Factors Affecting Commercial Bank Liquidity in Ethiopia: An Empirical Study of Selected Commercial Banks (Research Square)

Summary

• The random effects generalized least squares regression model comprises 110 annual panel observations.p.9
• The estimated random effects regression model achieves an R-squared of 0.672, accounting for 67.2% of the variation in bank liquidity.p.10
• Capital adequacy positively and significantly affects bank liquidity with a regression coefficient of 0.914.p.11

Key insights

1. Capital adequacy exerts a statistically significant positive effect on Ethiopian commercial bank liquidity with a coefficient of 0.914.p.11
2. The estimated random effects regression model yielded a Wald chi-square value of 178.751 with a p-value below 0.001.p.10
3. Profitability, bank size, interest-rate margin, NBE-bill holdings, and inflation did not show statistically significant impacts on bank liquidity in the estimated model.p.11