“Determinants of Resource Mobilization in Commercial Bank of Ethiopia case of Burayu town branches”

Abstract

The purpose of this study is to determine the factors affecting resource mobilization in Commercial Banks of Ethiopia in case of Burayu town. In order to achieve this objective descriptive and econometric analyses were performed. The target populations of the research were the customer of Commercial Banks of Ethiopia found in Burayu town. Accordingly, from total commercial banks found in Burayu town four commercial banks were purposively selected for this study. The primary and secondary data was used to collect the data from the customers of commercial banks found in Burayu town. Multiple regression models was used to analyses the data. The dependent variable used in this study was Deposit Mobilization. The explanatory variables used in this study were personal income, service Excellency, Banks accessibility, interest rate, exchange rate, inflation, liquidity problem, fund transfer and withdrawal limit. Different diagnostic tests namely test for zero mean of error terms; homoscedasticity, nomulticollinearity and normality were conducted to check the appropriateness of the model. The diagnostic results show that none of the classical linear regression model assumption is violated. To determine the effects of the independent variables on the dependent variable regression was used .The results show that service quality, Bank accessibility, personal income, interest rate and withdrawal limit have positive effect on resource mobilization of the banks. But exchange rate, inflation, liquidity problem and fund transfer limit has negative effect on commercial banks’ deposit growth. Thus, based on the findings the study suggests that commercial banks of Ethiopia should improve service quality specially reduce the waiting time and continue expand the branches to get huge non-banking customers living in rural area and they can collect more resource.