Beyond branches and interest rates: determinants of deposit mobilization in ethiopian banks

Deposit mobilization is fundamental to the stability and growth of commercial banks, yet its determinants in emerging economies like Ethiopia remain underexplored. This study investigates the long-run drivers of deposit mobilization using panel data from 17 Ethiopian commercial banks over the period 2014–2024, yielding 187 bank-year observations. The Augmented Mean Group estimator is employed, with Driscoll–Kraay standard errors applied for robustness. The analysis considers deposit interest rates, population growth, unemployment, liquidity, number of branches, and profitability. Results indicate that deposit interest rates exert a strong positive and statistically significant effect on deposit mobilization (β = 0.244, p < 0.001), while population growth has a significant negative effect (β = −1.218, p < 0.01). Liquidity (β = 0.218, p = 0.485), profitability (β = 0.059, p = 0.087), unemployment (β = 0.071, p = 0.263), and branch expansion (β = 0.001, p = 0.238) are not statistically significant at conventional levels, although profitability is weakly significant at the 10% level. A formal structural-break analysis rejects the null hypothesis of no break after 2019 (F(5, 16) = 54.26, p < 0.001). The unemployment–deposit relationship shifted from positive before 2019 (β = 0.603, p < 0.001) to negative after 2019 (implied β = −0.525, t = − 4.98, p < 0.001), while the branch–deposit relationship weakened significantly (interaction β = −0.001, p = 0.009). By providing recent bank-level evidence with an estimator that accommodates parameter heterogeneity and common dynamic effects, and by documenting a post-2019 regime change, the study contributes to the literature on financial intermediation in developing economies. Practical implications include competitive deposit pricing, monitoring the changing role of branch networks, and supportive policy frameworks for sustainable deposit mobilization in Ethiopia.