Determinants of Liquidity in Ethiopian Commercial Banks: The Case of Some Selected Commercial Banks.

Abstract

Abstract

The prime aim of this study was to investigate the determinants of Liquidity in Ethiopian Commercial Banks. The study covered the period 2012-2024 G.C and twelve commercial banks which selected based on purpose. Quantitative research approach and explanatory Research design was adopted. Secondary data was collected from the selected commercial banks, World Bank report and National Bank of Ethiopia. The data was analysed by using Eviews-9; both descriptive (mean and standard deviation) and inferential statistics (correlation and panel regressions) was employed.  The results of regression analysis revealed that among the incorporated independent variables: capital adequacy, return on asset and government expenditure has positive and statistically significant impact on liquidity with significance levels of 0.000, 0.000, and 0.000 respectively. The remaining variables have a negative and insignificant effect on liquidity. The research findings would have an insightful impact on different stakeholders like commercial banks in Ethiopia and policy makers like national bank of Ethiopia with respect to determinants of liquidity.  The study would contribute to knowledge gap and capacity building with respect to determinants of liquidity in Ethiopian Commercial banks.