Determinants of liquidity risk in selected commercial banks in ethiopia

The main objective of this study is investigating determinates of liquidity risk in some selected commercial banks in Ethiopia. 8 year (2010–2017) balanced panel data was extracted from income statement and balance sheet of 11 commercial banks. The random effect model result reveals that profitability, credit risk and efficiency positively affect banks liquidity risk. However bank size, capital adequacy ratio and leverage ratio negatively affects liquidity risk. From macroeconomic variables only political stability situation has negative effect on liquidity risk. The effect of market power from bank specific characteristics and inflation and GDP from macroeconomic is insignificant.