Assessment of Banks Liquidity: Empirical Evidence on Ethiopian Commercial Banks

Abstract

The purpose of this study is to identify the impact of macroeconomic factors on liquidity of Ethiopian commercial banks. The data covered the period from 2007-2013 for the sample of ten commercial banks in Ethiopia and used secondary data. Macro-economic variables were analyzed by employing the balanced panel fixed effect regression model and the result of the study revealed that real GDP growth rate have negative and statistically significant impacts on liquidity of Ethiopian commercial banks whereas inflation rate, and interest rate margin were found to be statistically insignificant/ has no any impact on liquidity of Ethiopian commercial banks for the tested period.

Keywords: Balanced panel data, Ethiopian commercial banks, macro-economic variables