Determinants Of Lending Behavior Of Banks A Case Study On Commercial Banks Of Ethiopia

This study investigated the determinants of commercial banks‟ lending behavior in the Ethiopianrncontext. The study aimed to test and confirm the effectiveness of the common determinants ofrncommercial banks lending behavior and how it affects the lending behavior of commercial banksrnin Ethiopia. Balanced fixed effect panel regression was used for the data of eight commercialrnbanks in the sample covered the period from 2001 to 2013. Seven factors affecting banks loanrnand advance were selected and analyzed. The results of panel data regression analysis showedrnthat volume of deposit and bank size had positive and significant impact on loan and advance.rnLiquidity ratio and interest rate had negative and significant impact on loan and advance. Cashrnreserve requirement, and inflation rate had positive and significant impact on loan and advancernbut the coefficient sign was not as expected. Real GDP growth rate had statistically insignificantrnimpact on bank‟s loan and advance. The study then suggests that commercial banks should focusrnon mobilizing more deposits as this will enhance their lending performance and should formulaterncritical, realistic and comprehensive strategic and financial plans

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