Determinants Of Deposit Mobilization In The Case Of Commercial Bank Of Ethiopia In Nifas Silk Lafto District

Abstract

All banks depended on the depositor money collected from various groups of depositors including Governments, NGOs, investors, individuals, etc. So, the deposit is the white blood and oxygen of the banking industry which circulates the banking operation. knowing deposit mobilization and how it is managed is more advantageous to the bank industry. The objective of the study was to assess the determinants of deposit mobilization in a case of CBE in the Nifas Silk lafto district. The study investigates the effect of practices of Awareness Creation (AC), branch Expansion (BE), Interest Rate (IR), Service Level, and Technology use (SLT), and Prize Linked Saving (PLS) on Deposit Mobilization (DM) of Commercial Bank of Ethiopia (CBE) in Nefas Selk Lafto (NSL) Kifle Ketema. The research adopted an explanatory research design to explore why certain factors influence bank deposit mobilization and employed a mixed research approach to increase the accuracy and reliability of the paper, where quantitative data was gathered using a survey questionnaire. The populations for the study were employees of CBE’s branches in NSL, with a population size of 734 employees from which 259 sample respondents were identified using a stratified random sampling technique. The data were coded and analyzed using Statistical Package for Social Sciences (SPSS) software version 24. This study used descriptive statistics such as frequency percentiles to describe the characteristics of the respondents, mean and standard deviations along with one-sample t-tests – to assess the performance of DM and the practices of AC, BE, IR, SLT, and PLS in the study area. Correlation analyses were also conducted to see the significant relationship and effect between DM and the five-factor variables. Further, regression analysis was conducted to investigate how DM was affected by the practices in the study area. The study found that the practice of AC was not satisfactory and was evaluated with a low-level average rating, M=2.45. AC was found to have been moderately and directly related to DM (r=0.380). Similarly, the BE practice was assessed with a low-level average rating, of M=2.54. This factor was the highest correlated factor with DM (r=0.728) and accounted for 53% of deposit mobilization. IR of the bank was also positively related to DM with r=0.398. The IR in the bank was assessed positively with an M=3.85 average agreement level. The overall SLT practice of the bank was evaluated moderately, M=2.94, and was the least but significant factor that has been directly related to DM (r=0.290), The PLS practice of the bank was evaluated positively with M=3.51 average rating, which was the 2nd highly related factor to DM (r=0.565). The overall assessment of DM in the study area was considerably high, which was agreed with, the M=3.83 average rating. DM was found to have a direct and significant relationship with the factor variables. The regression analyses depicted that these factors accounted for 66.4% of the variation in DM. The study concluded that all five factors altogether have a considerably high impact on DM, although certain drawbacks were exhibited in the practice of mobilizer deposits. The study, therefore, recommends banks continue to mobilize more deposits, it has to effectively carry out awareness creation practices through media advertisement and face-to-face contact with the community, expansion of branches based on market research, implement competitive deposit rates, provision of cost-effective prize-linked saving programs, provision of quality services, and assuring reliable technology services. Even though all variables have an impact on deposit mobilization researchers recommended the bank highly working on branch expansion, and an interest rate accounted for 53% and 9.1% respectively.