• Macroeconomic and Bank-Specific Determinants of Deposit Mobilization in Ethiopian Commercial Banks

    Author(s):

    Teshome Mengstu Mekonen1, Gurudutta Pradeep Japee2, Debesay Birsat3, Poulos Gebray4


    teshomy221@gmail.com
    2026-03-07 16:25:44

    1 Downloads 3 Views

    Abstract

    This study analyzes how macroeconomic and bank-specific factors shape deposit mo bilization in Ethiopian commercial banks. Using a balanced panel of 16 purposively se lected banks over 2013–2022, data were compiled from the National Bank of Ethiopia, the Central Statistical Authority, and the Ministry of Finance and Economic Coop eration. Employing Stata 14, we estimated fixed-effects panel regressions, chosen via the Hausman specification test. Results indicate that the loan-to-deposit ratio, cap ital adequacy ratio, annual inflation, bank size, and real GDP each exert a positive and statistically significant effect on deposit mobilization. By contrast, the deposit interest rate exhibits a negative and significant association with deposits, while the liquidity ratio is positive but not statistically significant. These findings suggest that, beyond price-based competition on deposit rates, banks can expand their deposit base by deepening intermediation (responsibly growing loans), strengthening capital posi tions, scaling operations, and leveraging favorable macroeconomic conditions. Ensur ing adequate though not excessive liquidity is important for depositor confidence, but alone may be insufficient to drive deposit growth. The study offers actionable guid ance for bank managers and policymakers seeking to accelerate deposit mobilization while safeguarding stability and inclusion in Ethiopia’s banking system.

    Keywords
    Commercial banks, deposit mobilization, macroeconomic determinants, bank-specific factors, and panel data

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