Macroeconomic Factors Influencing Deposit Mobilization of Commercial Banks

Deposit mobilization plays a vital role in the operations of commercial banks, facilitating financial intermediation and fostering economic development. This study delves into the impact of key macroeconomic factors on the deposit mobilization performance of commercial banks within the context of a developing economy. Through the application of panel data regression analysis, the research explores the dynamics between deposit mobilization and various macroeconomic variables, including inflation, interest rates, real GDP, exchange rates, monetary supply, and GDP per capita. The results indicate that both inflation and the monetary supply (measured by the M2/GDP ratio) exert a statistically significant negative effect on deposit mobilization. Furthermore, the investment deposit ratio also demonstrates a notable negative relationship with deposit mobilization. Conversely, GDP per capita shows a marginally significant positive correlation with deposit mobilization. The study includes a thorough descriptive analysis of the macroeconomic environment, assessing trends in inflation, exchange rates, real GDP growth, interest rates, and the expansion of money supply. This contextual review highlights a mixed macroeconomic landscape characterized by both favorable and adverse factors, which likely impact the deposit mobilization performance of commercial banks. The findings from this research offer valuable insights for policymakers and stakeholders within the banking sector. By informing the development of strategic initiatives aimed at promoting financial inclusion, enhancing asset-liability management practices, and bolstering the resilience of the banking system, stakeholders can effectively address the identified macroeconomic determinants influencing deposit mobilization.