FACTORS AFFECTING LOAN DISBURSEMENT IN COMMERCIAL BANKS OF ETHIOPIA

Abstract

The specific objective of this study was to investigate the determinant factors affecting loan disbursement of selected commercial banks in Ethiopia. The research employed a quantitative approach, utilizing descriptive and explanatory research designs, and panel data was collected from the annual financial reports of eight sampled commercial banks from 2010-2022. Secondary data were collected from seven private and one publicly-owned commercial bank in Ethiopia using purposive sampling, and the data were analyzed using descriptive statistics, correlation, and regression analysis. Since the sample was not randomly selected, the study used a fixed-effect regression model, which was determined to be the appropriate model based on Hausman and Wald's tests. The results showed that profit, capital, and the number of customers had statistically significant and positive effects on loan disbursement, while deposit, asset, liabilities, and the number of branches had insignificant impacts.