What Factors determine Commercial Banks’ Deposit? An Empirical Study on Commercial Bank of Ethiopia
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Date
2019-05
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A.A.U
Abstract
Deposit mobilization is a fundamental part of banking activity. Hence, deposit mobilization is critical to Banks, understanding the nature of Deposit Mobilization behavior is critical in designing policies to promote savings and investment which in turn enhance economic growth through capital formation. The survival of every commercial bank is highly depends on bank deposit because deposit mobilization is a major activity of all commercial banks. As the result, the issue of banks deposit and its determinants is crucial to the financial sector of developing country like Ethiopia. Therefore, this study aimed to identify and evaluate those factors determining bank deposit in general by taking Commercial Bank of Ethiopia as evidence. The study adopts mixed approach to gather the data. The primary data was gathered using questionnaire and sampling method of the primary data is purposive sampling technique. While the secondary sources of data were extracted from annual reports of Commercial bank of Ethiopia and data from National Bank of Ethiopia (NBE). Regarding the secondary data, the study used time series data from 2008-2017 for analysis using Classical linear regression method. In this research dependent variable (that consists of the total deposit) and the independent variable (that consists of the inflation, working age population growth of the country, number of Bank branches and saving interest rate) studied in detail. The study shows that, working age population growth and branch expansion has the most significant factors of deposit mobilization activity. The other variable such as deposit interest rate and inflation has insignificant power to influence the dependent variable. As a result, the study recommended that, branches should give due attentions for branch expansion of their bank branches to mobilize more deposits. Since there is a positive relationship between deposit and bank branches, banks ought to increase number of branches to mobilize more resources.
Description
A Thesis Submitted to Addis Ababa University School of Business and Economics in partial fulfillment of the requirements for the Degree of Masters in
Business Administration Specialization in Finance
Keywords
Commercial Bank of Ethiopia, Deposit Mobilization, Factors Determining Deposit