Determinants Of Deposit Mobilization: The Case Of Commercial Banks Around Burayu Town

Abstract

Deposit mobilization is among one of the primary activities of banking system. Banks mobilize financial resource required for investment and economic growth from households, business, corporate bodies and government. To be effective, competitive in the market and maintain liquidity identifying factors affecting deposit mobilization is crucial. With this in mind the objective of this study is to identify determinants of bank deposit mobilization in the case of Commercial Bank of Ethiopia. Concerning to the qualitative data questionnaire was used to gather information from 33 employees of commercial banks of Burayutown mainly for those employees who vigorously participated in deposit mobilization everyday jobs in Commercial Banks branches of city. To analysis the determinates of deposit mobilization we undertake descriptive and econometrics analysis by collecting primary data from 131 costumers , the determinants of deposit mobilization analyzed by using Ordinary Least Squares technique by Stata V-15. The results from econometric analysis showed age of households, annual income, educational level, marital status and consumption of households were correlated with the explained variable. From the econometric analysis age of households, annual income, educational level and marital status positively affecting deposit mobilization while consumption of households was negatively affecting deposit mobilization. As income of households increase by one-birr addition on household income leads to increase yearly money deposit by 0.80 birr and a one year increase in age of the household’s results, 0.0477 birr increases in quantity of money deposit. The result shows that one additional formal year education level leads to increase yearly money deposit by 0.205birr. Although result shows being married were increase the quantity of money deposit by 1.80 birr and one-birr additional annual consumption of households leads to decrease yearly money deposit by 0.112 birr. Finally, the study had recommended what should be done to encouraging deposits enlargement by Commercial banks in Burayu town for the advantage of the household deposit mobilization