Abstract:
The primary objective of this study is to examine the internal and external factors
affecting deposit mobilization at the Commercial Bank of Ethiopia (CBE). The research
focuses on key macroeconomic variables, such as GDP, inflation, exchange rates,
foreign remittances, and deposit interest rates, alongside institutional factors like skills
and knowledge, adequacy of training given, cooperation, government role and
regulation, awareness of customers, customers satisfaction and employee capacity.
The study adopts a mixed-method approach, integrating both primary and secondary
data. The primary data was collected from employees of CBE’s bole district using
structured questionnaires. The study population consisted of employees directly
involved in deposit mobilization, with a sample size of 151 determined using Taro
Yamane's formula. A simple random sampling technique was employed to ensure
representativeness. Secondary data spanning 2002/03 to 2022/23 was sourced from
CBE annual reports and the National Bank of Ethiopia. Analytical methods included
descriptive statistics, correlation analysis, and regression analysis. OLS regression
techniques were utilized to explore the relationships between deposits and the
macroeconomic variables.
The study reveals that GDP and foreign remittances significantly and positively affect
deposit mobilization. Inflation and exchange rate depreciation negatively influence
deposit growth, with exchange rate impacts being statistically significant. Deposit
interest rates, while showing a positive relationship, were found to be statistically
insignificant. Institutional factors such as employee capacity also play a critical role
in deposit mobilization, highlighting the importance of organizational strategies.
To enhance deposit mobilization, the study recommends stabilizing inflation and
exchange rates, promoting formal remittance channels, and implementing competitive
deposit interest rates. Additionally, CBE should focus on enhancing employee training
programs, and launching public awareness campaigns to improve financial literacy
and attract more deposits.
