Determinants of financial development in Ethiopia: ARDL approach

Sustainable economic growth requires financial sector development. However, development is low in Ethiopia. Hence, the main objective of study was to examine determinants Annual data from 1980 2019 used and examined by ARDL estimation technique. Private credit money supply as percentage GDP were dependent variables. Independent variables include external debt, reserve requirement, real exchange rate, lending interest inflation, political freedom index, trade openness growth. Broad model positively affected both short run long run. While it negatively rate requirement. has negative effect insignificant On other hand, private freedom, openness. requirement rate. Error correction result shows adjustment coefficient ?0.263 statistically significant at 5% level significance, which means deviation equilibrium adjusted a 26.3%. The for broad ?0.254. recommends that government needs improve quality factors production, reduce reducing on lending, political.