| Abstract: | The study focused on examining the determinants of commercial banks deposit evidence
from Ethiopia. In order to achieve this objective the study adopted quantitative methods
of research approach using secondary data. Six explanatory variables were regressed
with dependent variable (total deposit). The explanatory variables are number of bank
branches, deposit interest rate, capital adequacy, liquid asset to deposit, economic
growth (GDP) and inflation. The data for these variables were collected from the
selected commercial banks financial statements, national bank of Ethiopia, and MoFEC
from the year 1999/2000-2015/16. Seven commercial banks out of the seventeen
commercial banks operating in Ethiopia in existence as of 2017 have purposively been
selected for the study. Different diagnostic tests were performed to determine the validity
of the model. The final result achieved by using pane date, number of bank branches,
deposit interest rate, and GDP has positive and statistically significant impact on banks
deposit.; whereas liquid asset to deposit and inflation has negative and statistically
insignificant impact; capital adequacy has negative and significant impact on deposit.
The study recommends commercial banks have to reach the unbanked area to increase
deposit. The bank managers should be responsive to risk associated with changing macro
economic factors like inflation and GDP. NBE should make periodic supervision and
check capital strength of banks. The government should come up with consistent policies
regarding proper setting of liquid asset to deposit ratio. |
