Determinants of automated teller machine deployment in commercial banks of Ethiopia

The increasing development of transaction technology investment in the financial sector of the national economy especially Automated Teller Machine (ATM) in Ethiopia banking industry is below customers demand. The availability and deployment of ATM in Ethiopia is low-level compared to the fast growing urban population. Thence, the prime objective of this paper is to evaluate the determinants of ATM deployment in commercial banks of Ethiopia. In order to achieve the objective, panel data was gathered from thirteen Ethiopian commercial banks for the sampled time period beginning from 2012 to 2016. This study used descriptive statistics and panel data econometric regression analysis to analyze the data collected. The random effect model was employed as a reasonable fit model for this study and interpretations of estimates were made based on this model. The result of the descriptive analysis indicated that the trend of ATM deployment in commercial banks of Ethiopia was rising over the sample time period. The results investigated from random effect model indicated that that bank size, bank profitability and deposit ratio were statistically significant and had positive impact on ATM deployment. Meanwhile, cost efficiency and number of branches had statistical insignificant relationship with ATM deployment in Ethiopian commercial banks. Based on these findings, it is recommended that the commercial banks of Ethiopia or any concerned body need to envisage the bank size, bank profitability and deposit ratio in introducing and expansion of ATM and any other electronic form of payments.