Determinants Of Lending Decision Of Private Commercial Banks Ethiopia

The main objective of this study was to examine the determinants of lending decisions of private commercial banks in Ethiopia from year 2011 to 2020.The study used panel data of eight private commercial banks of Ethiopia selected purposively. The study applied explanatory research design and secondary data were analyzed through multiple linear regression models of the bank’s lending decision; Loan and advance (LOA). Random effect regression model were applied to analyze the effect of asset quality, capital adequacy, liquidity, lending interest rate, money supply, return on equity and volume of deposit on lending decision of private commercial banks. The finding of the study indicates that volume of deposit, Liquidity, Capital adequacy, Money supply and asset quality have significant effect on lending decisions of private commercial banks in Ethiopia, Whereas, return on equity and Interest rate have insignificant effect on lending decisions of private commercial banks in Ethiopia.

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