Determinants of Bank Lending Rates: Empirical Study on Commercial Banks in Ethiopia
| dc.contributor.advisor | Sewale, Abate (PhD) | |
| dc.contributor.author | Habtamu, Amsalu | |
| dc.date.accessioned | 2019-03-24T08:43:48Z | |
| dc.date.accessioned | 2023-11-04T09:03:22Z | |
| dc.date.available | 2019-03-24T08:43:48Z | |
| dc.date.available | 2023-11-04T09:03:22Z | |
| dc.date.issued | 2019-03 | |
| dc.description.abstract | This study investigates and analyzes bank-specific variables and external determinant factors of lending rates of commercial banks‟ in Ethiopia. Seven factors (five bank specific and two macroeconomic factors) affecting banks lending rate were identified and analyzed. Internal factors selected under this study consists of several aspects such as operating expenses, deposit rate, non-interest income, liquidity and asset size, while external variables included are GDP and inflation. Thirteen commercial banks have been the subject for the study ranging from the period 2010 to 2017. A quantitative research approach and explanatory design were adopted in carrying out this research. The study had employed panel data estimation techniques to analyze the influence of bank specific and macroeconomic factors on lending rate. The random effect panel regression technique was applied to estimate the model using the econometric software package EViews 9. The results indicate that lending rates are significantly impacted by variables associated with higher cost structures or lower income. The results of balanced random effect panel data regression analysis showed that operating costs, deposit rate, liquidity, asset size and GDP have a positive and statistically significant relationship with lending rate. On the other hand, non-interest income has negative and statistically significant effect on lending rate, suggesting that variable that help improve bank‟s income tend to benefit borrowers by lowering the interest they pay. The findings of the study also showed negative and significant relationship among inflation and lending rate of Ethiopian commercial banks. The findings of this study indicated that bank policies that reduce bank costs and strategies that improve bank‟s non interest income will help to lower the cost of borrowing. | en_US |
| dc.identifier.uri | http://etd.aau.edu.et/handle/123456789/17136 | |
| dc.language.iso | en_US | en_US |
| dc.publisher | Addis Ababa University | en_US |
| dc.subject | Ethiopian Commercial Banks | en_US |
| dc.subject | Determinants of Lending Rate | en_US |
| dc.subject | Lending Rate | en_US |
| dc.title | Determinants of Bank Lending Rates: Empirical Study on Commercial Banks in Ethiopia | en_US |
| dc.type | Thesis | en_US |