Affecting Deposit Mobilization; The Case Of Private Commercial Banks In Ethiopia Factors
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Date
2020-12
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Publisher
A.A.U
Abstract
The survival of every commercial bank is highly depends on the bank deposit because
making of profits of these banks is determined by the strategies adopted by each bank to
mobilize deposits from the public that is an input to earn income for most conventional
banks. In order to make good strategies, yet, the banks should know what factors determine
the deposit mobilization activity in the real world. As the result, the issue of banks deposit
and its factors is crucial to the financial sector. Therefore, this study main objective is to
identify and evaluate those factors affecting bank deposit in general by taking eight
private commercial banks in Ethiopia as evidence the sampled private commercial Banks
are Awash International Bank S.C, Bank of Abyssinia S.C, Wegagen Bank S.C, United
Bank S.C, Nib International Bank S.C, Dashen Bank S.C, Cooperative Bank of Oromia
and Oromia International Bank by using purposive sampling. Accordingly, the
researcher adopts primary and secondary data similarly qualitative and quantitative
(mixed) method of research approach was applied. Regarding to the qualitative data;
questionnaire is used by using non probability sampling to gather information from the
employees of selected private commercial banks particularly for those employees who
actively participated in deposit mobilization tasks by using a census to study a population
of 153 staff from this 127 was returned. Regarding to the secondary data; time series
data covering 2014/15 – 2018/19, the data were assessed using explanatory method of
analysis as well as the test for heteroskedasticity, autocorrelation and normality testing
was done to know if the assumptions of CLRM violated or not. Second, developed model
was a multiple linear regression equation with deposit as the dependent variable and
explanatory variables are interest rate, inflation rate, number of bank branch, number of
employee, gross domestic product, individual foreign remittance and exchange rate
estimation was done using Ordinary Least Squares technique by using STATA 14
software The results from analysis showed that all the explanatory variables were
correlated with the explained variable. Among these variables, interest rate is an
important strategy for deposit mobilization; it is highly significant and has positive effect
on deposit than others. Employees and Individual remittances from diasporas are also
next to interest rate to significantly and positively affects deposit. The other variables
have negative effects and can decrease private commercial banks deposit. And finally, the
study had recommended what should be done to encouraging deposits growth by private
commercial bank in Ethiopia for the benefit of the superior domestic deposit mobilization.
Description
A thesis submitted to the Department of business administration of Addis Ababa
University in partial fulfillment of the requirements for the Degree of Masters of business
administration in
Finance (MBA)
Keywords
Deposit Mobilization, Gross domestic product, Private Commercial Banks