Factors Affecting Deposit Growth of Selected Private Commercial Banks in Ethiopia

This paper investigates the macroeconomic and bank-specific determinants of deposit growth in twelve Ethiopian private commercial banks over 2013–2022 using a balanced panel of annual observations. We estimate panel regressions and conduct robustness checks to test the effects of GDP growth, inflation, government expenditure, Treasury-bill rate, foreign remittance growth, branch expansion, capital adequacy, and customer growth on banks’ deposit growth. Our preferred specifications (fixed-effects with clustered standard errors) show that higher customer growth, stronger capital adequacy and greater foreign remittances are robustly associated with higher deposit growth; Treasury-bill rates are positively related to deposits in some specifications, while government expenditure is negatively associated with deposit growth. We discuss plausible channels and policy implications for banks and monetary authorities, and we perform sensitivity checks using alternative estimators and diagnostic tests to ensure the reliability of inference. The paper contributes to the scarce empirical evidence on private bank deposit dynamics in Ethiopia by combining a ten-year panel with new macro variables (T-bill rate and government expenditure) and clarifying methodological choices for panel analysis.