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Since achieving the ideal level of liquidity is one of the top issues for banks, it is essential. Finding the factors that affect private commercial banks' liquidity in Ethiopia was the primary goal of this study. Data was gathered from a sample of six private commercial banks in Ethiopia between the years of 2012 and 2021 in order to meet the research objectives. Bank specific and macroeconomic variables were analyzed by using the balanced panel fixed effect regression model. Bank’s liquidity is measured in three ratios: liquid asset to deposit, liquid asset to total asset and loan to deposit ratios. The findings of the study revealed that, bank size and loan growth has negative and statistically significant impact on liquidity; while non-performing loans, profitability and inflation have positive and statistically significant impact on liquidity of Ethiopian private commercial banks. However, capital adequacy, interest rate margin, real GDP growth rate, interest rate on loans and short-term interest rate have no statistically significant effect on the liquidly of Ethiopian private commercial banks.
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