The Impact of Deposit Mobilization and Loan Disbursement on Financial Performance of Commercial Banks in case of Ethiopia
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Date
2018-05
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Addis Ababa University
Abstract
Mobilization of deposits is one of the important functions of banking business and it is an
important source of working fund for the bank. On the other hand, performance of banking
industry may be gauged through value of deposit and loan. The aim of this research is to
investigate the impact of deposit mobilization and loan disbursement on Bank’s financial
performance using seven years data from the year 2010 to 2016 with a sample of thirteen
Ethiopian commercial banks. The relevant literature was reviewed for the purposes of this study.
Explanatory research design was used in trying to establish the causal effect relationship
between the independent variables (amount of mobilized deposit, amount of disbursed loan and
none performing loan) including the control variable (bank size) and the dependent variable
(Return on Asset). To get information about the selected variables secondary data was collected
from the NBE. The study utilized both correlation and panel data with multiple regression
method as data analysis in drawing conclusions about the study. The findings of the study
shows that amount of mobilized deposit, amount of disbursed loan and bank size had positive
and significant impact on the performance of Ethiopian commercial banks. On the other hand,
none performing loan had a negative and insignificant impact on banks performance. Based on
the findings and conclusion the recommends that banks should attract depositors and deposit by
providing convenience accessible banking (through expanding number of branches, introduce
and enhance E-banking such as internet banking, card banking and mobile banking), quality
service( Improving employees knowledge and skills on banking product and customer service)
Description
A thesis submitted to the department of Accounting and Finance in
partial fulfillment of the requirements for the award of Master of
Business administration (MBA) On Financial Service
Keywords
Commercial banks, Deposit mobilization and Loan disbursement, Ethiopia, Financial Performance