatory variables are number of bank branches, deposit interest rate, liquid asset to deposit ratio, lagged value of bank deposits, net interest margin, inflation rate and economic growth (GDP). The data for these variables were collected from the respective private commercial banks’ financial statements, national bank of Ethiopia, central statistical authority and MOFEC of the sample year 2005 up to 2015. Different diagnostic test were performed to know whether the model is valid or not. All the tests were valid and eventually regression analysis was performed using Eview statistical package. The result from regression analysis showed that number of bank branches, deposit interest rate, net interest margin and GDP were significantly and positively correlated with the explained variable. Lagged value of bank deposit was significantly and negatively correlated with total deposit. However, liquid asset to deposit ratio and inflation rate were insignificantly negatively correlated with bank deposit. Finally the study had recommended what should be done to mobilize more deposits.
Description
Keywords
Deposit Mobilization Performance