Determinants of Deposits in Algerian Commercial Banks: Using A Panel Data Analysis

Abstract

This research aims to identify and analyse the microeconomic and macroeconomic determinants of bank deposit growth in Algerian commercial banks. The study is based on a sample of 19 Algerian commercial banks both public and private over a period of 14 years, spanning from 2010 to 2023, accounting for approximately 90% of the total banking sector population. To this end, a panel data regression model is applied, which takes into account both the individual and temporal dimensions of the data. Bank deposits are measured through the deposits-to-assets ratio (DEPRATIOS), which constitutes the dependent variable of the model. Regarding the explanatory variables, 8 independent variables are retained, namely: bank size, capital adequacy ratio, operational efficiency, loan-to-deposit ratio, return on equity, GDP growth rate, inflation rate, and money supply growth. The results of analysis indicate, firstly, that all results were statistically significant. Secondly, concerning the relationship of the independent variables with the deposits-to-assets ratio, it was found that the loan-to-deposit ratio and the inflation rate exert a negative effect on bank deposits. Conversely, bank size, capital adequacy ratio, operational efficiency, return on equity, GDP growth rate, and money supply growth were found to exert a positive effect on the deposits-to-assets ratio of Algerian commercial banks