Dereje, Melkamu2018-06-272023-11-082018-06-272023-11-082015-05http://etd.aau.edu.et/handle/123456789/4182The central objective of the study to empirically investigate the impact of commercial banks’ development in the Ethiopian economic growth. To undertake this study, six explanatory variables were considered namely deposit, loan and advances, assets, government expenditure, export and inflation rate. The first three were indicators of development of commercial banks and considered as main independent variables whereas the last three were control variables. The present research has adopted mixed research approaches. Therefore, the study used both secondary and primary sources of data. The current study considers total population of eighteen commercial banks, which are currently operating in Ethiopian banking industry. Of the total population eight commercial banks were selected using purposive/ deliberate sampling techniques. For this study unit root tests, co integration and granger causality tests were conducted. Thus, the study w used both Augmented Dickey Fuller (ADF) test and Philip Perron (PP) unit root test. The result suggested that except RGDP and ASSET all variables were stationary at level whereas when they are first difference all variables were stationary. The study has conducted Johansson co integration test to know whether variables have long run association ship so the result indicated a long run relationship among variables. Moreover, the study conducted granger causality test to know causality among variables and found that deposit has granger cause economic growth, economic growth granger cause loan and advances and no casual relationship is found among economic growth and asset. The study adopted different analysis techniques include descriptive statistics and multivariate regression analysis. The study found that a positive and significant relationship among economic growth, deposit and loan and advances whereas negative and significant association ship between economic growth and bank size i.e. asset. Furthermore, in relation to control variables both inflation and exports have been positively and significantly associated with economic growth while the study has found negative and significant relationship between economic growth and government expenditures. Finally, to maintain and sustain economic growth all stakeholders to whom concerned should have to pay a paramount attention for commercial banks considering their influence in the overall economic prospects. In addition, wistful government expenditures has to be eradicated, exports has to be encouraged and target inflation need to be maintain in order to realize dramatic economic growth in the country Ethiopia. was Key words: Ethiopia, commercial banks, economic growth, commercial banks’ deven-USEthiopiaCommercial banksEconomic growthCommercial banksThe Relationship between Commercial Banks’ Development Economic and Growth in EthiopiaThesis