Factors Affecting Deposit Mobilization Of Ethiopian Private Commercial Banks

Abstract

Deposit mobilization is the major services of commercial banks. The main business for banks is accepting deposits and granting loans. The more the loans the banks mobilize the funds and may be expected the more profit they make. Also, banks do not have a lot of their own money to give as loans. They depend on customer deposits to generate funds for granting loans to other customer this process is known as deposit mobilization. However, managing deposits is not possible without knowing and controlling the factors affecting it. Therefore, the study adopts qualitative and quantitative or mixed approach to gather the data. The primary data is gathered by using four-page questionnaire to eight selected private banks like AIB, BB, BOA, BIB, CBO, DB, NIB, and WB based on the date of establishment and their capital and While the secondary sources of data were extracted from National Bank of Ethiopia (NBE). The study used time series data from 2009/10 G.C-2020/21G.C for analysis made using Multiple linear regression. The study reveals that branch expansion and GDP per capita among selected banks are the most significant factors of deposit volume. Besides, the other variables inflation, and deposit interest rate respectively has moderate and smaller power to influence deposit mobilization activity. Finally recommended that private banks ought to increase number of branches both rural and urban to mobilize more resources, introduce new technology, improve service quality by providing cash and in kind incentive, maintain enough liquidity fund, provide adequate customer handling training to their staffs and so forth.