Determinants of Ethiopian banking sector development: a 30-year empirical analysis with ARDL model

Bantyergu Engida Bati ()
Additional contact information
Bantyergu Engida Bati: Hawassa University

Journal of Innovation and Entrepreneurship, 2025, vol. 14, issue 1, 1-21

Abstract: Abstract This study examines the determinants of Ethiopia's banking sector development (BSD) through New Institutional Economics (NIE) lenses. The study uses 30 years of secondary data (1994–2023) from the Global Financial Development Database, the National Bank of Ethiopia, and the World Bank. The dependent variable, BSD, was measured using indicators of depth, access, and efficiency. Independent variables include GDP per capita, inflation, fiscal policy, trade openness, remittances, political stability, regulatory quality, and urbanization. The Autoregressive Distributed Lag (ARDL) model was used to analyze short and long run relationships among variables. The NIE perspective reveals how institutional misalignments between formal policies and informal norms shape BSD outcomes. The study's findings revealed that GDP per capita has significant positive impact on BSD both in the short-term (β = 0.2723, p = 0.0029) and long-term (β = 0.1959, p = 0.0001). Remittances showed significant positive influences in both short-term (β = 0.089151, p

Keywords: Banking sector development; New institutional economics; Macroeconomic factors; Policy and external factors; Institutional and structural factors (search for similar items in EconPapers)
Date: 2025
References: Add references at CitEc
Citations:

Downloads: (external link)
http://link.springer.com/10.1186/s13731-025-00558-w Abstract (text/html)
Access to the full text of the articles in this series is restricted.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:spr:joiaen:v:14:y:2025:i:1:d:10.1186_s13731-025-00558-w

Ordering information: This journal article can be ordered from
https://innovation-e ... ip.springeropen.com/

DOI: 10.1186/s13731-025-00558-w

Access Statistics for this article

Journal of Innovation and Entrepreneurship is currently edited by Elias G. Carayannis

More articles in Journal of Innovation and Entrepreneurship from Springer
Bibliographic data for series maintained by Sonal Shukla () and Springer Nature Abstracting and Indexing ().