DETERMINANT OF BANKING SECTOR DEVELOPMENT IN ETHIOPIA

Abstract

The aim of this study was to investigate the effect of bank-specific and macroeconomic determinants of banking sector development in Ethiopian. The study was selected seven banks from year 2008 to 2017. The study was used an explanatory type of research design and it would be use secondary financial data. Random effect regression model was applied to examine the impact of management efficiency, financial openness, trade openness, economic growth rate and inflation rate on banking sector development. Credit to growth domestic product rate (CTGDPR) was use as a measure of banking sector development. The major examining of the study would be showing that inflation rate was statistically insignificant and positive relationship with banks’ sector development. Financial openness, trade openness and management efficiency have a positive and statistically significant relationship with banks’ sector development. Also the relationship for economic growth rate was found to be negative relationship with banks sector development and statistically significant.