Determinants of Deposit Mobilization: in The Case of Selected Private Commercial Banks in Ethiopia
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Date
2025-05-08
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A.A.U
Abstract
Deposit mobilization is the primary source for banking business to secure their existence. The
objective of this study was to examine the determinants of deposit mobilization for selected
private commercial banks in Ethiopia. For the purpose of this study, eight private commercial
banks were selected based on some of them selected based on their year of establishment and
others selected based on current performance. To achieve this objective, fifteen year data from
2009 to 2023 was collected and encoded in to stata accordingly. In order to conduct this study,
the researcher used six independent variables namely branch expansion, bank liquidity, bank
profitability growth, deposit interest rate, inflation rate and per capita income. While conducting
this research, the researcher employed quantitative research approach and explanatory research
design. The researcher used a purposive sampling technique. Fixed effect model the models
account for time-invariant unobserved factors within individuals was used for data analysis.
Branch expansion, bank liquidity, deposit interest rate and per capita income positively related
on deposit mobilization at 5% significant level. Whereas inflation had a statically significant
negative effect on deposit mobilization at 5% significant level. Bank profitability insignificant
positively effect on deposit mobilization. Finally, the researcher recommended that private
commercial banks included in the study should expand their branch around the rural areas of the
country, specifically in small town areas of the country. Furthermore, the researcher also
recommended these private commercial banks to maximize their bank liquidity position by
managing current asset to current liability and should understand macroeconomic variable and
effect on deposit mobilization as much as possible to attract additional customer and deposit.