The Role of Banks’ Deposit Mobilization and Credit Financing on Capital Formation in Ethiopia
| dc.contributor.advisor | Berhanu, Habtamu (PhD) | |
| dc.contributor.author | Lemma, Muluneh | |
| dc.date.accessioned | 2018-06-28T11:42:35Z | |
| dc.date.accessioned | 2023-11-08T14:37:16Z | |
| dc.date.available | 2018-06-28T11:42:35Z | |
| dc.date.available | 2023-11-08T14:37:16Z | |
| dc.date.issued | 2015-06 | |
| dc.description.abstract | Capital formation or real investment is an essential component for economic development and growth. Capital formation may take place for many reasons. In any of the cases, capital formation or real investment can only be realized if adequate funds are available. To finance investment required for economic growth and capital formation, the economy needs to generate sufficient savings. This requires an institutional arrangement that encourages savings, which will result into productive investment. Bank play vital role in the economic development of a country by promoting capital formation through rising of the financial resources. These savings are made available to the businessman; make use of them for productive purposes in the country. Therefore, banks’ participation in the financial sector of developing nations raises many questions which remain unanswered. Key among them is the issue of how effective they have been in mobilizing domestic savings and in channeling the savings to enhance capital formation through the distribution of credit. Thus, this research paper investigated the role of bank deposit mobilization and credit financing in Capita Formation of banking industry in Ethiopia. The study was undertaken based on an ordinary least square (OLS) model by employing annual time series data of 21 years for the period of 1994 t0 2014. The study used Gross fixed capital formation (GFCF) as dependent variable, representing bank credit (BC), bank deposit (BD), bank investment (BI) as independent variables, and national saving (NS) and real interest rate (RIR) as control variables . The findings of analysis showed that bank deposit, bank credit and national saving has a great role on capital formation in Ethiopia since the coefficients of the variables are statistically significant. However; bank investment and real interest rate become insignificant effect on capital formation in Ethiopia, since the coefficients of the variables are turned out to be statistically insignificant. Therefore; Needless to mention, Ethiopia needs to continuously build a strong cooperation between banks and all concerned government bodies in order to take the major role to sustain the saving culture through financial literacy, should design and implement credit policy that promotes capital formation in the economy in order to finance medium and long term projects, and also enhance banks to contribute significant role on security portfolio investment in a country that leads to capital formation which is an essential component for economic development and growth. Key Words: Capital formation, banking industry in Ethiopia, Bank Deposit, Bank Credit | en_US |
| dc.identifier.uri | http://etd.aau.edu.et/handle/123456789/4641 | |
| dc.language.iso | en_US | en_US |
| dc.publisher | Addis Ababa University | en_US |
| dc.subject | Capital formation | en_US |
| dc.subject | Banking industry in ethiopia | en_US |
| dc.subject | Bank deposit | en_US |
| dc.subject | Bank credit | en_US |
| dc.title | The Role of Banks’ Deposit Mobilization and Credit Financing on Capital Formation in Ethiopia | en_US |
| dc.type | Thesis | en_US |