Abstract:
Today banks are performing all kinds of banking transactions and providing various financial
services in order to make life easier for people in a given country. Banks should consider the
demographic, economic and social characteristics of the geographical regions in branch site
selection in order to provide the best financial services in line with their customers' demand. And
the main purpose of this study was to gather and analyze the factors that determine the
Geographical Distribution of Bank Branches: A Case in Ethiopian Commercial Banking Industry
with respect to regions and cities. Both state owned commercial banks and private owned
commercial banks were taken for the study. The study used both primary and secondary sources
of data which covered from the year 2006-2011.The primary data was collected through
unstructured interview and the secondary data was collected through document analysis and
analyzed using descriptive and inferential stastics. To examine the influence of economic, socialcultural and demographic variable on decision of bank branch location selection over time, panel
regression models were used using Normality of the error term, Heteroscedasticity,
Multicollinearity and Model specification test. Accordingly, government capital expenditure,
number of employed population, number of firms in all sectors and the Number of Vocational
Training School and Undergraduate Students are vital determinants of the geographical
distribution of bank branches in Ethiopian commercial banking sector.
