Determinants of Deposit Mobilization in Private Commercial Banks of Ethiopia

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This paper empirically examines the determinants of Deposit mobilization in private commercial banks of Ethiopia for the period 2009-2018. From total of sixteen private Banks which are engaged in commercial bank activities, seven private commercial banks selected. To arrive on generalized idea the researcher used combination of banks service years and availability of data to achieve the maximum number of observations through purposive sampling technique. Out of sixteen commercial banks that are registered and operated in Ethiopia, seven are selected. The selection method was based on year of establishment and availability of data. The sampled commercial Banks were Awash International Bank S.C, Dashen Bank S.C, Bank of Abyssinia S.C, Wegagen Bank S.C, United Bank S.C, Nib International Bank S.C, and Lion international bank. The researcher employed quantitative research methodology and techniques using an econometric model and Descriptive Analysis in order to address the research questions. Multiple regression using OLS (Ordinary Least Square) estimates of the dependent(Total Deposit growth) and independent four external variables Inflation, Deposit interest rate, Broad Money Supply, Growth per capita GDP and two internal factors Return on equity and loan to deposit ratio were employed. Different diagnostic tests (test for assumption of Heteroscedasticity using estathettest, specification error using linktest, multicollinearity using correlation matrix) were conducted to check the appropriateness of the model. The result reveal that deposit interest rate and growth per capita GDP are positively and statistically significant on bank deposit growth; whereas, inflation rate, return on equity, broad money supply and loan to deposit ratio (bank’s liquidity) influence is negatively and statistically significant on bank deposit growth. The research recommends that Government should decrease supply of broad money to the economy, device mechanism to control inflation, increase deposit interest rate and give more attention to investment and private commercial banks loan to deposit ratio to be kept minimum.


A Thesis Submitted to the School of Graduate Studies of Addis Ababa University in Partial Fulfilment of the Requirements for the Degree of Master in Accounting and Finance Distance education program in Accounting and finance


Bank deposit growth, External Determinants, Internal Determinants, Regression Analysis, Private commercial Banks