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Factors Affecting Deposit Mobilization of Commercial Banks;the case
of Commercial Bank of Ethiopia at Hawassa City Branches.
The thesis Submitted to Hawassa University School of Graduate Studies In
Partial Fulfillment Of The Requirements For The Degree Of Master In
Business Administration Specialization In Marketing Management.
By:
Tadele Shamebo
Principal Advisor: Dr.YlimaGelatu
Co –Advisor Abdulaziz Abdella (hpD canditate)
Hawassa University
College of Business and Economics
School of Management and Accounting
June 2019
Hawassa, Ethiopia
Factors Affecting Deposit Mobilization of Commercial Banks;the
case of Commercial Bank of Ethiopia at Hawassa City Branches.
By:
Tadele Shamebo
Principal Advisor: Dr.Ylima Gelatu
Co –Advisor Abdulaziz Abdella (phD canditate)
The thesis Submitted to Hawassa University School of Graduate
Studies In Partial Fulfillment Of The Requirements For The Degree
Of Master In Business Administration Specialization In Marketing
Management.
Hawassa University
College of Business and Economics
School of Management and Accounting
June 2019
Hawassa, Ethiopia
Declaration
I declare that this work has not be previously submitted and approved for the award of a degree
by this or any other university. To the best of my knowledge and belief, the project contains no
material previously published or written by another person except where due reference is made
in the project itself.
Nane: Tadele Shamebo
Signature: ------------------------
Date: -------------------------------
SCHOOL OF GRADUATE STUDIES
HAWASSA UNIVERSITY
ADVISORS’ APPROVAL SHEET
This is to certify that the thesis entitled "Factors Affecting Deposit Mobilization of
Commercial Banks ,the case of Commercial Bank Ethiopia at Hawassa city branches
submitted in partial fulfillment of the requirements for the degree of Master's with
specialization in marketing management , the graduate program of the school of management
and accounting, and has been carried out by Tadele Shamebo Id. No 037/09 under my
supervision. Therefore I recommend that the student has fulfilled the requirements and hence
hereby can submit the thesis to the School.
Name of Principal Advisor Signature Date
Dr.Ylima Gelatu
---------------- -----------------
Name of co-Advisor Signature Date
Abdulaziz Abdella (phD Canditate)
---------------------- ------------------
SCHOOL OF GRADUATE STUDIES
HAWASSA UNIVERSITY
EXAMINERS‟ APPROVAL SHEET
===============================================================
We, the undersigned, members of the Board of Examiners of the proposal open defense by
Tadele Shamebo have read and evaluated his/her thesis entitled “_Factors Affecting Deposit
Mobilization of Commercial Banks ,the case of Commercial Bank Ethiopia, at Hawassa
city branches”, and examined the candidate. This is, therefore, to certify that the thesis has been
accepted in partial fulfillment of the requirements for the degree in Business Administration.
________________________ _______________________ ____________
Name of the Chairperson Signature Date
________________________ _______________________ ____________
Name of Principal Advisor Signature Date
________________________ _______________________ ____________
Name of Co- Advisor Signature Date
________________________ _______________________ ____________
Name of Internal Examiner Signature Date
________________________ _______________________ ____________
Name of External examiner Signature Date
________________________ _______________________ ____________
SGS Approval Signature Date
Final approval and acceptance of the thesis is contingent upon the submission of the final copy of
the thesis to the School of Graduate Studies (SGS) through the School Graduate Committee
(DGC/SGC) of the candidate‟s department.
Stamp of SGS Date: ______________
i
ACKNOLEDGEMENTS
First, I am thankful to the Almighty GOD who saw me through the toughest moments of this
program.
Next, I would like to sincerely thank my principal advisor: Dr.Ylima Gelatu for his constructive
comments, valuable suggestions and good guidance since the beginning to the end of the project
.I equally thank my co-advisor Abdulaziz Abdella (phD candidate) for his strong comments,
suggestions and necessary encouragement. I also thank all my lectures who thought me
throughout the program. I also wish to thank my classmates particularly those whom I closely
shared many special learning experiences. I wish to thank respondents to this study without
whom this study would not have been complete.
Finally, my appreciation also goes to my family, friends& work classmates for their moral &
financial support throughout this study.
ii
Table of contents
Contents page ACKNOLEDGEMENTS ................................................................................................................. i
Table of contents ............................................................................................................................. ii
List of Table .................................................................................................................................... v
List of Figure.................................................................................................................................. vi
LIST OF ACRONYMS ................................................................................................................ vii
ABSTRACT ................................................................................................................................. viii
CHAPTER ONE ............................................................................................................................. 1
1. Introduction ................................................................................................................................. 1
1.1. Background of the Study ...................................................................................................... 1
1.2. Statement of the Problem ..................................................................................................... 4
1.3. Objectives of the study ......................................................................................................... 6
1.3.1General Objectives ........................................................................................................................ 6
1.3.2. The specific objectives ................................................................................................................ 6
1.3.3 Research hypothesis ................................................................................................................... 6
1.4 Research questions ................................................................................................................ 7
1.5 Significance of the study ....................................................................................................... 7
1.6. Scope of the study ......................................................................................................................... 7
1.7. Limitation of the study ......................................................................................................... 8
1.8 Organization of the thesis ...................................................................................................... 8
1.9. Operational definition of the study ...................................................................................... 9
CHAPTER TWO ........................................................................................................................ 10
2. LITERATURE REVIEW ...................................................................................................... 10
2.1 Chapter overview ................................................................................................................ 10
2.2. Theoretical conceptualization of deposit ........................................................................... 10
2.3 The role of commercial Banks in Financial Systems .......................................................... 12
2.4 Major Types of Deposit products ........................................................................................ 12
2.5 .Importance of Deposit mobilization ................................................................................... 13
2.6 Factors that affects the deposit mobilization of commercial banks in Ethiopia ................. 14
iii
2.6.1 Institutional factors and saving mobilization ............................................................................. 14
2.6.1.1 Internal saving policy .................................................................................................... 14
2.7 External environmental factors and saving mobilization .................................................... 23
2.7.1. Competition .............................................................................................................................. 25
2.7.2. Inflation rate ............................................................................................................................. 25
2.7.3. Saving interest rate (Deposit rate) ............................................................................................ 26
2.7.4 per Capita Income of the Society ............................................................................................... 28
2.8 The research gap ................................................................................................................. 30
2.9. Empirical Evidence of Deposit Mobilization from Developing Countries ........................ 30
2.10 Empirical Evidence of Deposit Mobilization from Ethiopian‟s Commercial Banks ........ 32
2.11 Conceptual framework ...................................................................................................... 36
CHAPTER THREE .................................................................................................................... 38
3. Research Methodology ........................................................................................................... 38
3.1 Description of the Study Area ............................................................................................. 38
3.2 research design .................................................................................................................... 39
3.3 Data type and sources .......................................................................................................... 40
3.4 Target population ................................................................................................................ 40
3.5 Sample design ..................................................................................................................... 42
3.5 .1 Sample size determination ....................................................................................................... 42
3.6 Data collection method ....................................................................................................... 43
3.7 Data analysis ....................................................................................................................... 43
3.7.1. Descriptive Analysis .................................................................................................................. 43
3.7.2. The inferential statistics ............................................................................................................ 44
3.8 Model specifications ........................................................................................................... 44
3.7.3. Qualitative analysis ................................................................................................................... 46
3.9. Reliability test .................................................................................................................... 46
3.10 Validity test ....................................................................................................................... 47
3.11 Ethical considerations ....................................................................................................... 48
CHAPER FOUR ......................................................................................................................... 49
FINDING AND DISCUSSIONS ................................................................................................ 49
4.1 Chapter over view ............................................................................................................... 49
4.3 Demographic characteristics of respondents ....................................................................... 49
iv
4.3.1 Gender distribution of respondents .......................................................................................... 50
Table 4.3.1 Gender of respondents ............................................................................................ 50
4.3.2 Respondents age distribution .................................................................................................... 50
4.3.3 Respondents Educational level .................................................................................................. 51
4.3.4 Respondents experience in deposit mobilization ...................................................................... 51
4.3.5 Respondent by role played in the deposit mobilization ............................................................ 52
4. 4 .The trend and current status of saving mobilization by commercial banks ...................... 53
4.5 Factors influencing of saving mobilization by commercial banks ...................................... 55
4.5.1 Influence of institutional factors on deposit mobilization ......................................................... 55
4.5.2The influence of external environment on the saving mobilization. .......................................... 60
4.6 Multiple Regression analysis of the study .......................................................................... 63
CHAPTER FIVE ........................................................................................................................ 71
SUMMERY, CONCLUSION AND RECOMENDITIONS .................................................... 71
5.1 Chapter overview ................................................................................................................ 71
5.2.1 The trends and current status of saving mobilization by commercial banks ............................ 71
5.3 Conclusion........................................................................................................................... 72
5.4 Recommendations ............................................................................................................... 73
5.5 Limitations of the study ...................................................................................................... 74
5.6 Areas for further research .................................................................................................... 75
REFERENCES .......................................................................................................................... 76
Appendixes................................................................................................................................... 80
v
List of Table
Table 3.1 Target population of the study------------------------------------------------------------------44
Table 3.2: Reliability Statistics------------------------------------------------------------------------------------49
Table 3.3: Item Statistics----------------------------------------------------------------------------------50
Table 4.1 Rate of response by respondents-------------------------------------------------------------52
Table 4.3.1 Gender of respondents ----------------------------------------------------------------------53
Table 4.3.2 Age of the respondents----------------------------------------------------------------------53
Table 4.3.3 Respondents Educational level-----------------------------------------------------------54
Table 4.3.4 work experience in the bank---------------------------------------------------------------54
Table 4.3.5 Position of respondents in the bank ------------------------------------------------------55
Table 4.5.1 Descriptive statistics of institutional factors--------------------------------------------58
Table 4.5.2 Pearson chi square correlation analysis result for institutional factors
and deposit mobilization.--------------------------------------------------------------------------------59
Table 4.5.2.1 Descriptive statistics of the influence of external factors on
Deposit mobilization-------------------------------------------------------------------------------------60
Table 4.5.2.2Pearson chi square correlation analysis result for external
Environmental factors and deposit mobilization---------------------------------------- -------------63
Table4.6.1Model Summary------------------------------------------------------------------------------64
Table 4.6.2 Analysis of variance (ANOVA) ---------------------------------------------------------65
Table 4.6.3 .Multiple regression model results: factors that influence
Deposit mobilization by commercial banks--------------------------------------------------------------67
Table 4.6.4 Independent variable with coefficient and p-value---------------------------------------70
vi
List of Figure
Figure 2.1 Conceptual frameworks-----------------------------------------------------------------------39
Figure 4.4.1 saving as a percentage of planned mobilized and total variation deposit-------------56
Figure 4.4.2 the percentage distribution of scores on performance in deposit mobilization-------57
vii
LIST OF ACRONYMS
AEBP---------------------------------------------Ability and Experience of Bank Personnel
CD----------------------------------------------------Certificate of Deposit
CBE ---------------------------------------------Commercial Bank of Ethiopia
CSA------------------------------------Central Statistical Authority
DMB ----------------------------------------------Deposit Money Banks
EVA------------------------------------------------Economic Value Added
GDP-----------------------------------------------Gross Domestic Product
ICB -------------- ---------------------------------International Commercial Bank
IMF------------------------------------------------International Monetary Fund
ISSER---------------------------------------- Institute of Statistical, Social and Economic Research
MIFs ----------------------------------------------Microfinance Institutions
LDC------------------------------------------------Least Developed Countries
NI -------------------------------------------------- Net Income
NBE----------------------------------------------National Bank of Ethiopia
ROI ------------------------------------------------Return on Investment
RBI---------------------------------------------------Reserve Bank of India
ROA ------------------------------------------------Return on Asset
RQ -------------------------------------------------Research Questions
SACS-----------------------------------------------Saving and Credit Associations
SPSS ----------------------------------------------Statistical Package for Social Science
viii
ABSTRACT
The objective of this study is to assess the factors that affects deposit mobilization in
commercial bank of Ethiopia at Hawassa District, and to establish the extent to which the
institutional and the external Environmental factors influence the saving mobilization by
commercial banks. The study also adopted descriptive and quantitative method to obtain data
useful in evaluating present practices and providing a basis for decision making. The
populations of the study were managers & employees of CBE under Hawassa city branches.
The sample design used for this study was purposive sampling technique with an objective of
insuring that only those which had operated more than five years were included in the study
to allow analysis of trend in saving mobilization for the last six years. The study used the
qualitative &quantitative approaches the data collection method was survey method by
employing both questionnaire and interview and the collected data was analyzed by using
both qualitative and quantitative data by using descriptive data analysis method. The
descriptive analysis revealed the trend of deposit mobilization by commercial banks with the
current status considered unsatisfactory. The multiple regression analysis model revealed
that a significant influence of institutional &external environmental factors on deposit
mobilization. The institutional factors are inappropriate management &employee’s attitude
on deposit mobilization, inappropriate product/service promotional strategy, poor job
commitments &performance in deposit mobilization, inappropriate rewarding system which
do not significantly impact on employees motivation .The external factors are competition
with other deposit taking institutions. Such as microfinance institution, other private banks&
the persistent increase of inflation rate would affect bank deposit. In the light of the findings,
the researcher recommended the leadership and the management of commercial bank of
Ethiopia need to re-focus on their performance management police and strategy towards
improving incentive systems, change employees attitude to enhance employee’s motivation
and job commitments. The bank should also advise innovative measures to position more
strategically and competitively to attract more saving and mitigate the negative impact of
competition with other deposit -taking institutions on their performance on deposit
mobilization.
Key words/phrases: Deposit mobilization, inflation rate, competition, interest rate, rewards.
1
CHAPTER ONE
1. Introduction
This section of the study is introductory part which consists of background of the study,
statement of the problem, objective of the study, research question, significant of the study,
scope of the study, limitation of the study, operational definitions and organization of the study.
1.1. Background of the Study
Mobilization of deposits is one of the important functions of banking business. It is an important
source of working fund for the bank. Deposit mobilization is an indispensable factor to increase
the sources of the banks to serve effectively. Mobilization of deposit plays an important role in
providing satisfactory service to different sectors of the economy. The Commercial Banks must
tap deposits from urban and rural areas. This helps the banks to provide large amount of funds to
priority sectors for development. The success of the banking greatly lies on the deposit
mobilization. Performances of the bank depend on deposits, as the deposits are normally
considered as a cost effective source of working fund.
The reserve bank of India (RBI) encourages the banks to mobilize deposits, by providing subsidy
for branch expansion. The successful functioning of commercial banks depends on the extent of
funds mobilized. Deposits are the life blood of banking companies. Deposits constitute a vital
source of funds required for banking business. There are different types of deposits, with
different maturity pattern carrying different rates of interests. Deposit mobilization is depending
on the cost of deposits.
Mobilization of deposits for a bank is as essential as oxygen for human being. In the post
liberalization scenario, the number of players in banking industry has increased considerably
which developed competition in bank marketing. „The survival of the fittest‟ has made
applicable for the banks. To enhance profitability, banks take steps to minimize the expenditure
and are forced to mobilize low cost deposits. In the present context bank‟s efficiency is measured
based on the deposit mix and on the quantum of low cost deposits in the mix. In the present era
2
of competition and with the emergence of private and multinational banks, an ideal mix of
deposits is a must to survive. Since the interest paid on deposit forms a big burden on bank, the
mobilization of low cost deposits, like current account and savings bank deposit is the urgent
need for the bank. Banks borrow and lend, they borrow money by accepting deposits from the
public including members of the bank. Deposit mobilization is the chief source of funds to
undertake lending operations, for profitable operation, the amount of deposits is very important.
The banks should introduce various deposits schemes to attract the public to deposit. It is the size
of the deposits that largely decides the lending potential of banks.
Economic growth is the common goal of all nations. Everybody lives with more comfortable,
better standard of living than before and holding a better welfare because of the surge in
economic growth. Government in each country aims to reduce poverty and increase the level of
national income. Therefore, to achieve the main target of economic growth, governments may
implement various kinds of policies such as encouraging saving, stimulating investment and
production in their countries (Pinchawawee, 2011).
Mobilizing deposits is one of the essential issues in developing countries as domestic funds
provide cheap and reliable source of funds for development, which is of great value to these
countries, especially when the economy has difficulty raising capital from international donors,
investors and markets. Yet, in many developing countries, there is a considerable amount of
savings that are not intermediated through the formal sector particularly there exist significant
savings potential in the rural (and/or semi-urban) sector of many developing countries.
Selvaraj& Kumar (2015) State that, the success of the banking greatly lies on the deposit
mobilization. Performances of the bank depend on deposits, as the deposits are normally
considered as a cost effective source of working fund. Mobilization of rural savings is one of the
important objectives of the Commercial Banks. It helps to expand banking operations. The
successful functioning of commercial banks depends on the extent of funds mobilized. Deposits
constitute a vital source of funds required for banking business. There are different types of
deposits, with different maturity pattern carrying different rates of interests. Mobilization of
deposits for a bank is as essential as oxygen for human being. Compared to most countries,
Ethiopia has taken a cautious approach toward the liberalization of its banking industry. For all
intents and purposes, its industry is closed and generally less developed than its regional peers.
The industry comprises one state-owned development bank and the financial giant dominant
3
Commercial Bank of Ethiopia (CBE) which embarks on aggressive branch network expansion
aimed at mobilization of deposit resources; continued amassing of foreign currency proceeds of
export items channeled from China, channeling of savings made for the housing project in the
capital city (though it also lends householders at a lower interest rate); imposition of private
banks to purchase NBE-Bills and the sum effect of the above and other factors enable the CBE
secure competitive edge over private banks with assets accounting for more than 65 percent of
the industry‟s total holdings. The banking industry‟s nonperforming loan ratio is commendably
low, and profitability is good, but the dominance of public sector banking certainly restricts
financial intermediation and economic growth. It contrasts with regional and international peer
countries where banking industries have a much higher share of private sector and foreign
participation (Dereje, 2017).
According to (Abay, 2010), by sub-Saharan Africa standards, Ethiopia„s rate of domestic saving
has been very low. From 1997 to 2010, the average saving rate in low-income countries of the
region was about 9 per cent, while it was about 19 per cent for middle-income countries. In the
same period, the average saving rate of ―fragile sub-Saharan African states was 11.5 per cent,
still significantly higher than Ethiopia„s rate of 4 per cent.
The aim of this study is to assess the factors that affect the deposit mobilization of commercial
bank of Ethiopia targeted at Hawassa District city branches .And the main focusing area that the
study will concern is about identifying the institutional and external environmental factors
affecting deposit of commercial bank of Ethiopia an empirical study on Hawassa district. The
most institutional factors will be relating to the governance, and organizational structure,
appropriateness of saving products and technology ,management capabilities (with especial
attention to risk and liquidity management) deposit regulatory environments –strategy, police,
guidelines, employees attitude, performance management system, incentives, monitoring &
marketing strategy. The external factors concerns emergence of potential competitors, the
financial regulatory environment such as change of interest rate, employees saving schemes,
income level, unemployment level &inflation which will result in a great impact on the deposit
of the commercial bank of Ethiopia, and in relation to this, the change in customers‟ attitude and
preference in banking service such as loan services, money transfer, deposit services and
customer service of bank. These factors will affect the market share of the bank largely and
decrease in the market share, which in turn leads to decrease in amount of deposit. So this study
4
enables banks and regulators to keep control to the issue of deposit which is very important to
the security of their operation as well as the economy as a whole in the country. Therefore, this
paper aimed to assess, identify and evaluate those factors that affecting deposit of Commercial
Bank of Ethiopia, an empirical study at Hawassa District.
1.2. Statement of the Problem
Deposits are the primary source of funds for a bank, which facilitates the uses of funds (loans
and investments). The higher the deposits amount, the bigger the lending and investments
portfolio can be maintained by the banks to sustain its expansion and future growth. The banks
must have adequate deposits to meet the lending volume required by the public and at the same
time maintain extra cash for withdrawals by depositors. The cash reserve is a component of
liquidity reserves which measure the ability of the bank to meet its expected withdrawals and
recurring withdrawals. The withdrawals made from there serves are oddly-offset against new
deposits which the banks should continuously mobilize. The inability to get sufficient deposits
could result in negative fund situation. The level of deposits growth also indicates the bank's
performance in relation to customers' satisfaction on interest payout and services rendered.
The fast growing economy of the country, which is proactively investing in road infrastructure,
building hydropower dams, constructing thousands of housing condominiums and expanding
agricultural and other investments in the country are hugely relying on the commercial banks for
loans and credits. Moreover, there have been multiple small enterprises incubated in the last
decades and increasing number of import and export companies, heavily relying on commercial
banks for loans, foreign currency and trade assurances. This call for an increased demand for
deposit mobilization from public institutions, private sector and other potential contributors
(Hibret, 2015).However, Ethiopian banking industry is still in its growing stage. The deposit
generated by the county economy not yet been mobilized as much as expected. NBE indicates
that from deposits that should be mobilized by banks only 7% is mobilized as of 2012 (Wubitu,
2012). This indicates that from the money that should be deposited in the bank 93% of it was not
mobilized. Moreover, in the context of Ethiopian, the previous related research has mostly focus
on similar determinant variables to assess the factors that affects the deposit of commercial
banks.
5
For instance; Inflation Rate taken as explanatory variable by (Andinet, 2016) the result of his
study indicates inflation has a negative relation and insignificant to Privets Commercial Bank
Deposit. (Giagn, 2015) also used the variable in his study to determine the effect of inflation to
Commercial Bank Deposit Growth result of the study was positive relation and significant for
deposit. Finally (Shemsu, 2014) used Inflation rate as an explanatory variable to determine the
effect on the Commercial bank of Ethiopia deposit result was positive relation and insignificant
to the dependent variable deposit. Interest rate: was taken as an explanatory variable by (Andinet,
2016), the result is positive and significant to deposit. (Shemsu, 2014) the result is positive and
insignificant and (Giragn, 2015) the result is negative and insignificant and lastly (Wubit, 2012)
result shows positive and insignificant. Therefore, the findings of the study were incompatible
andwhich revealed mixed result which stimulates further study. There were gaps in the
identification of factors that affects deposit of commercial banks. This meansthere are many
factors that affect commercial banks‟ banks financial performance. These are broadly
categorized as internal and external factors (Choong,Thim, &Kyzy, 2012; Sehrish&Zaman,
2011). Internal factors are mainly influenced by a bank‟s management decisions and policy
objectives whereas external factors focus on industry related and macroeconomic variables
reflected in the economic and legal environment where banks operate (Kijjambu, 2015). Since
CBE has been playing a significant role in the economic development of the country, the bank
has not yet been mobilized as much as expected. This is because of, there are institutional and
external factors affecting deposit mobilization of the bank. The institutional factors: lack of
good saving policy, low employees motivation, lack of good marketing strategy, which will lead
lower market share and the external factors; high competition of other deposit taking banks, low
income level of society, persistent increase of commodity price & unattractive interest rate,
which will discourse deposit mobilization. Hence, the aim of this study was designed to assess
the extent of influence of such factors and to generate valuable information on internal saving
policy, employees‟ motivation & product/service promotion strategy. And external factors like
other banks competition, interest rate, income level & inflation rate that affecting deposit
mobilization of commercial bank of Ethiopia, targeted at Hawassa District city branches.
6
1.3. Objectives of the study
1.3.1General Objectives
The overall objective of the study was aimed to assess factors that affecting the deposit
mobilization of commercial bank of Ethiopia, Hawassa city branches.
1.3.2. The specific objectives
1. To determine the influence of internal saving policy on deposit mobilization of CBE
2. To determine the influence of clients income on deposit mobilization of CBE.
3. To determine the influence of new product promotional strategy on deposit mobilization of
CBE.
4. To determine the influence of interest rate changes on deposit mobilization of CBE.
5. To establish the current status and trend of deposit mobilization by CBE for the period 2012-
2017.
1.3.3 Research hypothesis
Research hypothesis is a predictive statement, capable of being tested by scientific methods,
that relates an independent variable to some dependent variable (kothari, 2004).It is the null
hypothesis is assumed to be correct, until research demonstrate that the null hypothesis is
incorrect (mathers, Fox&Hunn2007).
Based on the objectives the following hypotheses are set for the study under consideration:
H1: Internal saving policy has significant effect on deposit mobilization of commercial banks.
H2: Customers‟ income has significant effect on deposit mobilization of commercial banks.
H3: New product promotional strategy has significant effect on deposit mobilization of CBE.
H4: An interest rate change has significant effect on deposit mobilization of CBE.
H5; performance incentives system has significant effect on deposit mobilization of CBE.
7
1.4 Research questions
This study was intended to address the following questions
1. To what extent is the internal saving policy is affecting the deposit mobilization of CBE?
2. To what extent do the clients‟ income is affecting the deposit mobilization of CBE?
3. What is the effect of the new product strategy on deposit mobilization of CBE?
4. What is the effect of interest rate changes on deposit mobilization CBE?
5. What is the current status and trend of deposit mobilization of commercial bank of Ethiopia?
1.5 Significance of the study
The study conduct on assessment of factors affects commercial banks deposit mobilization
would be an important input to all stakeholder. Accordingly, the following are the significances
that are attained from the study.
1. It would contribute to the well-being of the financial sector of the economy and the society as
a whole. To the financial sectors, it is hoped that the results obtained from the study would serve
as a veritable material to deal with the issues and problems associated with deposit mobilization
in commercial banks.
2. It provides information for all stakeholders especially for management of the commercial
banks in order to minimize the impact of factors affects deposits mobilization by making them to
design effective strategies.
3. Furthermore, it serves as source of reference for academic staffs of the country for further
studies in the area of deposit mobilization. To the students and academics the study would be a
contribution to knowledge and literature as well as a guide for further research.
4. Lastly, this study gives good idea to the researcher about this specific topic and general
knowledge about any research.
1.6. Scope of the study
In line with the overall theme, the study in terms of geographical coverage is delimited to CBE,
Hawassa District selected city branches. In accordance with conceptual delimitation, the
assessment of deposit mobilization influencing factors drew limits to the institutional and the
external environmental factors that drawing from the theoretical and conceptual framework of
8
the study. In terms methodology, the study employed descriptive research, which is survey
design. The study also used survey data collection both quantitative and qualitative methods by
designing semi-structured questionnaire and structured interview to managers and employees
under Hawassa District city branches. Regarding the time scope, the study based on the analysis
of savings mobilization extended to the previous six years (2012-2017) deposit trend of
Hawassa District.
1.7. Limitation of the study
1. A limitation of a research study identifies potential weaknesses in the research. Hence, the
study confined to the following constraints during the research process:
2. The study limited by empirical data which is previously done on the areas of deposit
mobilization in the commercial bank of Ethiopia.
3. The study limited by the ethical consideration of respondents to conduct a research honestly
and with integrity to get bias free data.
4. The scope of the study area was also limited by finance, time and resource constraints.
1.8 Organization of the thesis
This paper organized into five chapters. The first chapter is introductory chapter and is
focused on the introductory part, background of the study, statement of the Problem,
significance of the study, objective of the study, search question, scope of the Study and
limitation of the study& the organization of the study. The second chapter is deals with
literature review, definition of deposit mobilization, theoretical conceptualization the role
financial institution on deposit mobilization, deposit mobilization in commercial banks; the
review also extends to concepts & empirical literature on institutional &environmental factors
that affects deposit mobilization of commercial banks. it also details the conceptual
framework of the study. The third chapter concerns with research methodology, Description
of the study area, sampling technique (procedure) data collection method and data analysis
procedure. The fourth chapter deals with data analysis, findings and discussion of the study.
The fifth chapter focused on Summary of findings, conclusions and recommendations.
9
1.9. Operational definition of the study
1. Deposit mobilization: This is defined as taking of money from clients for storage into their
bank account which is later withdrawn for consumption or investments.
2.Institutional factors: This are the attributes of the saving system internal in the commercial
banks that create an environment that foster or deter performance by the actors/staffs of the
commercial banks .The regulatory environment is defined by policies, strategies, guidelines that
create incentive for performance.
3. External factors: This is defined as the attributes of the external environment to the
commercial banks. The regulatory environment is defined by regulatory policies, competition
and income status of potential deposit clients.
10
CHAPTER TWO
2. LITERATURE REVIEW
2.1 Chapter overview
This chapter preset the reviewed literature on deposit mobilization accordance with the study
objectives. it presents the theoretical conceptualization the role of financial institutions in deposit
mobilization, deposit mobilization trend in Ethiopia and empirical evidence on factors that
influence saving mobilization. The review also extends to the empirical literature on deposit
mobilization influencing factors in developing countries like Ethiopia and focus on institutional
and environmental factors. Finally, a summery will identify the gap and justify the relevancy of
this study is presented.
2.2. Theoretical conceptualization of deposit
According to Bello (2005), banking system is the backbone of financial intermediation through
the mobilization and channeling of financial resources. Banks in performing their pivotal role in
the economy, facilitate financial settlement through the payment system, influence money
market rates and provide a means for international payment. The sector mobilizes funds from the
surplus spending units into the economy and by on-lending such funds to the deficit spending
units for investment, banks in the process increase the quantum of national savings and
investment (Mordi, 2004)
Commercial banks as well as the sector in general do depend on customer‟s deposit to advance
its clients. According to Sharma (2009), the bank credit and bank deposits are very closely
related with each other that they represent, roughly speaking, two sides of the same coin, and the
balance sheets of banks. With regard to the question whether loans make deposits or deposits
make loans, two kinds of answers have been given for the puzzle. Banks, the world over, thrive
on their ability to generate income through their lending activities. The lending activity is made
possible only if the banks can mobilize enough funds from their customers. Since commercial
banks depend on depositor‟s money as a source of funds, it means that there are some
relationships between the ability of the banks to mobilize deposits and the amount of credit
granted to the customers. Thus, the main function of financial institutions of mobilizing funds
from the surplus economic agents to the deficit economic agents is put to test in order to generate
11
economic growth. However, the efficiency of performing this function depends on the level of
development of the financial system. The finance literature provides support for the argument
that countries with better/efficient financial systems grow faster, while inefficient financial
systems bear the risk of bank failure. (Kasekende, 2008)
Mohan (2012), Mobilization of deposits is one of the important functions of banking business. It
is an important source of working fund for the bank. Deposit mobilization is an indispensable act
or to increase the sources of the banks to serve effectively. Mobilization of deposit plays an
important role in providing satisfactory service to different sectors of the economy. The success
of the banking greatly lies on the deposit mobilization.
Mobilization of deposits is one of the important functions of banking business. It is an important
source of working fund for the bank. Deposit mobilization is an indispensable factor to increase
the sources of the banks to serve effectively. Mobilization of deposit plays an important role in
providing satisfactory service to different sectors of the economy. The success of the banking
greatly lies on the deposit mobilization. Performances of the bank depend on deposits, as the
deposits are normally considered as a cost effective source of working fund. There are different
types of deposits, with different maturity pattern carrying different rates of interests. Deposit
mobilization is depending on the cost of deposits. Mobilization of deposits for a bank is as
essential as oxygen for human being. To enhance profitability, banks take steps to minimize the
expenditure and are forced to mobilize low cost deposits. (Sylvester, 2010)
In the present context banks‟ performance is measured on several indicators, including the
deposit mix and the quantum of low cost deposits in the mix among others. In the present era of
competition and with the emergence of private and multinational banks, an ideal mix of deposits
is a must to survive. Since the interest paid on deposit forms a big burden on bank, the
mobilization of low cost deposits, like current account and savings bank deposit is the urgent
need for the bank. Banks borrow and lend, they borrow money by accepting deposits from the
public including members of the bank. Deposit mobilization is the chief source of funds to
undertake lending operations, for profitable operation, the amount of deposits is very important.
The banks should introduce various deposits schemes to attract the public to deposit. It is the size
of the deposits that largely decides the lending potential of a bank.(Rajeshwari,2014
12
2.3 The role of commercial Banks in Financial Systems
Commercial bank deposits are major liabilities for commercial banks. (Kelvin, 2001) said that
deposits of commercial banks account for about 75% of commercial banks liabilities.
Commercial banks keep lending as long as they possess adequate deposit.
Therefore, banks will be better off if they are mobilizing more deposits. However, as (N.
Desinga, 1975) indicates deposit mobilization is a very difficult task. The cost of intermediation
for mobilizing deposits is also very important part of overall intermediation cost of the banking
system as (E.A. Shaw 1995) indicates. In spite of the difficulties, deposits play an important role
not only to the banking sector but also the overall economy.
All the financial performance of most of the commercial banks in one way or the other related to
the deposit it managed to be mobilized. Deposits provide limits to the working capital of the
bank. The higher the deposit, the higher will be the funds at the disposal of a bank to lend and
earn profits (N. Desinga, 1975). Therefore, to maximize its profit the bank should increase its
deposit. (Mahendra, 2005) had also mentioned deposits as a foundation up on which banks thrive
and grow and deposit is unique items on a bank‟s balance sheet that distinguish them from other
type of business organizations.
Commercial banking is a service industry with a high degree of built in profit potential
(Meenakshi, 1975). Commercial banks mainly depend on the funds deposited with them by the
public to lend it out to others in order to earn interest income (Davinaga, 2010). However, banks
attract deposits by paying a risk free return to the savers. Interest expense is number one expense
on the income statement of most commercial banks. (Hamid 2011) said that if banks lose their
deposit base they rely on non-deposit based funding that is very expensive and consequently
minimizes the profit margin.
2.4 Major Types of Deposit products
Deposit account is a savings account, current account or any other type of bank account that
allows money to be deposited and withdrawn by the account holder. These transactions are
recorded on the bank's books, and the resulting balance is recorded as a liability for the bank and
represents the amount owed by the bank to the customer. Some banks may charge a fee for this
service, while others may pay the customer interest on the funds deposited. The account holder
13
has the right to withdraw any deposited funds, as set forth in the terms and conditions of the
account. The following are most common type of bank deposit.
Demand Deposit: it consists of funds held in an account from which deposited funds can be
withdrawn at any time without any advance notice to the depository institution. Demand deposits
can be "demanded" by an account holder at any time. Many checking accounts today are demand
deposits and are accessible by the account holder through a variety of banking options, including
teller, ATM and online banking.
Savings Account: is a deposit account held at a bank or other financial institution that provides
principal security and a modest interest rate. Depending on the specific type of savings account,
the account holder may not be able to write checks from the account (without incurring extra fees
or expenses) and the account is likely to have a limited number of free transfers/transactions.
Time Deposit: time deposit or certificate of deposit (CD) held for a fixed-term, with the
understanding that the depositor can make a withdrawal only by giving notice. A time deposit is
an interest-bearing bank deposit that has a specified date of maturity. Generally speaking, the
longer the term the better the yield on the money (Dereje, 2017)
2.5 .Importance of Deposit mobilization
A. a source of investment
According to(Ongore&Kusa, 2013) Intermediation function of banks play a vital role in the
efficient allocation of resources of countries by mobilizing resources for productive activities.
They transfer funds from those who don't have productive use of it to those with productive
venture. (Nwanko, Ewuim, &Asoya, 2013) States that, savings are resources which one decides
to put aside for investment purposes and not for luxury. What people save, avoiding toconsume
all their income, is called "personal savings". These savings can remain on the bank accounts for
future use or be actively invested in houses, real estate, bonds, shares and other financial
instruments.
B. Low cost
According to (Shettar&Sheshgiri, 2014) the success of the banking greatly lies on the deposit
mobilization. Performances of the bank depend on deposits, as the deposits are normally
considered as a cost effective source of working fund.
14
Elser, Hannig, &Wisniwski, (1999) savings are a source of funds with low financial costs i.e.,
interest costs, Compared to other commercial funds. With regard to financial costs, most of the
institutions apply a differentiated interest rate schedule, compensating for the higher
administrative costs with no or low interest rates on small savings and increasing them according
to the size of the deposit.
C. A source of profit
According to (Varman, 2005) the ability of a bank„s management and staff to attract checking
and saving accounts from business and individuals is an important measure of the bank„s
acceptance by the public. Deposits provide most of the raw materials for bank loans and thus
represent the ultimate source of bank profits and growth.
Tuyishime, Memba, &Mbera, (2015) also affirmed that, Deposits are an indispensable tool
commercial banks use to enhance its profitability through advancing deposits mobilized to its
customers in form of loans which make in return interest to commercial banks.
D. Economic Growth and Development
According to (Ongore&Kusa, 2013), In addition to resource allocation good bank performance
rewards the shareholders with sufficient return for their investment. When there is return there
shall be an investment which, in turn, brings about economic growth. On the other hand, poor
banking performance has a negative repercussion on the economic growth and development.
Poor performance can lead to runs, failures and crises. Banking crisis could entail financial crisis
which in turn brings the economic meltdown.
2.6 Factors that affects the deposit mobilization of commercial banks in Ethiopia
The factors that influence the commercial banks deposit are categorized into two main parties as
institutional (internal) and the external environmental factors.
2.6.1 Institutional factors and saving mobilization
2.6.1.1 Internal saving policy
Luara et al.(1999) argues that people are willing and have capacity to save with commercial
institutions but can only do so if the institution offer appropriate saving products and an
appropriate institutional structure and regulatory environment to guarantee safety of their funds,
easy of immediate access and positive real return to savings. A number of empirical literature
15
open insights into crucial factors that are likely to affect the role played by financial institutions
in saving mobilization. These are: institutional type, governance organizational structure,
appropriateness of saving products the regulatory environment .the elements have been analyzed
and specific strategies on how to successfully mobilize savings identified in context of financial
institutions in the other countries. Similarly, Maimbo&Movrotas (2003) observed a changing
trend in aggregate as well as private saving &government saving in overtime in Zambia. This
change was attributed to the financial institutional reform as well as in decline in government
foreign debt. Bank outreach is also a key factor in saving mobilization .most saving especially in
the rural area probably are not efficiently mobilized as a result of factors, which amongst others;
include bank spread otherwise referred to as commercial bank branches distribution .the poor
bank distribution lead to the development of strong informal financial sectors, which now
competes with the formal sector at an almost equal strength (Anza, 2005; Ngendakuriyo et al.,
2014) Performance of commercial banks in saving mobilization can also be linked with the
general performance management literature which underscores a significant link between
employees‟ competence ,motivation ,rewards, remuneration, and punitive actions with
performance(Chubbe ,Reilly &Brown,2011Strebler,Robinson, & Bevan(2001) observed that
organization can improve performance by adopting either a developmental approach or punitive
action .The former concerns interventions to build staff capacity to perform better trough fitting
people to roles that would allow them to perform better, adopting reward system, encouraging
&motivating poor performers(Locke &Latham,1990;Likert , 1959;Karuhagna,2010;Chubbe et
al.(2011) .the later entails adoption of more punitive method of identifying and weeding out
those who are seen as nonperformers.
2.6.1.2 Employees attitude, incentives, promotion &monitoring
Deposit mobilization is the most important function of commercial banks since their successful
functioning depends on the extent of funds mobilized. In Nigeria, the government has directed
banks from time to time to make all possible efforts to mobilize new deposits, which can
expedite the pace of lending activities. Historically, monetary incentives have been used to
reward bank employees for good job performance. Monetary rewards have been tied to the
achievement of sales or target deposits (Bonner and Sprinkle 2002).
16
Thus staff financial incentive scheme in the banking industry are mostly designed to have
positive and powerful effects on productivity in terms of deposit mobilization. According to
Omolayo and Owolabi (2010), most financial incentive schemes or bonuses in banks are
designed in a manner that only better performing staff (especially marketers) are rewarded with
higher salaries or bonuses. In the banking sector in Nigeria marketers are given higher
compensation for working better and harder in meeting or exceeding targets given to them. As a
marketer, your ability to mobilize more deposits earns you financial reward.
Similarly, Suleiman (2011) observed that salaries of bank staff are tied to their performance in
bringing deposits. Thus, incentives are designed to motivate staff to achieve high performance
levels, change behaviors and attitudes. He described financial bonus or incentives in the banking
sector as rewards for achieving certain targets or making a certain effort toward mobilization of
deposit. Financial incentive scheme is a potential tool for boosting the deposit mobilization
efforts of marketers and managers of bank branches. Those performances are monitored on a
monthly, quarterly or yearly basis depending on the bank.
Ahmed (2010), asserted that the purpose of target deposit and the financial implication in terms
of staff incentive is to improve marketers efforts in deposit mobilization. He stated that most
banks in Nigeria implement individual performance based monetary staff incentive which
considers only the amount of deposits brought to the bank. He opined that one major “lever” for
increasing individual efforts is money. Monetary incentives have a direct impact on employees
income, regardless of the payment‟s frequency (i.e. whether the incentive “package” is paid out
monthly or quarterly, or at other intervals). Therefore, the staff members targeted by a monetary
incentive scheme will feel a direct impact on their own incomes and ultimately, on their
livelihoods. He submitted that it is only logical that a financial institutions employee will take a
keen interest in any financial incentive scheme designed (or planed) for them. After all, they are
the ones who are most directly affected by such schemes.
According to Hartman (2011), in most financial institutions both in developed and developing
economies, financial incentives or bonuses are typically designed for marketers and staff
involved in attracting deposits. These incentives measure and reward performance in the short-
term, focus on target deposit mobilization, and bonuses make a significant difference to the
remuneration of the staff affected. He opined that incentives transform best into improved
performance if:
17
1. Staff perceives a strong link between their individual effort and reward; a) performance is
measured and rewarded in the short term (monthly or quarterly); b) the performance of
individual employees (marketers) is measured and rewarded;
2. Rewards are monetary and make a significant change to the employee‟s total remuneration;
bonuses are not capped. Clark and Condly (2003), sees economic and money reward as the
greatest motivator for marketers and bank staff in general. They conducted a meta-analytic
review of all adequately designed field and laboratory research on the use of incentives to
motivate performance. They reported that in all the studies, money was found to result in higher
performance gains than non-monetary incentives. The literature on target deposit and its
financial implication for marketers and individuals is well documented. In a study on the way in
which United Kingdom banks practice internal marketing, Omon- Donkakis (2011) discovered
that banks set sales targets for the majority of contact personnel and the branch as a whole.
Internal marketing is used to direct people‟s efforts towards achieving higher sale. Everyone has
to get their sales targets in order to get the bonuses and a salary increase at the end of the year.
Omon- Donkatis (2011), noted that banks in the United Kingdom tie monetary rewards to the
achievement of sale targets. Front line personnel have more monetary incentives than back-up
personnel because of their selling role. As part of internal marketing banks design and promote a
program called “Pentathlon” in which the banks reward individual performance in terms of the
sales targets achieved. The monetary rewards are between 20 pounds and 1000 pounds. The
banks also reward two managers who achieve the highest performance results in terms of sales
nationally. This creates competition within the branch network. Branch personnel receive
literature on a quarterly basis which emphasizes the importance of meeting their sales and profit
targets in order to gain the monetary rewards. These are also monetary rewards given for
individual performances in terms of (a) the highest number of new accounts opened and (b) the
highest sales figures for specific products including loans, cards and insurance services.
Impact of target Deposit on Individual Promotion
Constant and due promotion is a way by which employees climb to the top of their career and
achieve by joining an organization. He posited that everything that will enable the employee to
achieve his ambition of promotion and self-actualization will motivate him to put in his best in
18
his work. Thus, there is significant effect on the quality of performance when personal ambition
in joining an organization is not achieved.
In any organization career progression is mostly based on promotion and is of paramount
importance to the employees. Thus, promotion is necessary for climbing to the top in any chosen
career. However, organizations differ in their criteria for staff promotion. In the mainstream civil
service, promotion of civil servants is upon mandatory duration of certain number of years,
favorable scores in performance evaluation, and passing of written examination. In the tertiary
institutions (especially for academics), it is mainly through additional qualification and
publications, while in the banking sector it is based on performance. Whatever the organization
may be, promotion can be a powerful motivating force just as monetary compensation or
intrinsic rewards. Milkorich and Newman (2008) opined that the most important human resource
management issue nowadays is reward structure. They stated that due to global competition and
environmental uncertainty most employers have shifted from traditional ways of reward structure
and design them on the basis of performance, skills knowledge and competency. This they
concluded is to attract, retain and motivate talented employees to achieve their objectives.
Gunu(2009),reported that in the Nigeria banking industry there is relationship between “target
deposit‟ and promotion of bank staff. He asserted that promotion in most of the banks both in the
pre-consolidation and post consolidation eras to a large extent depend on the value of deposits a
bank staff could mobilize. This he concluded has given rise to the emergence of unprofessional
bankers especially in the top management levels. According to Farooq and Ullah (2010), money
is not the only effective motivator in business. Employees may also see factors aside from money
as prime motivators. They noted that in the banking sector motivation can be increased by given
employees more responsibility so that they can feel their contribution is more valuable to the
business and that their contribution is appreciated. They further observed that banks also promise
staff the chance of promotion if they reach a certain standard or target. Thus, promotion of bank
staff is mostly based on meeting deposit mobilization target.
In the same vein, Dauda and Akingbade (2010) noted that financial institutions especially
commercial banks have introduced the process of appraisal which is a huge motivator to
employees. This is because they will be recognized for the value they add (or do not add) to the
business by reviewing their progress and achievements over a certain period. However measures
of financial performance, such as targets based on revenue or deposit mobilization, profit or
19
income, cash flow or interest on loans, are still frequently used for performance measurement in
the banking sector. Haerdle, et al (2011), observed that the main instrument used by banks to
raise their deposit is giving incentives and promotion to staff, who works in the deposit area,
should they have widened the number of depositors by promoting the bank‟s products. Because
of this fact, nowadays financial institutions/banks use the level of deposit in the branch as
standard measuring tool of staff performance. They also noted that since bank staff has
considered the promotion incentive as a benefit, in most instances, clients have been obliged by
concerned staff to open a deposit account to get in turn the bank credit facilities. Obliging clients
either directly or indirectly to deposit their money in the banks in such a way has benefited the
banks in deposit mobilization. Adegbaju and Olokoyo (2008) asserted that the opportunity for
promotion in the banking sector is a powerful motive for good performance. They observed that
most marketers or bank staff works harder to meet or exceed their target deposit so that they can
move to a higher rank within the organization. In his contribution to the impact of target deposit
on promotion, Oyewole (2011) emphasized that most often banks in Nigeria have a policy of
filling all vacant managerial positions from within the organization. This is intended as a signal
to employees that it pays to work hard since the best employees can move up through the ranks.
He however noted that as a result of stiff competition and the consolidation program, banks in
Nigeria start seeking for “hot” high profile marketers even in other banks to make managers of
their banks. It is documented that high performing marketers in the banking sector move from
one bank to the other as they will, and are easily promoted to the next level or two steps ahead of
their present position by other banks. In most cases these marketers use their skills, connections
to increase the deposit of their new employers. Some even go to the extent of moving the high
profile customers they introduced to the former bank to the new bank by all means. It is therefore
no secret that promotion of marketers and bank staff is nowadays highly dependent on meeting
or exceeding deposit mobilization targets.
2.6.1.3. Marketing strategy and deposit mobilization
A marketing strategy combines product development, promotion, distribution, pricing,
relationship management and other elements; identifies the firm's marketing goals, and explains
how they will be achieved, ideally within a stated timeframe. Marketing strategy determines the
choice of target market segments, positioning, marketing mix, and allocation of resources. It is
20
most effective when it is an integral component of overall firm strategy, defining how the
organization will successfully engage customers, prospects, and competitors in the market arena
of corporate strategies, corporate missions, and corporate goals. As the customer constitutes the
source of a company's revenue, marketing strategy is closely linked with sales. As per the
research conducted by TIebbar (1988) studied marketing strategies of banks aimed at inculcating
the habit of thrift among the people. The suggestion is that keeping the rural branches open on
Sundays can augment savings. Direct marketing is also suggested to reduce waiting time
exponentially and enhance customer satisfaction. Erratic behavior of the employees, suspicious
looks of the staff, vague knowledge of the products, undynamic promotional methods etc., may
hamper the banking business in rural areas. In the process of study, Mehta (2010) in his article”
Personal Selling-A Strategy for promoting Bank Marketing “reported that there is lack of
Marketing Communication in Indian Banks .He suggested for adopting banks suitable marketing
promotion strategies for better business. He emphasized that on adoption of personal selling as a
strategy for marketing promotion in Banks the banking business can improve considerably.
In another study made by Gupta, and Mittal (2008), in their article” Comparative Study of
Promotional Strategies of Public and Private Sectors Banks in India “stated that a well -designed
promotional strategy is very important to promote banking services effectively .They studied that
the promotional strategies of private and public sector banks are almost similar. Both types of
banks take the help of almost all type of media to promote their services. The major difference in
the promotional strategies adopted by banks is in the two techniques of the promotion and they
are "Personal Selling" and "Direct Marketing". The difference is that public sector banks do not
adopt the strategies of promotion as personal selling and direct marketing; on the other hand the
same are adopted by private sector banks.
According to A.S.Mohanrani and C.Mahavi, Feb (2007) conducted an empirical study on,
―Product related characteristics, Promotion and Marketing Mix are key tools in determining
Purchase Behavior of Purchase Decision by Teenagers. Results suggest that teenagers are
influenced by updated information of the product and hence they go for information search,
collect information from different dealers on various aspects like price, technology etc. They are
also influenced by peer compulsion of sales talk of the dealers. Teenager„s employees two
strategies- Emotionally convincing & logically convincing to convincer their parents. Logical
teenagers give importance to sales promotion factors like offers & schemes, while emotional
21
teenagers gives importance to aesthetic appearance, color, brand value, popularity &social image
on selecting the products. Marketing strategies comprises of marketing mix which involves 7Ps
to organize business in effective manner. In the process of that a detailed review is collected with
regard to 7Ps and presented in following paragraphs includes - product, price, place, promotion,
people, process and physical evidence.
Vashist (1987), in his doctoral work, evaluated the performance of PSBs with regard to six
indicators, i.e., branch expansion, deposits, credit, priority sector advances, differential rate of
interest, advances and net profits, over the period 1971-83. The study has ranked Indian
Overseas Bank at the top and Dena Bank at the bottom. To improve the performance of
commercial banks, the study has suggested development of marketing strategy for deposit
mobilization, profit planning and strengths, weaknesses, opportunities and threats analysis in
banks.
Robert A.W. Kole& BAS Hillebrand (2003) conducted the study on ―What makes product
development market oriented? Towards a conceptual frame work, author presents a conceptual
frame work detailing the elements of market oriented product development and the relationship
between these elements.
RajaniSofat&PreetiHiro, (2007) conducted a comparative study on Creativity and Innovations in
retail banking- A comparative analysis of financial product offered by ICICI & HDFC bank.
Results suggests that now challenge for banking sector in the current scenario is to design and
innovate the financial product which are convenient to use & continuously meet financial goals
of the customers.
Dixit, V.C. (2004) concludes that for successful marketing and to make it more effective,
identify the customer needs by way of designing new products to suit the customers. The staff
should be well equipped with adequate knowledge to fulfill the customer‟s needs. We should
adopt long-term strategies to convert the entire organization into a customer-oriented one.
Dwivedi, R. (2007) explained that finance functions are important but not as important as the
marketing functions. Friction between the marketing and finance functions would be detrimental
to the smooth development and functioning of any business organization. Finance objectives like
value maximization to shareholders are integral parts of any new strategy adopted by the
organization. But this objective seems to have been lost amidst the flurry of marketing activities
22
focusing on market share. Conscious efforts must be taken to avoid the missing core objective
and for sales growth.
Goerge J. Avlonitis and Kostis A. Indounas ( 2005 ) conducted the study on Pricing objectives
and pricing methods in the services sector, the findings of the study reveal that the objectives,
which are pursued, are fundamentally qualitative rather than quantitative in their nature with a
particular emphasis given on the company„s customers. The pricing methods, which are adopted
by the majority of the companies, refer to the traditional cost-plus method and the pricing
accounts to the market„s average prices.
SubbaRao (1982) conducted a study to find out the influence of different media of advertisement
and different forms of personal selling on the deposit mobilization of commercial banks both in
urban and rural areas. The study suggested that the medium of English Newspapers need not be
used widely as its impact is very little on urban customers and it is almost negligible on rural
depositors. Personal selling or direct contact has been found to be more powerful method, since
it educates the potential rural customers into the bargain.
Chidambaram (1994) studied the promotional mix available to bankers for the marketing of
services such as direct marketing, public relations, social banking and customer meets. The study
concludes that a good promotional mix is one that a) that takes into account the objectives of the
bank and lays emphasis on those services which are of current significance, b) reaches various
customer segments very effectively, c) creates a desire to seek out the services offered, d) builds
a positive image for the bank, and e) strike a balance between cost and effectives
Booz Allen Hamilton (2005) conducted the study on ―Improve productivity to make the most of
branch popularity study has created a framework for understanding the drivers of performance.
As well as staff roles and time-spend, it has identified four other drivers: network size and
structure, sales process effectiveness, performance measurement and management and process
efficiency.
Adrian J. Palmer (1995) conducted the study on ―Relationship Marketing: Local
implementation of a universal concept, this paper discusses the nature of relational exchange and
governance within a cross cultural context advises caution in the implementation of western style
tactical relationship marketing activity in markets where relationships represent core cultural
values.
23
Lynthia Webster (1995) conducted the study on ―Marketing culture and marketing
effectiveness in service firms, marketing culture refers to the unwritten policies and guidelines
which provide employees with behavioral norms, to the important the organization as a whole
places on the marketing function, and to the manner in which marketing activities are executed.
Kola and Akinyele (2010) in their article “Evaluation of Effectiveness of Marketing
Communication mix element in Nigerian Service Sector” state that Creating effective
communication with customers is the most important aspect in-services marketing. The
effectiveness of advertising and personal selling practices of Nigerian service sector in
communicating with its customers with the aim of finding solutions to improve the existing
communication and customer satisfaction was accessed. Five parameters 1) Providing
Information 2) Creating Awareness 3) Changing Attitude 4) Building company Image 5)
Enforcing Brand Loyalty were considered in the study. The research revealed that both these
elements are moderately effective in providing information, creating awareness and changing
attitude whereas ineffective in building company image and enforcing brand loyalty.
Rajasekhara (2008) in his article “Assessment of Effectiveness of Marketing communications
mix elements in Ethiopian Service Sector” stated that creative effective communication with
customers is most important aspect in services marketing. He evaluates the effectiveness of
advertising and personal selling practices of Ethiopian service sector in communicating with its
customers with the aim of finding solutions to improve the existing communication and customer
satisfaction. He found that marketing communication mix elements viz. Advertising and personal
selling are moderately effective in providing information, creating awareness and changing
attitude whereas ineffective in building company image and enforcing brand loyalty.
2.7 External environmental factors and saving mobilization
Consistently, Luara et al. (1999) articulates the influence of regulatory environment both external
& internal to the financial institutions. The external environment concerns the police &
regulation set by regulatory authority in regard to performance standard upon which financial
institutions institute internal controls such as polices regulations & capacity measures to meet the
standards. The regulatory environment also partly determines the emergency and growth of
financial institutions in saving mobilizations including commercial banks, microfinance
institutions, insurance companies employee saving schemes and which in view of Ang(2010)
24
promotes private investment but also create competition that compromises the role of other
institutions in saving mobilizations (Tennant, 2007).the regulatory environment will also
determine the internal regulatory policies ,regulations ,performance control mechanisms and
overall performance in saving mobilization .for example the positive real returns to savings will
more likely depend on interest rate charges which in in view of (Tennant ,2007)partly
determines the efficiency and effectiveness of bank in transferring fund to borrowers for
investment of internal performance management control measures is crucial and depends on the
quality of the institution‟s governance &management system .the expertise of governance and
management boards and representation of key stakeholders is likely to differ across financial
institutions and determines the effectiveness of decisions taken regarding enhancing savings
mobilizations.
Among the key external environment factors is supervision from the regulators. This particularly
underline the necessity of developing efficient internal controls because decentralized internal
control system allow operational flexibility while insuring aquacade level internal control(Elser
et al.,1999).furthermore ,Dahou et al (2009 ) also cited inadequate regulatory framework as one
which makes for a highly concentrated banking sector, very low intermediation rates and
inefficient collateral registry systems that further impede business &the individual access to
save.
One part of savings ,household or individual ,the real per capita income of the individuals prove
to be a foremost influence on saving rate .when the income of the individual increases the
consumption pattern improves which in the sense some part is left out which goes to saving as to
secure one‟s unforeseen future. In addition, Nayak (2012)pointe out demographic factors such as
sex ratio ,the age distribution &the rate of dependent population and social barriers such as
variations &distinctness in the age sex, culture, tradition, social taboos as key factors in
determining saving behavior of individuals.
Microeconomic instability, vital external force to the bank often in the form of high inflation rate
is known to impede financial development (2012) as it discourages financial saving. Pearce
,Davis, Onumah&Butterworth (2004) added that monetary policy intervention to contain
inflationary pressure, usually through sale government debt instruments like treasure bills tend
to reduce the volume of credit available to the private sector as well as raising the cost of
borrowing .in addition , other key external factors cited by Maimbo&Mavrotas(2003) increased
25
level of poverty and unemployment, increased investment in property for private and
commercial purpose& the HIV/ADIS epidemic. This is in support of what Adenutsi (2007)
found that in the long run, improved financial deepening is the only component of financial
development that significantly promotes bank saving mobilization specifically, an increase in
deepening the financial sector by 100 percent would lead to at least a 21 percent increase in
amount of deposit mobilized by commercial bank as a ratio of GDP. Another important external
environment factor is customer preference &desires .since customers of the financial institutions
are not the same in terms of need and wants, observing their preferences very often will make it
possible for the MFIs to improve on their service &develop suitable product which will
eventually ensure increased saving mobilization (Brafu-insaidoo&Ahiakpor, 2011).
2.7.1. Competition
Now a time Competition in the banking industry operates is fierce; the competitive advantage
strategy would be that the bank would be able to compete on deposit mobilization.
Differentiation would be viable strategy in this case as there is like hood that the loyal customer
would stay with bank. It would also be hard for competitor to cope with the specialist. When
bank inaugurated will strive to be the best and to deliver better and quality service through well
trained and qualified workforce and win the competition through delivering better and quality
service by well trained and qualified workforce and by using differentiation strategy. Banks
should win this competition by providing excellent service for its customers to mobilize more
resource and use their good will to attract its customers and for those that do not have good will
it is recommended that Banks should build goodwill to be acceptable for the society and should
win the public confidence.
2.7.2. Inflation rate
Banks in their quest to boost deposits and increase self-sufficiency must analyze the behavior of
depositors in a period of inflation. The latter is the persistent increase in the general price level
for a specified period of time. Thus, it is a fall in the market value of money (purchasing power)
as a result of persistent rise in prices. Real value of money declines resulting in benefit to debtors
and loss to creditors (Brealey and Myers 2003).
From the monetarist point of view inflation is demand pull and an exogenous rise in money
supply is the causality. In the short run an increase in money supply induces demand above
26
supply of goods and services which causes prices to rise until the market adjusts to the
equilibrium. The structuralist however, argues from the effect of changes in the socio-political,
economic and institutional structures with the view to increasing growth in the economy of
market failures (Kirkpatrick and Nixon, 2002).
Beim expresses the most popular view held by economists by characterizing on inflationary
period as the period of uncertainty, distortion of capital gains and negatively impacts on the real
interest rates making markets difficult to allocate resources efficiently (Beim et al., 2001).
Investors with surplus funds hold on to assets which can appreciate in value rather than money
whose value are frequently eroded away. Empirical evidence from Latin American countries as
stated in the World Development Reports indicates that inflation is an implicit tax on depositors
and has the capacity to reduce profits through low deposit rates. A strong correlation exists
between real interest rates and inflation as both can impact on deposits and savings (World
Development Report, 1989).
2.7.3. Saving interest rate (Deposit rate)
One of the most effective factors for deciding to deposit in banking system is the interest rate
(Mohammad andMahdi, 2010). Moreover, this article shows the impact of interest rate on the
performance of the banking system to achieve the goals that are expected from the banking
system. Herald and Heiko (2009) also mentioned interest as one of the determining factor for
commercial banks deposits. Philip (1968), also states that the offering of attractive interest rate
on bank deposits may be considered to have had a beneficial effect. Moreover,
MustafaandSayera (2009) said that low deposit rates are discouraging saving mobilization. V. V.
Bhatt (1970) said that the banking system is unlikely to be in a position to meet the demand for
bank credit unless concerted policy is pursued to raise the rate of saving generally and the rate of
saving in the form of deposits in particular. Interstate in the banking system is held as investment
cost from the investor‟s point of view and opportunity cost from the depositor‟s point of view
(Mohammad and Mahdi, 2010). Thus, capital market forces balance interest rates.
In other words, the just and correct interest rate should be determined through market
mechanism, that is, interest rate is balanced in supply and demand conditions in proportion with
the inflation rate. Eustacius and David (1995) states that deposits are more interest rate sensitive
and banks may choose to increase investments in interest rate sensitive assets and to decrease
27
investments in loans. That is commercial bank deposits are interest rate sensitive, therefore as the
interest rate changes the deposit of the commercial banks will change. It is known that depositors
bring money to the bank which the bank in turn lends it to borrowers. The gross earnings of the
bank are determined by the volume and composition of loan able funds and the rates at which
they are loaned. After losses and expenses of operation are deducted, the net earnings provide a
margin out of which interest on deposits can be paid. Because of the competition for these funds
among bankers who desire loan them at a profit, a bank must pay interest or lose deposits to a
competitor.
The payment of interest on deposits is explained in this wise, like any other interest rate. As to
Erna and Ekki(2004), Economists, mainly conventional ones, believe that depositors are attracted
to deposit their money in banks because of the opportunity cost of holding cash in hand is high
when the interest rate is also high (Romer, 2001, p. 346; Athukorala and Sen., 2004, p. 498).
This can easily be explained by the utility maximization (cost minimization) premise, as a
depositor will choose an action that will maximize their welfare or satisfaction. As to Richard
(1971), regulation of the commercial banking industry affects the returns which commercial
banks realize on their deposits and capital. That is although deposits are the source for profit
ofbanks it is influenced by regulation of the country. Accordingly, the higher profit rate on
demand deposits is to a large extent the result of the prohibition against the payment of interest
on these deposits. Therefore, depositors are motivated by returns. Using an Adaptive Expectation
Model (AEM), it is founded that depositors are indeed motivated by returns in Malaysia (Erna
and Ekki, 2004). On the other hand, Erna and Ekki (2004), states that Ghafur‟s (2003) shows that
the rate of interest does not have influence on the volume of the deposits. However, Rose (2001)
said that banks increase their deposits by offering higher deposit rate. These are the articles that
contradict to each other in identifying the relationship between the commercial banks deposits
and saving interest rates or deposit rate.
Giovannini (1985 and 1988) employed time series data and undertook cross-sectional studies to
show that there is little empirical support for the existence of strong relationship between
aggregate savings and positive real interest rates. Tybout and De Melo (1986) and Yusif and
Peters (1984) supported Giovannini‟s view in their study on domestic resource mobilization in
Korea from 1965 to 1982.
28
Gupta (1987) examined the effects of real interest rates on personal savings of rural and urban
households in a survey of a group of Asian and Latin American countries, using per capita
aggregate savings as the dependent variable in a cross-sectional model with alternate interest
rates as independent variables. He concluded that though per capita income levels were low,
incentives such as positive real interest rates could lead to higher savings especially from the
urban
sector. Gupta further observed that real interest rates have an effect on the structure of savings. In
his findings, financial savings as a percentage of total savings increases with increases in deposit
rates. These findings support the financial expressionists‟ view that interest rate liberalization
encourages savings.
2.7.4 per Capita Income of the Society
According to Jim (2008), per capita is the level of GDP divided by the population of a country or
region. Changes in real GDP per capita over time are often interpreted as a measure of changes
in the average standard of living of a country. If households and firms desire to hold more
money, deposits will increase (Evan et al, 2006).So the relationship between income and deposits
is positive, that is as the income of the society increases the same happens for the commercial
bank‟ deposits. Therefore as society‟s per capita income increases the same will happen for
commercial banks deposit increment. One of the basic determinants of savings which almost all
the studies in the area of savings have tried to study is income. Different studies using different
methods have been conducted in different parts of the world and all have found a positive
relationship between income and savings. Based on the findings, some scholars have propounded
certain theories.
The Keynesian Savings function and the Friedman Permanent Income postulate a positive
relationship between savings and income. Friedman Permanent Income hypothesis distinguishes
between permanent and transitory components of income in which case households tend to
consume the permanent income while the transitory income is channeled into savings with a
marginal propensity to save from this income approaching unity (Quartey and Blankson, 2008).
Studies conducted by other scholars have also found similar results. For instance, Collins (1989)
examined the saving behavior in nine Asian developing countries plus Turkey since the early
1960s. Using a times-series data, the results show trends and differences in saving across
29
countries and within countries over time. However, in the midst of all the differences in savings
rate and savings behavior, the results from all the countries confirmed that increase in income
have a positive effect on household savings.
Evidence from Sub-Saharan Africa and other developing countries, albeit mostly from middle- to
upper-income households, suggests that income positively influences saving and in ways
consistent with Keynesian Savings function and the Friedman Permanent Income. In Kenya,
household income was found to be a statistically significant predictor of savings among rural
farmers, entrepreneurs, and teachers (Kibet et al., 2009). A similar result was found in Uganda
where higher permanent and transitory incomes significantly increased the level of net deposits
among households that reported owning bank deposit accounts (Kiiza& Pederson, 2001). The
findings in Uganda do not differ from what Athukorala&Sen (2004) also found in India even
though both used different approaches. They found a positive relationship between income and
savings in India just as Abdelkhalek et al (2009) found in their microeconomic analysis of
household savings in Morocco. In the far region of Pakistan, the analysis of the savings behavior
of different groups by urRehman et al (2011) also found similar results and in the Philippines,
Bersales&Mapa (2006) also found a positive relationship between income and savings. These
findings suggest that households save a larger share of their income when that income is higher
and this has been proven to be positive in all the regions across the world.
Athukorala and Sen (2004) noted in their analysis of the determinants of private savings in the
process of economic development in India from 1954 – 1998 that real interest rate return on bank
deposit had a statistically significant positive effect on Indian‟s savings behavior. The income
growth variable was found to be an important determinant of the private savings rate. The
Keynesian „absolute income hypothesis‟ was found to hold for savings behavior in India.
Similarly, the empirical estimations from Dirschmid and Glatzer (2004) analysis of the
determinants of household savings rate in Australia using an error correction model showed that
the savings rate was positively influenced by income growth in both the short and long run. In
the same way, Samuelson and Samuelson (1980) in their work stated that rich people save more
than poor people not only in absolute but also in percentage amounts. The very poor are unable
to save at all. Instead they „disserve‟, that is spend more every year than they earn, with the
difference being covered by debt financing. Thus income is a prime determinant of savings.
30
Thus, all the studies above, there is a positive relationship between income and savings and even
though these scholars used different strategies and methods, their findings were similar.
2.8 The research gap
From the forgoing discussion, saving mobilization is crucial to economic development
particularly countries like Ethiopia that are increasingly becoming reliant on domestically
generated revenue to finance investments. The literature open insight into the factors that
influence deposit mobilization of commercial banks. This implies the institutional factors and the
external environmental factors. But from the view of imperial evidence of previous research
study the related research has not taken into consideration the most institutional factors such as
deposit regulatory environment-management capability, strategy, Police guideline, employees‟
attitude, incentive system, marketing strategy. The previous research studies depends on macro-
economic (external environmental) factors when assessing factors affects deposit of commercial
banks like inflation rate, interest rate and related variables. So after observing the gaps in the area
of research, the researcher initiated to assess factors affecting the deposit mobilization of
commercial banks, specifically at Hawassa city branches.
2.9. Empirical Evidence of Deposit Mobilization from Developing Countries
The literature on saving bears a wide focus on influencing factors. The factors identified in these
studies basically related to what influence savers ability to save the factors can be perceived in
three dimensions. First are socio-economic attributes of the savers including Gender, Age,
education, and income &household size second their willingness, motivation &opportunity to
save. And third are institutional factors such as regulatory environment characterized by interest
rate, inflation rate, and government police, institutional arrangement to incentivize saving such
as contractual saving plans saving products and strategies like such as low minimum balance,
interest even for small saving as well as staff performance incentives to improve effectiveness
&efficiency including bonus, reward, training, staff supervision among others (Laura et al..,
1999).
Notably, the institutional factors influence the second category (willingness, motivation
&opportunity to save) and are therefore focused on in this study as primary factors influencing
deposit mobilization. For example , increasing taxation, if direct, reduce available income to
household if indirect, lower the purchasing power existing personal incomes, hence reduce the
31
ability to save .in contrast, interest rate may or may not motivate people to save depending on the
amount one saves. Where amount is small to attract high interest rate, individual may prefer
saving with indigenous association that grant them security, credit &social standing inside the
local community.
The significance of socio economic attributes of the saver in influencing saving has been
underscored in many studies in the Sub-Saharan Africa and developing countries context. For
example in Uganda (Kiiza&Pederson, 2001); Kenya (Kibet et al., 2009).;India (Abdelkhalke et
al.,2009);Philippines(Rehman et al.,2011)identify the factors that influence savings .Han
&Sherraden(2005) noted that institutional model of saving suggests that institutional factors
greatly influence an individual‟s abilities to save.
According to (Daniel, 2005), a deposit holds 63% of commercial bank liabilities. This indicates
that factors that affect deposits mobilization have a huge impact on the performance of
commercial banks. Developing economies are characterized by unstable macroeconomic
environments such as inflation, inappropriate fiscal and monetary policies, interest rate controls.
The net effect is the change in liquidity which affects savings and capital formation. Where the
macroeconomic environment is favorable to savings then the commercial banks are in a better
position to increase savings. On the contrary, where macroeconomic policies erode liquidity
from the hands of the people then deposits reduce and may negatively impact on capital growth
and investment in the country.
The study conducted by (Fadare, 2011) through linear least square model and time series data
from 1980 to 2009 examine the determinants of Banking Sector liquidity in Nigeria and assesses
the extent to which the recent financial crises affected liquidity in deposit money banks in the
country. The findings indicate that only liquidity ratio, monetary policy rate and lagged loan-to-
deposit ratio are significant for predicting Banking Sector liquidity; and that a decrease in
monetary policy rates, liquidity ratios, volatility of output in relation to trend output, and the
demand for cash, leads to an increase in current loan-to-deposit ratios; while a decrease in
currency in circulation in proportion to Banking Sector deposits; and lagged loan-to-deposit
ratios leads to a decline in current loan-to-deposit ratios. The result suggests that during periods
of economic or financial crises, deposit money banks are significantly illiquid relative to
benchmarks, and getting liquidity monetary policies right during these periods is crucial in
ensuring the survival of the Banking Sector.
32
The research study undertaken by (Wubitu, 2012) on factors determining commercial bank
deposits in Ethiopia using both primary and secondary data from the year 2000 – 2011 which
regressed the dependent variable or total deposit with three independent variables bank branch,
deposit rate and inflation rate through multiple regression model indicated that all have positive
effect on deposit of the bank, but their significances differ from one variable to others. Hence,
the findings depicted that branch expansion had positive and significant effect whereas deposit
rate and inflation rate have positive and insignificant effect on total deposit of the banks.
According to Kazi (2012), in banking sector, deposit mobilization is a scheme intended to
encourage customers to deposit more cash with the bank and this money in turn will be used by
the bank to disburse more loans and generate additional revenue for them. The main business for
banks is accepting deposits and granting loans. The more the loans the banks disburse 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 customers.
According to Laura, Alfred, Sylvia(2009), to mobilize more deposits, financial institutions offer
a range of savings products that are tailored to their particular clientele. They offer the widest
variety of specialized savings products, so that their customers have a choice between
immediately accessible, liquid products, or semi-liquid accounts or time deposits with
accordingly higher interest rates. Simple and clear design of basic savings products enables
depositors to easily select the product that best suits their needs. The simple and transparent
design of the savings products also enables staff to administer them with ease, reducing
administrative costs
2.10 Empirical Evidence of Deposit Mobilization from Ethiopian’s Commercial Banks
Andinet (2016) the aim of this study is to examine factors influencing deposit mobilization in
private commercial banks in Ethiopia. In doing so, the study adopted quantitative methods
research approach using secondary data. The study had found variables that can affect the total
deposits of the banks. Seven variables are regressed with the dependent variable i.e. total deposit.
The explanatory variables are number of bank branches, deposit interest rate, liquid asset to
deposit ratio, lagged value of bank deposits, net interest margin, inflation rate and economic
growth (GDP). The data for these variables were collected from the respective private
commercial banks‟ financial statements, national bank of Ethiopia, central statistical authority
33
and MOFEC of the sample year 2005 up to 2015. Different diagnostic test were performed to
know whether the model is valid or not. All the tests were valid and eventually regression
analysis was performed using E view statistical package. The result from regression analysis
showed that number of bank branches, deposit interest rate, net interest margin and GDP were
significantly and positively correlated with the explained variable. Lagged value of bank deposit
was significantly and negatively correlated with total deposit. However, liquid asset to deposit
ratio and inflation rate were insignificantly negatively correlated with bank deposit. Finally the
study had recommended what should be done to mobilize more deposits.
Kibebe(2016) the research tried to determine factors that affect deposit mobilization, the
associated costs of deposit mobilization in private banks. Therefore, the study adopts mixed
approach to gather the data. The primary data is gathered using questionnaire. Sampling method
of the primary data is purposive sampling technique. While the secondary sources of data were
extracted from annual reports of all private commercial banks of Ethiopia, data from National
Bank of Ethiopia (NBE) and from Central Statistical Authority (CSA). Regarding the secondary
data, the study used time series data from 2000-2014 for analysis made using Classical linear
regression method. The study shows that, Age dependency ratio, Investment and money supply,
are the most significant factors of deposit mobilization activity. The other variable such as Per
capita income has insignificant power to influence the dependent variable. As a result, the study
recommended that, Government should increase investment so as to promote economic growth
to mobilize deposits since there exists a positive relationship between Deposit and Investment.
And private banks ought to increase number of branches to mobilize more resources.
Shemsu(2015) this study aimed to identify and evaluate those factors affecting bank deposit in
general by taking Commercial Bank of Ethiopia as evidence. Accordingly, the researcher adopts
mixed research approach. Regarding to the qualitative data; questionnaire is used to gather
information from the employees of commercial bank of Ethiopia particularly for those
employees who actively participated in deposit mobilization tasks in CBE city branches.
Regarding to the secondary data; time series data covering 1998 -2014 was analyzed. First, the
time series data were assessed using descriptive statistics for the variables as well as the test for
heteroskedasticity, autocorrelation and normality testing to know if the assumptions of CLRM
violated or not.
34
Dereje (2017) the purpose of this study is to investigate determinants of deposit mobilization in
private commercial banks of Ethiopia using panel data of six private commercial banks from
year 2002 to 2012. The study used both quantitative and qualitative research approach.
Secondary financial data are analyzed using multiple linear regressions models for the six bank‟s
deposit. Fixed or random effect regression model was applied to investigate the impact of bank
branches, exchange rate, Real Gross domestic product, Capital Adequacy and Liquidity on
private commercial banks deposits. Besides, the study used primary data analysis to solicit
managers‟ perception towards the determinants of private commercial banks deposit
mobilization. The empirical results from regression analysis showed that bank branches,
exchange rate, and real gross domestic product affects deposit of the bank positively whereas,
capital adequacy and liquidity affects the deposit of the private banks negatively. This
implication show that better capitalized banks tend to create less liquidity that leads to mobilize
little deposit amount. On the other hand the feedback of respondents depicted that managerial
efficiency, government policy, convenience of bank office, technology, bank size and awareness
of savings by society affected deposit level of the banks significantly. Thus, management bodies
of private commercial banks should strive to strengthen the identified significant factors and
government bodies should also see the adverse effect of tight polices imposed on the existing
private commercial banks as well as for the new entrant banks. Second, estimated model was a
single regression equation with deposit as the dependent variable and explanatory variables as
deposit interest rate, overall inflation rate, number of branch opening, gross domestic product,
individual foreign remittance and dummy variable. Estimation was done using Ordinary Least
Squares technique by E-views7 statistical package. The results from economic analysis showed
that all the explanatory variables were positively correlated with the explained variable. Among
these variables, branch opening is an important strategy for deposit mobilization, it is highly
significant than others. Individual remittances from diasporas is also next to branch opening is
significantly affects CBE‟s deposit. The others are affects positively and can increase CBE‟s
deposit. And finally, the study had recommended what should be done to encouraging deposits
growth by Commercial bank of Ethiopia for the benefit of the domestic deposit mobilization.
Giragn (2015) this paper then explores the theoretical as well as empirical analysis of those
factors having an impact on deposit volume in banks and even assesses which ones are more
significant or less significant. To do the practical investigation in terms of commercial banks in
35
Ethiopia, the researcher collected the relevant data from annual reports of twelve years (2001/2-
2012/13) and from questionnaires and interviews made to senior bank officers of seven banks.
The data is analyzed through the econometric analysis using SPSS software.
The study reveals that the branch expansion, the money supply, the exchange rate of Birr to USD
and general inflation are the most significant factors of deposit mobilization activity. The other
variables-deposit rate and real per capita GDP growth rate have insignificant power to influence
the dependent variable. In this research, as opposed to the conventional economic theory, the
deposit rate is found to have negative relation against the deposit volume for the period under
study. The study also exposes that the deposit mobilization activity is becoming challenging, its
associated costs are escalating and the competition is also becoming stiff-the outcome of the
competition favoring the big size state banks. Beyond that the government policies are also
favoring the latter in an effort to mobilize huge fund for a national development activities. The
research recommends that banks have to do much in branch expansion studying potential deposit
areas.
36
2.11 Conceptual framework
Below are indicated independent and depending variables included in the research topic factors
affecting deposit mobilization and financial performance of commercial banks in Ethiopia. The
conceptual framework interlinks independent and dependent variables as depicted in the figure
below:
Independent variable
Dependent variable
Source: own application, 2019
Figure 2.1 conceptual frameworks for analyzing deposit mobilization influencing factors
The conceptual framework in figure above presents a link between institutional factors and
saving mobilization and the moderating effect of external environmental factors. Deposit
mobilization is measured in the terms of values of deposit but important by the ratio of deposit to
assets. Ideally the mobilization of savings is a function primary done by the staff in the banks
that must be regularly monitored and any deviation satisfactory performance motivated with
incentives like rewards or better pay and any poor performance sanctioned with punitive actions.
Internal saving policy
Performance incentives
Promotional strategy
Income
Interest rate
Competition
Inflation rate
Deposit mobilization
37
However, implementation of these require an appropriate regulatory environmental characterized
by incentive systems, training policy, performance procedures and guidelines. These are
typically institutional related factors.
On the other hand, performance of bank in the deposit mobilization can be dictated by the
external environmental factors such as poverty or income level, interest rate on savings and
inflation rate. For example, increased income means that individuals have capacity to save after
meeting their basic needs. Similarly while high interest rate on saving could motivate individuals
to sacrifice some income for saving in the banks or abandon saving in secret places. High
inflation rate could diminish the capacity of individuals to save by spending more of their
consumption .these assertions are supported by a variety from a theoretical and empirical
orientations earlier presented in chapter two.
38
CHAPTER THREE
3. Research Methodology
This chapter presents the methodology that was used to obtain the primary and secondary
qualitative and quantitative data for the study. It aims to highlight the overall methodological
consideration of the paper, which includes Description of the study area, Research Design,
Target population, Sample Design, Data source and type, Data collection methods, Data process
and analysis.
3.1 Description of the Study Area
Hawassais a city in Ethiopia, on the shores of Lake Hawassa in the Great Rift Valley. It is
located 273 km south of Addis Ababa , 130 km east of Sodo, and 75 km north of Dilla. The town
serves as the capital of the Southern Nations, Nationalities, and Peoples' Region, and is a special
zone of this region. It lies on the Trans-African Highway 4 Cairo-Cape Town, and has a latitude
and longitude of 7°3′N 38°28′ECoordinates: 7°3′N 38°28′E and an elevation of 1708 meters
above sea level.
Hawassa was capital of the former Sidamo Province from about 1978 until the province was
abolished with the adoption of the 1995 Constitution. This city is home
to HawassaUniversity (which includes an Agricultural College, a Main Campus and a Health
Sciences College), Hawassa Adventist College, and a major market. The city is served
by Hawassa Airport (ICAO code HALA, IATA AWA), opened in 1988. Postal service is
provided by a main branch; electricity and telephone service are also available.[1]
Important local
attractions include the St. Gabriel Church and the HawassaKenema Stadium. Fishing is a major
local industry.
Based on the 2007 Census conducted by the Central Statistical Agency of Ethiopia, this zone has
a total population of 258,808, of whom 133,123 are men and 125,685 women. While 157,879 or
61% are living in the city of Hawassa, the rest of population of this zone is living at surrounding
rural kebeles. A total of 61,279 households were counted in this zone, which results in an
average of 4.22 persons to a household, and 57,469 housing units. In 2016, a new Industrial Park
was built in Hawassa to accommodate 60,000 jobs at a (1.3 km²) or 321 acre site.
39
Hwassa has a tropical savanna climate (Köppen Aw) though it borders on a subtropical highland
climate. There are two seasons: a lengthy though not intense wet season from March to October
and a short dry season from November to February. The extra cloudiness of the wet season is
sufficient to make it substantially cooler than the dry season despite a higher sun angle; however,
the coolest morning temperatures, often close to freezing, occur during the dry
season.(http://en.wikipedia.org/wiki/Awassa)
3.2 research design
The Research design is a plan of collecting and analyzing data in an economic, efficient and
relevant manner. Manheim and Rich (1995), define study research design as a plan of the study
that organizes observations in such a way as to establish a sound logical basis for casual
influence. The author also added that it is a plan of action adopted by researcher in carrying out
the research. This study adopted descriptive and quantitative method to obtain data useful in
evaluating present practices and providing a basis for decision making. According to Mugenda
and Mugenda 1999), descriptive research is a process of collecting data in order to test
hypotheses or to answer questions concerning the current status of the subjects in the study. A
descriptive study determines and reports the way things are. Descriptive research is used to
describe characteristics of a population or phenomenon being studied. Quantitative method
addresses research objectives through empirical assessments that involve numerical
measurement and analysis. The quantitative methods of data analysis can be of great value to the
researcher who is attempting to draw meaningful results from a large body of qualitative data
(Mwituria, 2012). The study also designed as explanatory researches since it explained the
trends in deposit mobilization by commercial bank of Ethiopia. The design applied to explain the
influence of factors related to commercial banks (institutional) and the external environment. It
also explain the relationship between independent and dependent variables .Which evaluate &
explain cause and effect relationship of independent variables( internal deposit policy, new
product promotional strategy strategy, incentives ,interest rate, income level, competition) and
dependent variable-deposit mobilization. A survey data was conducted to collect quantitative and
qualitative data on a sample of selected commercial bank‟s branch managers and banking staffs
in order to address research objectives. For the purpose of understanding how deposit
40
mobilization has involved in the recent periods, a trend analysis of saving data in the last six
years (2012-2017) was used.
3.3 Data type and sources
Both Quantitative and Qualitative data was collected to answer the basic research questions to be
stated in the study and to attain desired objectives of the study. Quantitative data involves
numeric scores, while qualitative data includes interviews. And also both primary & secondary
data sources were used to collect data.Primary data refer to information obtained first hand by
the researcher on the variables of interest for the specific purpose of the study. The secondary
data refer to information gathered from source already existing. Primary data was collected by
using self-administrated questionnaires which prepared for selected branch managers and
banking staffs. The objective of primary data is designed to gain information regarding the
influence of the institutional factors on deposit mobilization such as internal saving polices
strategy and guideline. It also entails the deposit mobilization knowledge and skill gaps among
staffs, the performance of incentive system. Regarding the secondary data, the data relevant for
the study was gathered from district office & head office of annual report of commercial bank of
Ethiopia &the bank websites. Secondary data is mainly used to analyze the deposit mobilization
trend, the volume of deposit (demand, time deposit, private& public deposit) mobilized. Data
regarding inflation rate, income level and interest rate was collected from annual report of NBE,
central statistical agency (CSA) and other banks websites.
3.4 Target population
A population can be defined as the complete set of elements or entities under investigation. A
population refers to the group of individuals, organizations or events that a researcher is
interested in making an investigation (Kazeeorani, 2001:996).Thestudy targeted population of all
branches under Hawassa city branches. There were seventy four (74) total branches under
Hawassa District, of which seventeen (17) branches were found at Hwassa city. And the remain
fifty seven (57 ) were outline branches ,out of seventeen city branches target population sample
of eight branches were selected through purposive sampling technique with an objective of
insuring that only those which had operated more than five years were included in the study to
allow analysis of trend in saving mobilization for the last six years.
41
Table3.1. the target population of the study includes all branches of Hawassa District.
S.N Branch Name S.N Branch Name S.N Branch Name S.N Branch Name
1 Aare Branch 20 CheleleketuBranc 39 Gudumale Branch 58 Moyalle Branch
2 Adolla Branch 21 Chirri Branch 40 Hambela Branch 59 NegeleBorena Br
3 Alemura Branch 22 Daka Branch 41 Hanchulucha Bran 60 Otilcho Branch
4 AletaChulo Branch 23 Darakebedo Branch 42 Hantete Branch 61 Sessa Branch
5 Aletawendo Branch 24 Dato Branch 43 Harekello Branch 62 Shakiso Branch
6 AmaroKelle Branch 25 Daye Branch 44 Hawassa Branch 63 Tabor Branch
7 Anfele Branch 26 Dilla Branch 45 HIP Branch 64 Tesso Branch
8 AradaLiben Branch 27 DoriBafeno Branch 46 Hayadima Branch 65 Tula Branch
9 Arebegona Branch 28 Dume Branch 47 HokoGirja Branch 66 Tutit Branch
10 Arebsefer Branch 29 Erbamuda Branch 48 Hula DirereBranc 67 Uraga Branch
11 Aroressa Branch 30 Filtu Branch 49 Kercha Branch 68 Wadera Branch
12 Bensa Branch 31 Furra Branch 50 Kofi Branch 69 W.amanuelBranc
13 Bonna Branch 32 Gafima Branch 51 Leku Branch 70 Wonago Branch
14 Bore Branch 33 Gambo Branch 52 Manicho Branch 71 Wondogenetchuk
15 Borecha Branch 34 Gebrielsefer Branch 53 Mega Branch 72 Yabelo Branch
16 BuleHorra Branch 35 Gedeb Branch 54 Meibeko Branch 73 Y/cheffe Branch
17 Buledi Branch 36 Gidabo Branch 55 Melkasoda Branch 74 Y/rgalem Branch
18 BurjiSoyoma Branch 37 Gorche Branch 56 Mesincho Branch
19 Bursa Branch 38 Guangua Branch 57 Michile Branch
Source: CBE, 2019
The main objective of the study is to assess factors affecting commercial banks deposit, to meet
these objectives of the study and to generalization from sample to population; the researcher
selected eight branches from all city &outline branches by using simple random sampling
techniques. For the interest of analyzing the trends of deposit mobilization for the last five years,
the branches chosen were operated for more than five years and that had kept the required
performance data in deposit mobilization that would be utilized in analysis for trend analysis.
42
The selected Branches are Dato Branch, Adare Branch, Tabor Branch, Hawassa Branch, Dume
Branch &Furra Branch, Aleura & Gebraelsefer Branch. Within the branches, the study was
conducted on staffs engaged in the deposit mobilization function .The staffs were expected to
experienced and knowledgeable on issues concerning the saving mobilization function in their
respective branches upon which they were provided valuable information about deposit
mobilization trend of the bank within the banks.
3.5 Sample design
A sample design is a definite plan for obtaining a sample from a given population. It refers to the
technique or the procedure the researcher would adopt in selecting items for the sample. For this
study eight (8) city branches were selected from total seventeen city branches through
purposive sampling technique with an objective of insuring that only those which had operated
more than five years were included in the study to allow analysis of trend in saving mobilization
for the last five years. In contrast, the staffs and managers in each branch were selected by using
simple random sampling from different categories by role played in saving mobilization in the
bank. The categorization was meant to insure representation of views of staffs in different
position across the banks since, based on diversity of their job position, the staffs would share
multidimensional views vital to create more accurate and correct understanding of the factors
influencing saving mobilization in the banks.
3.5 .1 Sample size determination
The sample was drawn from the population of the study area. Accordingly, the total number of
city branch employees is six hundred. For the consistency of the study, only city branch
employees are selected by using simple random sampling techniques making the population 600.
The sample size was determined by using Yemane (1967) formula which was the most familiar,
simple as well as precise represent the target population. The way how the sample size is
determined by the given formula is shown as follows.
n =
Where n= sample size
N=total population
e = accepted of error
43
n=600 =600 =240
3.6 Data collection method In this study both qualitative and quantitative data was collected from primary and secondary
data sources. The primary data was collected from branches and district office of CBE Hawassa
city branches by using a self-administrated questionnaire. The questionnaire designed with 5
point likert scale approach & interview questions were designed to senior managerial staffs that
have good experience and knowledge regarding deposit mobilization & also to freely express
their personal attitude about the objective of the study. The target respondents of the study were
bank managers and senior employees. Because branch managers &senior employees have better
knowledge and experience on deposit mobilizations function. Regarding the secondary data,the
data relevant for the study was gathered from district office &CBE annual report, the bank
websites, by reviewing books, previous research works, articles and journals related, and online
information available.
3.7 Data analysis
The Primary data which was collected by self -administrated questionnaire was entered into
statistical tool SPSS software version 20 & analyzed by using descriptive and inferential
statistics .The analysis of the trend in as well as the current status of saving mobilization by
commercial banks utilized descriptive statistics .The average annual saving across commercial
banks were expressed as a percentage of average planned deposit and also a percentage of actual
total actual deposit .The percentage or score were categorized into unsatisfactory (0-50) and
satisfactory(51-100) and the percentage distribution of the two categories obtained .
3.7.1. Descriptive Analysis
Descriptive Analysis refers to the transformation of data into a form that was making them easy
to understand and interpret. Descriptive response or observation was typically the first form of
analysis. The calculation of averages, frequency distribution, and percentage distribution is the
most common form of summarizing data.
The self-administrated qualitative responses on factors influencing deposit mobilization coded in
SPSS, descriptive statistics mainly percentages were generated. Depending on whether the
44
respondents agreed or disagreed with the statements elicited on the questionnaire the percentage
of respondents who perceived the bank to be offering an environment of factors that can favor
affects deposit mobilization was generated. To affirm the influence of particular institutional
factors on saving mobilization, correlation and regression was used .The strength of relationship
or influence was tested at 1%&5% significance level. Findings were presented in graphs and
tables to ease visualization and interpretations.
3.7.2. The inferential statistics
Which is correlation and regression analysis was used to test the effect strength of relationship
between dependent and independent variables. Regression analysis was used to investigate the
effect of independent variables (internal saving policy, performance incentive system,
promotional strategy, interest rate, income level, and competition &inflation rate) on deposit
mobilization of commercial banks.
3.8 Model specifications
In this research multiple regression analysis was used by researcher of this study, because, it is
usually used in the research were there are two or more independent variables that were
hypothesized to influence one or more dependent variables (baker, 2006).
Multiple regression analysis is a popular statistical method used to understand how one or more
predictor variables influence the independent variable (Beckstead, 2012; Bonett& Wright, 2011).
Researchers use multiple regression analysis to understand the extent that the independent
variables affect the prediction of the dependent variable (Tonidandel&LeBreton, 2011).
Researchers use other statistical tests such as ANOVA and t-tests to test for correlation between
variables (Levine, Ramsey, &Smidt, 2001). However, regression analysis is an appropriate
statistical test to use if the goal is to assess the influence of one or more predictor variables on
the response variable (Levine et al., 2001)
The regression analysis is used to show to what extent dependent variable affected by various
independent variable. To test hypotheses set of the model, there is needed to find out if
independent variables are significantly affect the dependent variable, to test the relationships and
in that way the research hypotheses regression analysis is used in this research. Regression
45
analysis can determine how much of variable the variation in the dependent variable can explain
by the independent variables.
The statistical formula of the model
Yi = a + β1X1 + β2X2 + β3X3 + β4X4+ β5X5+β6X6+ β7X7+u
Where: Y is the dependent variable (deposit mobilization)
A is the constant (the value of "y" when the value of all independent variable are "0")
X1= internal saving policy
X2= performance incentive system
X3= promotional strategy
X4= competition
X5=Interest rate
X6=income level
X7= inflation rate
β1is the intercept term which give the mean or average effect of Y If all the variables excluded
from equation, β2, β3, β4 ,β5 &β6 refers to the coefficient of their respected independent variable ,
which measures the change in mean value of Y, per unit change in respective independent
variables.
The trend of saving mobilization was measured in two dimensions i.e. the average annual saving
mobilized of the district performance for the last six years was expressed as percentage average
planned deposit and also as the average actual deposit .The current state of saving mobilization
was measured by staffs rating on scale of 1-10, the extent to which they consider their
commercial banks to be effective in deposit mobilization.
The independent variables including institutional and external environmental factors were
measured from stakeholders‟ prospective. Respondents were asked to indicate the extent to
which they agree or disagree the same statements testing institutional factors that could
46
potentially influence savings mobilization. The response for the each of the statements on
institutional and the external environmental factors were measured on a 5-pointlikert scale.
According to Mugenda (1998), this scale is suitable for survey questions measuring attitude,
opinion and other factors .The scale running 1-5(1=strongly disagree,2=disagree,3=unjustified
,4=agree,5=strongly disagree),could accommodate every respondent‟s position regarding
constructs tested in the statements built in the questionnaire. Depending on the construct
measured for each variable such as availability, conclusiveness and adequacy, the response on the
5-point scale were then converted into binary for entry into the logistic regression model as
indicated.
3.7.3. Qualitative analysis
For qualitative data which was collected concurrently with the quantitative information in the
questionnaire, the initial stage was quick analysis of data on emerging issue .the handwritten
notes were assembled together and typed into a word processing program-Microsoft word. The
data was thoroughly read and manually analyzed for content and recurrent themes in the text
based on the key themes, phases quoted verbatim or statements were derived in accordance with
the objective of the study and used to build arguments or explain the quantitative responses.
3.9. Reliability test
Reliability test is the degree to which the measure of a construct is consistent or dependable.
There are many ways of estimating reliability one of which is internal consistency reliability. It is
a measure of consistency between different items of the same construct .If a multiple items
construct measure is administered to respondents, the extent to which respondent rate those items
in a similar manner is a reflection of internal consistency. This reliability can be estimated in
terms of cronbach's alpha (Bhattacheriee2012). George and Mallery (2003), stated that a
reliability score of greater than 0.9 is excellent, greater than 0.8 is good, greater than 0.7 is
acceptable, greater than 0.6 is questionable, greater than 0.5 is poor and less than 0.5 is
unacceptable. In this research cronbach's alpha mode will be used with 6 scales (internal saving
policy, incentive system, marketing strategy, interest rate, income level, competition &inflation
rate) .
47
Table 3.2: Reliability Statistics
Cronbach's Alpha N of Items
.807 7
(Sources: Researcher‟s Own Survey data, 2019)
In the study Cronbach's alpha was used to test internal consistency of the variables of factors that
affects deposit mobilization in commercial banks. Therefore, table 3.3 indicated that for 7 items
tested using 24 randomly selected respondents, the value of cronbach‟s alpha was 0.807, which
is greater than 0.7 and hence it can be concluded that they all are internally consistent.
Moreover, the item statistics result in table 3.3, indicted that the mean score of the item such as
variables internal saving policy, performance incentive, promotional strategy, interest rate,
inflation rate, competition, & income were found to be 3.5, 2.75, 2.71, 2.21, 2.38 & 3
respectively. Their respective standard deviations were also .885, 1.327, .955, 1.351, 1.527,
1.445, and 1.022.
Table 3.3: Item Statistics
Item Mean Std. Deviation N
Internal saving policy& strategy 3.5 .885 24
Performance incentive 2.75 1.327 24
Promotional strategy 2.71 .955 24
Interest rate 2.21 1.351 24
Inflation rate 2.38 1.527 24
Competition 3 1.445 24
Income 3 1.022 24
(Sources: Researcher‟s Own Survey data, 2019)
Table 3.3, indicated that all seven sets of variables used in the study were met the suggested
standard of α which is equals to 0.807, greater than 0.70 indicating that they all internally
consistent
3.10 Validity test
Validity refers to the extent to which a measure adequately represents the underlying construct
that it is equaled supposed to measure (Bhatteheriee, 2012).Validity of the instruments will be
ensured by consulting with different bank senior staffs and management. In this perspective,
48
ahead of designing the final questionnaire, the researcher conducted a pilot test to predict
accurately the effectiveness of this survey instruments. According to Lovell and Lawson (1970),
validity depends upon judgment of experts who after examining the contents decide what they
think it measures.
3.11 Ethical considerations
The researcher carried out the research work in ethical manner honestly and with integrity by
detecting the probability of fraud that may arise from being selective in sampling, deliberately
biasing data collection, making up data, not reporting survey response rate falsifying analysis
and data presentation. Conduct the study as much as possible with high integrity by taking
ethical responsibility in to considerations. And the respondents were assumed that participation
in the study could be voluntary and all information offered would be handled with utmost
confidentiality and also put use for the intended purpose to the benefit of the researcher and the
respondent.
49
CHAPER FOUR
FINDING AND DISCUSSIONS
4.1 Chapter over view
This chapter presents results and discussions .It is divided into three subsections. The first
subsection profiles the data by presenting a description of the respondents in the sample by the
gender, age, educational qualification, work experience and role played in saving mobilization.
The second subsection presents results on factors influencing deposit mobilization of commercial
banks including analyzing results while the last subsection elicits of institutional and external
factors especially descriptive statistics in saving mobilization and their influencing factors as
well as inferential statistics.
4.2 Description of respondents in the sample
Table 4.1 Rate of response by respondents
Questionnaire Respondents Valid percentage Cumulative
percentage
Returned 222 92.5 92.5
Not returned 18 7.5 100
Total distributed 240 100
Source: survey Questionnaires, 2019
As shown in table 4.1 above 240 questionnaires were administered to bank staffs and managers.
Out of 240 questionnaire that were distributed, 222(92.5 %) returned and 18(7.5%) of
questionnaires were not returned. The return rate indicates that there was a high rate of response
from the respondents.
4.3 Demographic characteristics of respondents
Analysis of factors affecting deposit mobilization of commercial banks indicate that the social
and demographic characteristics of individual such as sex, age, level of education and
occupational status associated with bank staffs and managers .
In order to trace the background of the respondents demographic characteristics were collected
and presented in the following tables.
50
4.3.1 Gender distribution of respondents
Table 4.3.1 Gender of respondents
Gender
frequency
percentage
Cumulative percentage
Female
100
45.0
45.0
Male
122
55.0
100
Total 222 100
Source: survey Questionnaires, 2019
The above table 4.2.1 shows the gender of the respondents, from total 222 respondents 100(45%)
were female and 122(55%) were male. Therefore the respondent to the sample questionnaire was
approximately proportional.
4.3.2 Respondents age distribution
Table 4.3.2 Age of the respondents
Age Frequency Percent Valid Percent Cumulative
Percent
20-30years 50 22.0 22.5 22.5
31-40 years 102 44.9 45.9 68.5
41-50 years 44 19.4 19.8 88.3
Above 50 years 26 11.5 11.7 100.0
Total 222 97.8 100.0
Source: survey Questionnaires, 2019
The answers of respondent to their age were outlined showed that the majority of the respondents
102(45.9%) were from age 31-40 and 50(22.5%) from the age of 21-30, followed by 44(19.8%)
51
from age 41-50 and 26(11.7%) from the age of 51 and above .The result indicates that more
respondent (45.9%) were in the age between31-40 years.
4.3.3 Respondents Educational level
Source: survey Questionnaires, 2019
The majority 192(86.4%) of employees had attained first-degree and above, 18(8.1%) diploma,.
this indicates majority of employees in the bank are first degree holders .This demonstrating
higher education endowment among stakeholders to the saving mobilization function. This result
is consistent with the qualification requirements of the position held by most stakeholders in the
saving mobilization function.
4.3.4 Respondents experience in deposit mobilization
Experience on the job is associated with on the skill and understanding of task which are vital to
enhance competence in executing the saving mobilization task and responsibilities compliance
.On the other hand, experience would determine the correctness of stakeholder‟s
option/argument during interviews .the status of experience among the studied respondents was
presented in the table 4.3.4below.
Table 4.3.3 Educational qualification of respondents
Frequency Percentage Cumulative percentage
High school complete 16 7.2 7.2
Diploma 18 8.1 15.3
first degree 172 77.5 92.8
master‟s degree 16 7.2 100.0
100.0
52
Table 4.3.4 work experience in the bank
Service years Frequency Valid Percent Cumulative percentage
1-5 years 35 15.8 15.8
6-10years 115 51.8 67.6
11-15 years 57 25.7 93.3
above 15 years 15 6.7 100.0
Total 222 100.0
Source: survey Questionnaires, 2019
With regard to the respondents experience in the bank ,35(16%) stayed 1-5 years in the
organization.115(52%) employees who have stayed 6-10 years.57(26%) employees stayed 11-15
years and 15(7%) stayed above 15 years .One can see from this the employees more 6-10 years
with the organization contains the largest number. This result demonstrates the endowment of
district with adequately experienced deposit mobilization staff that would potentially on one
hand, translates into higher individual capacity to executes the deposit mobilization tasks and
manage the entire deposit mobilization function.
4.3.5 Respondent by role played in the deposit mobilization
Different stakeholders play different roles in the deposit mobilization functions and would
therefore provide diverse views on the factors influencing deposit mobilizations. Consequently,
the evidence generated would be representative of the different groups of stakeholders in the
deposit mobilization function. The percentage distribution of respondents was presented in the
table4.3.5 below.
Table 4.3.5 Position of respondents in the bank
Source: survey Questionnaires, 2019
Position Frequency Valid Percentage Cumulative percentage
Marketing officers 13 5.8 5.8
Branch Manager 21 9.5 15.30
Ass. Branch Manager 28 12.6 28
Senior customer service officers 86 38.7 65.7
Customer relation officers 42 19 84.7
Credit manager 16 7.2 100
Financial Manger 16 7.2
53
The above table constituted more of bank managers than all other categories of deposit
mobilization stakeholders. Next to these were senior customer service officers and customer
relation officers all of with an equal contribution on the table. This can be attributed to the fact
that the bank managers, by nature of their position were readily available and would easy
respond to the call for interviews. In contrast, the other managers being under the bank managers
would wait for the instructions of the bank managers and sometimes would be reluctant due to
heaver workload.
4. 4 .The trend and current status of saving mobilization by commercial banks
The analysis of performance of commercial bank of Ethiopia, Hawassa District established as
well as the current status of saving mobilization in the commercial banks .The rate of saving
mobilization was established in the table below as annual plan, actual deposit mobilized and the
variation (%) of saving for the last six years. In the later, the respondents rating of their
commercial banks on saving mobilization were categorized into unsatisfactorily (for score of 0-
50) and satisfactorily (for score 51-100) and the percentage distribution of the two categories
Obtained on the figure 4.4.1 below
54
Figure 4.4.1 saving as a percentage of planned mobilized and total variation of deposit for the
years 2012-2017.
Figure 4.4.2 the percentage distribution of scores on performance in deposit mobilization
80
49
78 86 87
40
-20
-51
-22
-14 -13
-60
1940
1960
1980
2000
2020
2040
2060
2080
2100
2120
1 2 3 4 5 6
% variation
%planed
year
33
67
satsfactory(51-100 %)
unsatsfactory (1-50%)
55
As indicated in the figure 4.4.1 deposit mobilization decreased tremendously between years 2012
and 2013. For example, as a percentage of planned deposit, the actual saving realized by the
district decreased from 80% to 49% translating into 31 percentage slide in deposit mobilization.
There are attempts increases in the deposit mobilized in the following three years 2014-
2016.After which it declined one again between years the period 2016 and 2017 by a higher
magnitude of (47%) compared to the period 2013 and 2012.
Similarly, as a percentage of total deposit variation of the bank, a decline in deposit is observed
between the period 2016 and 2017 which was total variation (-60%). This implies from total
annual plan, 60 % of deposit was not mobilized. The statistics generally translates in to a
decreasing rate of deposit mobilization by commercial banks which the analysis in this study
went further to account for. This situation in Ethiopia‟s commercial bank is similar to that in
other countries such as Zambia where a decreasing trend in deposit mobilization was observed
(Maimbo&Mavrotas, 2003). In the views of the internal stockholders in the deposit mobilization
function i.e. .staffs in the banks, the current status of deposit mobilization is unsatisfactorily with
the majority of respondents (67%) rating the bank to not more (50%) in deposit mobilization
(figure4.4.2).
4.5 Factors influencing of saving mobilization by commercial banks
The analysis established the trend in saving mobilization and accounted for the trend by
establishing the institutional and external environmental factors perceived by stakeholders to
influence saving mobilization in the commercial banks under the study. Embedded in the
analytical analysis approach of this study, the percentage distribution of responses below and
above 3 on a 5 point ordinal scale are presented in table 4.5.1 ,they indicates responses
disagreement and agreement with the statements measuring prevalence or institutional challenges
and external impediments to the saving mobilization functions respectively as hypothesized in
the study.
4.5.1 Influence of institutional factors on deposit mobilization
The analysis of institutional factors was obtained and compared the percentage of respondents
rating of staff motivation ,performance incentives , such as salary enumerations ,reward and
sanctions ,strength of the internal saving regulatory environment, polices, strategy guidelines
,the strength of internal monitoring and evaluations measures and resource input into the saving
56
mobilization functions characterized by the adequacy of staff and competence , availability tools
and financial resources to run effectively run saving mobilization operation .results are presented
in the table.4.5.1
Source: survey Questionnaires, 2019
The banks were found to have instituted strong institutional framework for enhancing saving
mobilization. This was characterized by availability and implementation of appropriate policy
and strategies to enhance performance of employees in saving mobilization as indicated 85% of
respondents. Characteristics of this included the provision for performance incentive structures
Table 4.5.1Descriptive statistics of institutional factors.
% of respondents
Independent variables SD DA UN A SA
Our bank has good strategy, policy, guide lines with
emphasis on deposit mobilization functions
0 10 5 66 19
The saving mobilization staffs are motivated and job
committed
18 57 4 17 4
The saving mobilization staffs are adequately remunerated 15 57 4 19 5
Our bank has often rewarded employees for performance
excellence
29 51 5 15 0
The deposit mobilization operations in our bank are
adequately Supervised, monitored& evaluated
7 20 5 54 14
The banks instituted strong performance incentive 10 54 4 27 5
The bank facilitate saving mobilization staff with adequate
tools/resources
11 37 5 45 2
The banks have adequate and competent staff 9 21 4 48 18
The saving mobilization staffs are highly coordinated 11 41 5 27 16
The bank designed effective service marketing strategy to
promote new products or services
0 55 4 34 7
57
such as rewards and sanctions as well as adequate staff tooling and facilitation to enable effective
execution of performance mobilization.
The bank has also made significant effort to monitor and evaluate the saving mobilization
function which is essential to draw lessons and inform management decisions for enhanced
performance .This fact alludes from the availability and implementation of a monitoring and
evaluation system of the saving and mobilization operation in the bank as indicated by 68% of
the respondents agreed.
The institutional environment presented significance negatives regarding staff motivation /job
commitment as well as salary remuneration which constrained the effective implementation of
the saving mobilization function .The majority (75% of the respondents) disagreed indicate that
the saving mobilization staffs were not motivated and job committed .The some percentage of
respondents indicated that the staffs in the saving mobilization were not adequately remunerated.
In light of these findings .It was imperative to explore the association between the institutional
factors to determine the extent to which they influenced saving mobilization. The finding is
consistent with a variety of literature on performance management which observes the workers
remuneration and motivation remains critical challenges consequently affects performance of
employees and organizations (chubb.et.al. 2011; Locke& Latham1990; Likert 1959; karuhagna,
2010).
58
Table 4.5.2 Pearson chi square correlation analysis result for institutional factors and deposit
mobilization.
P RWD SAL EMOT SCOM DM PI SCON
P
Correlation 1 .415**
.267**
.436**
.363**
.416**
.316**
.462** .462**
P value .000 .000 .000 .000 .000 .000 .000 .000
N 222 222 222 222 222 222 222 222 222
RWD
Correlation .415**
1 .104 .356**
.184**
.278**
.149* .240** .240
**
P value .000 .124 .000 .006 .000 .026 .000 .000
N 222 222 222 222 222 222 222 222 222
SAL
Correlation .267**
.104 1 .392**
.372**
.257**
.403**
.544** .544**
P value .000 .124 .000 .000 .000 .000 .000 .000
N 222 222 222 222 222 222 222 222
EMOT
Correlation .436**
.356**
.392**
1 .467**
.507**
.454**
.561**
.561**
P value .000 .000 .000 .000 .000 .000 .000 .000
N 222 222 222 222 222 222 222 222
SCOM
Correlation .363**
.184**
.372**
.467**
1 .445**
.497**
.489** .489**
P value .000 .006 .000 .000 .000 .000 .000 .000
N 222 222 222 222 222 222 222 222
DM
Correlation .416**
.278**
.257**
.507**
.445**
1 .600**
.539** .539**
P value .000 .000 .000 .000 .000 .000 .000 .000
N 222 222 222 222 222 222 222 222 222
PI
Correlation .316**
.149* .403
** .454
** .497
** .600
** 1 .499** .499
**
P value .000 .026 .000 .000 .000 .000 .000 .000
N 222 222 222 222 222 222 222 222 222
SCON
Correlation .462**
.240**
.544**
.561**
.489**
.539**
.499**
1 1
P value .000 .000 .000 .000 .000 .000 .000
N 222 222 222 222 222 222 222 222 222
59
**. Correlation is significant at the 0.01 level (2-tailed).
*. Correlation is significant at the 0.05 level (2-tailed).
Where :
P=policy ,SCON=staff coordination
DM=deposit mobilization, SAL=salary
RWD=reward ,IP=performance incentives
EMOT =employees motivation, SCOM=staff competency
In the above table the P value in respect to the correlation coefficient for the variables such as
bank policy & deposit mobilization , rewarding system &deposit mobilization, salary
remuneration &deposit mobilization ,staff motivation & deposit mobilization, staff competency
&deposit mobilization ,strength of performance incentives &deposit mobilization ,staff
coordination and deposit mobilization were positive and statistically significant at (p<0.00).But
rewarding system in respect to salary remuneration, performance incentives& staff competence
were statistically insignificant and positively correlated. Indicating a significant relationship
between these variables. Notably there was no significant relationship between rewarding for
performance excellence and deposit mobilization, rewarding for performance excellence with
staff motivation and rewarding for performance excellence with performance incentive. This
implies that deposit mobilization was significantly influenced by rewarding system for
performance excellence, staff motivation and commitment which depends on strength of
performance incentives determined by salary remuneration to staff. The bank with staff who are
adequately remunerated were likely to be more motivated, committed and perform better in
deposit mobilization .In contrast, there was no significance evidence to conclude the banks
which implemented the performance rewards who would have their staff perform better. This
finding underscored the relevance of salary remunerations to employees‟
motivation/commitment and ultimately better performance. From table above rewarding system
is insignificantly correlated with salary remuneration which is .124 and .026 with performance
incentives. There is strong correlation between performance incentives, staff coordination and
deposit mobilization which was .600**& .539**respectively. The next highest correlation with
deposit mobilization was staff motivation & bank policy and strategy which is .507** &
.419** respectively .Staff coordination is moderately correlated with all other variables. This
60
finding indicated that rewarding system for performance excellence had significant relationship
with deposit mobilization and insignificantly correlated with salary remuneration and
performance incentives – which mean, rewarding system for performance excellence in the bank
significantly affects deposit mobilization function. Again all the variables in the above table were
positively correlated with deposit mobilization and also significantly influence deposit
mobilization. The correlations of all variables in all case are significant at 0.01 levels .But the
correlation for rewarding system &performance incentives were at 0.05.With regard to the salary
system and rewarding system it was approximately correlated at 0.05 levels. The correlations of
all variable in all case are significant at 0.01 levels as P value for each correlation is less than
0.005 (p<0.05). All variables of the study significant in its relationship with other variable of the
study.
The finding of this study suggested that the bank deposit mobilization is highly influenced by
salary remuneration, performance incentives &rewarding system. In further affirmation of this,
respondents had this to say
“in my view this more likely true to other staffs ,what matter is the monthly take home “salary”
It would every one‟s wish to excel in deposit mobilization to strengthen their job position in the
bank if the remuneration is motivating but not because comes with a prize “. Similarly, one
would be motivated to strive to perform satisfactorily and avoid the risk of being sanctioned if
the bank can pay a motivating salary. This is not to say that rewards and sanctions are not good
but the salary is what the really matters”.
Generally jobs in the banks are quite demanding in terms of time .One work full day and non-
stop but the payment is quite lower to compare with that of employees in the other sectors.
Though you would for example equate the salary for bankers with that of civil servants, the work
load for the civil servants is far less in my view.
4.5.2The influence of external environment on the saving mobilization.
The analysis further established the influence external factors on saving mobilization .Results in
table 4.5.2.1 indicates the options of respondents regarding the extent to which they consider the
bank‟s saving mobilization to be affected by the income of the clients, the extent to which the
inflation rate affects the saving capacity of society ,to what extent the interest rate is attractive to
61
interest sensitive customers to deposit their money in the bank & the extent to which banks
„saving mobilization is affected by the competition of other deposit taking institutions
Table 4.5.2.1 Descriptive statistics of the influence of external factors on deposit mobilization
Statements % of respondents on 1-5 scale of
agreements.
SD DA UN A SA
Bank saving mobilization is affected by incomes of
customers
0 14 4 52 30
Bank saving mobilization is affected by the rate of interest
the bank pay to depositors.
10 18 5 50 17
Bank saving mobilization is affected by market inflation
rate
0 20 5 53 22
Bank saving mobilization is affected other deposit taking
banks(competitors)
0 23 5 61 11
Source: survey Questionnaires, 2019
From the above table 4.5.2.1 majority of the respondents considered deposit mobilization by
commercial banks affected by income of clients and competition with other deposit taking
institutions.82% of respondents believed that bank deposit is affected by incomes of clients. In
the terms of interest rate 67% of respondents agreed that deposit mobilization was affected by
interest rate.
62
Table 4.5.2.2Pearson chi square correlation analysis result for external environmental factors and
deposit mobilization.
Variables DM INR IR ICM COM
DM
Correlation 1 .101 .533**
.134* .069
Sig. (2-tailed) .135 .000 .045 .304
N 222 222 222 222 222
INR
Correlation .101 1 .686**
.661**
.197
Sig. (2-tailed) .135 .000 .000 .003
N 222 222 222 222 222
IR
Correlation .533**
.686**
1 .593**
.180
Sig. (2-tailed) .000 .000 .000 .007
N 222 222 222 222 222
ICM
Pearson Correlation .134* .661
** .593
** 1 .204
Sig. (2-tailed) .045 .000 .000 .002
N 222 222 222 222 222
COM
Pearson Correlation .069 .197**
.180**
.204**
Sig. (2-tailed) .304 .003 .007 .002 1
N 222 222 222 222 222
**. Correlation is significant at the 0.01 level (2-tailed).
*. Correlation is significant at the 0.05 level (2-tailed).
The result from table4.5.2.2 statistical analysis showed that all the mentioned independent
variables were significantly and positively correlated with the explained variable (deposit
mobilization) in different strength. As indicated by the Pearson correlation test in above table
4.5.2.2, there is strong positive correlation between interest rate which is .533** and deposit
mobilization and the next highest correlation is income of client which is .134* .This implied
that income and interest rate were partially correlated with deposit mobilization and had strong
relationship with deposit mobilization. This study is consistent with the study conducted
by(Kibet et al, 2009), the household income was found to be a statistically significant predictor
63
of bank deposit among rural farmers, entrepreneurs, and teachers, This suggests that when the
income of an individual increase the consumption pattern improves which in sense some part is
left out which goes to saving so as to secure one‟s unforeseen future (Nayak (2013).there is also
strong correlation between interest rate and inflation rate which .686** ,interest rate and income
which is .593** and inflation rate & income which .661**. Regarding the effect of inflation rate
and competition with other deposit taking banks on deposit mobilization,).it was insignificant
relationship with deposit mobilization and positively correlated. This study is similar to the study
undertaken by (Mohammad and Mahdi, 2010) showed that in Latin America the effect of
inflation on saving and time deposit to GDP was insignificant.
4.6 Multiple Regression analysis of the study
In this research multiple regression analysis is used by researcher of this thesis, because, it is
usually used in the research were there are two or more independent variables that are
hypothesized to influence one or more dependent variables (baker, 2006).
The regression analysis is used to show to what extent dependent variable is affected by various
independent variables. To test hypotheses set of the model, there is needed to find out if
independent variables are significantly affect the dependent variable, to test the relationships and
in that way the research hypotheses regression analysis is used in this research. Regression
analysis can determine how much of variable the variation in the dependent variable can explain
by the independent variables. It is measured by adjusted "R" and R2.
Table4.6.1 Model Summary
Model R R Square Adjusted R
Square
Std. Error Sig
1 .805a .648 .636 .232 0.000
Source: survey questionnaire; 2019
A predictors; (constant), policy, performance incentives, product promotional strategy,
competition, income, interest rate& inflation rate
From table4.6.1 “R" has a score of .805 it is multiple correlation coefficient between dependent
and independent variables of the study "R" represents the value of multiple correlation
coefficients between the predictors and outcome (field, 2005).
64
The "R" value represents the simple correlation between deposit mobilization &policy,
performance incentives, marketing strategy, competition, income, interest rate& inflation rate.
Over all they have strong correlation.R2
= .648 which is the correlation between dependent and
independent variable value of the research. R2
is also called the squared multiple correlation
coefficient or the coefficient of determination. Since (R) 2
= (.805)2 =.648025, which rounds
.648. So table 4.7.1 above with R2
= .648 means that the total variation in the dependent variable
(deposit mobilization) is affected by 64.8 percent of the change (increase) in all independent
variables such as policy, performance incentives, marketing strategy, competition, income,
interest rate& inflation rate.35.2 percent of variation in overall effect on deposit mobilization
cannot be explained or caused by those listed independent variables, so that there must be other
factors that are not incorporated in the model to which affect deposit mobilization in commercial
banks. From this test result, the model is satisfactory and can be used for estimation purposes.
Table 4.6.2 analysis of variance (ANOVA)
Model Sum of
Squares
Df Mean
Square
F Sig.
1
Regression 21.238 7 3.034 56.192 .000
Residual 11.555 214 .054
Total 32.793 221
a. dependent variable: deposit mobilization
b. predictors(constant):P.PI,PRO,IT,INR,IN,COP
Source: survey questionnaires, 2019
In the above ANOVA table, the column labeled" sum of squares" describes the variability in
deposit mobilization value of regression. The regression sum of squares and residual sum of
squares is the difference between total sum of square and residual sum of squares (TSS-
RSS=32.793-11.555=21.238). Here each sum squares (Regression, residual and total under the
source column) has corresponding degree of freedom is N-1(=222-1=221), one less than the
number of observations.
The regression degree of freedom for the table above is 7 which is the number of independent
variable (. inflation rate, promotional strategy, competition, income, performance incentives,
interest rate &policy) in model of this thesis.
65
The residual sum of square (residual or left over) is sometimes in literature as error sum of
square is the part still cannot be accounted for after the regression model is fitted. It has
221degrees of freedom (=214-7) for this paper. The mean squares are the sum of squares divided
by corresponding degree of freedom the regression model has a mean square of 3.034 (2.238/7),
the residual means square is 0.096(21.238/221).
In general the ANOVA table shows that strong relation between independent and dependent
variables of the study with F-ration of 56.192 for the overall analysis and is worth mentioning
that F-value is highly significant as ( p=.000<.01).
Table 4.6.3 Multiple regression model results: factors that influence deposit mobilization by
commercial banks.
Model Unstandardized
Coefficients
Standardized
Coefficients
t Sig. Collinearity
Statistics
B Std.
Error
Beta Toleran
ce
VIF
(Constant) -.239 .118 -2.027 .044
P .082 .022 .171 3.660 .000 .751 1.331
PI .142 .017 .420 8.238 .000 .633 1.580
PRO -.055 .016 -.155 -3.500 .001 .843 1.187
IN -.067 .016 -.243 -4.189 .000 .490 2.040
IR .193 .020 .622 9.869 .000 .414 2.416
COP .003 .017 .008 .190 .850 .903 1.108
INR -.147 .024 -.385 -6.036 .000 .405 2.467
a. Dependent Variable: deposit mobilization
Source: survey questionnaire, 2019
A dependent variable; deposit mobilization
In table 4.6.3 above, the column co linearity statistics is used to identify the multi co linearity
problem of independent variables, (P, PI, PRS, IN, IR, and COP&INR). This is used to a cross
check in addition to the correlation table4.6.3 applied before the regression. Multi co linearity is
usually regarded as a problem because; it means that the regression coefficients may be unstable.
66
This implies that they are likely to be subject to considerable variability from sample to sample.
In any case, when two variables are highly correlated, here semis little point in treating them as
separate entities (savatsomboon, 2010).
Tolerance and variance inflation facto (VIF) of the table 4.6.3 above are means to identify the
existence of multi co linearity problem. If tolerance value is less than .20 the independent
variable should be dropped from the analysis do to multi co linearity.VIF may be used in lieu of
tolerance as VIF is simply the reciprocal of tolerance. The VIF value of each independent
variable should be less than 5% in order to avoid multi co linearity among independent variable
(Gline and morgan 2000) or tolerance of less than 0.2 or 0.1 and VIF 5 or10 above indicates
multi co linearity.
In this analysis, the inter correlation score become as follows
Policy = 1-.751= .249
Performance incentive = 1-.633=.367
Marketing strategy=1-.843=.157
Income=1-.490=.510
Interest rate=1-.414=.586
Competition=1-.903=.097
Inflation rate=1-.405=.595
Hence, the computed inter correlation value among the independent variables are much less than
one indicates that multi co linearity is not a problem.
Turning to VIF methods, since all values of independent variables are much less than 5(i.e.1.331,
1.580, 1.187, 2.040, 2.416, 1.108&2.467) for P, PI, PRO, IN, IR, COP& INR respectively, so
that multi co linearity again not a problem. So in both case measures, there is no multi co
linearity problem.
Here, follows the presentation of the hypothesis testing based on above table using "ß"
(Standardized) coefficients.
67
The regression equation of the research model become in the form
Y=DM= .171P+.420PI-.155PRO-.243IN+.622IR+.008COP-.385INR
Where:-
P = Policy IN= income
PI= performance incentives COP=competition
PRO= promotional strategy INR=Inflation rate
IR= interest rate
This regression equation has its own interpretation to the research model in connection with the
factors affects deposit mobilization in commercial bank of Ethiopia. Therefore, +.171P means
that one percent increase (or one standard deviation), keeping other constant, results increase by
1.5 percent of variation or change in deposit mobilization .The effect of this coefficient is smaller
than the coefficient of PI& IR & larger than that of PRO,IN,COP &INR coefficient of
regression equation. With regard to -.155 PRO, in the assumption of keeping stable other
variable, 1percent reducing in marketing strategy (promotion), (i.e. one standard deviation),
bring about 1.55% of variation or decrease in bank deposit level. +.008 COP is interpreted as
due to 1percent change (increase ) Cop or (one standard deviation), keeping other variable
constant, and the result in change (increase) by 0.8 percent of bank deposit level . Finally, -.385
INR means that 1 percent change (decrease) INR (1standared deviation) keeping other variable
constant, the results in increase of bank deposit by 38.5 percent in commercial banks. The
reverse is also true in all variables of the study.
Hypothesis testing
Hypothesis testing is the method of testing whether claim or hypothesis regarding population are
likely to be true. The goal of hypothesis testing is to determine the likelihood that population
parameter, such as the mean is likely true. Here there are two hypotheses: null (Ho), and
alternative (Ha).The null hypothesis (Ho), stated as null, is statement about population
parameter, such as the population parameter, such as the population mean, that is assumed to be
true, the null hypothesis starting point.
In this paper research tests whether the value stated in null hypothesis is likely to be true. An
alternative hypothesis (Ha) is a statement that directly contradicts a null hypothesis by stating
that the actual value population parameter is less then, or not equal to the value stated in the null
hypothesis.
68
The significance (sig) value expresses a value to accept or reject the (null) hypothesis. It is also
called p-value. The p-value is the probability that the correlation is one just by chance.
Therefore, the smallest the p-value, the better will be. The general rule is reject Ho if p < .05 and
accept Ho if P ≥ .05 (pallant, 2007). In this part of the study proof of the null hypothesis is based
on table 4.6.4 below for variables, P, PI, PRS, IN, IR, COP,INR either to accept or reject,
Because, to test research hypothesis set on chapter one.
Table 4.6.4 Independent variable with coefficient and p-value
Model Unstandardized Coefficients Standardized
Coefficients
t Sig.
B Std. Error Beta
(Constant) -.239 .118 -2.027 .044
P .082 .022 .171 3.660 .000
PI .142 .017 .420 8.238 .000
PRO -.055 .016 -.155 -3.500 .001
IN -.067 .016 -.243 -4.189 .000
IR .193 .020 .622 9.869 .000
COP .003 .017 .008 .190 .850
INR -.147 .024 -.385 -6.036 .000
Source: survey questionnaire
It is possible to find out if the independent variable. For the test relationship and in that way or
hypotheses, the regression analysis was applied for this paper.
Hypothesis 1
H1o: The internal saving policy has no significant effect on deposit mobilization of CBE.
H1a: The internal saving policy has significant effect on deposit mobilization of CBE.
The Beta of bank policy .171, the value has positive effect on the dependent variable deposit
mobilization. Since the value of p=.000 is less the .05, the coefficient of P, has highly significant
effect on deposit mobilization of commercial bank of Ethiopia.
Based on this null hypotheses is not accept (H10), and in turn, we accept the alternative
69
hypothesis (H1a). Therefore, The internal saving policy has significant effect on deposit
mobilization of commercial banks.
Hypothesis 2
H2o: Performance incentive has no significant effect on deposit mobilization of CBE.
H2a: Performance incentive has significant effect on deposit mobilization of CBE.
Table 4.6.4 of Beta value show that performance incentive has positive impact on deposit
mobilization with value of .420, since the p-value is less than .05 (at p=.000) the value is highly
significant. Thus, we reject the null Hypothesis (H1o) and, accept the alternative hypothesis
(H1a) says that performance incentive has significant effect on deposit mobilization of CBE.
Hypothesis 3
H3o: promotional strategy has no significant effect on deposit mobilization of CBE.
H3a: : promotional strategy has significant effect on deposit mobilization of CBE
Table 4.6.4 depicts that the Beta of promotional strategy -.155 this value has negative effect on
the dependent variable deposit mobilization. Since the value of p=.001 is less the .05, has
significant effect on deposit mobilization of commercial banks. Therefore, null hypothesis is not
accepted (H3o), and in turn, we accept the alternative hypothesis: promotional strategy has
significant effect on deposit mobilization.
Hypothesis 4
H4o: Clients income has no significant effect on deposit mobilization of CBE.
H4a: Clients income has significant effect on deposit mobilization of CBE.
The Beta value of income -.243 though the coefficient has negative impact on dependent variable
(deposit mobilization), since p value is less than .05 (p=.000). The value is highly significant.
Thus, we reject the null hypothesis (H4o) and, instead accept the alternative hypothesis (H4o)
says that the clients income has significant effect on deposit mobilization of commercial banks.
70
Hypothesis 5
H5o: Interest rate has no significant effect on deposit mobilization of CBE.
H5a: Interest rate has significant effect on deposit mobilization of CBE.
The Beta value of interest rate is .622, the coefficient has positive impact on dependent variable
(deposit mobilization), since p value is less than .05 (p=.000). The value is highly significant.
Thus, we reject the null hypothesis (H5o) and, instead accept the alternative hypothesis (H5a)
says that external factors has significant effect on deposit mobilization of commercial banks.
Hypothesis 6
H6o: other banks competition has no significant effect on deposit mobilization of CBE.
H6a: other banks competition has significant effect on deposit mobilization of CBE.
The Beta value of competition, which is .008, though the value has positive effect on the
dependent variable deposit mobilization. Since the value of p=.850 is greater than .05, the
coefficient of P, has insignificant effect on deposit mobilization of commercial bank of Ethiopia.
Based on this null hypotheses is accepted (H10), and in turn, we reject the alternative hypothesis
(H1a).
Hypothesis 7
H7o: Inflation rate has no significant effect on deposit mobilization of CBE.
H7a: Inflation rate has significant effect on deposit mobilization of CBE.
Table 4.6.4 of Beta value show that inflation rate has negative impact on deposit mobilization
with value of -.385, since the p-value is less than .05 (at p=.000) the value is highly significant.
Thus, we reject the null Hypothesis (H1o) and, accept the alternative hypothesis (H1a) says that
inflation rate has significant effect on deposit mobilization of CBE.
Therefore, this hypothesis suggested that external factors have significant effect on deposit
mobilization of commercial banks.
71
CHAPTER FIVE
SUMMERY, CONCLUSION AND RECOMENDITIONS
5.1 Chapter overview
This chapter presents the summery of the study findings, discussions, conclusions and
recommendations. It also presents implications of the findings, scientific contribution of the
study and suggests areas for further study. The summery, discussion of the study findings,
conclusion and recommendation are presented objective by objective in the proceeding sections.
5.2 Summery of the results
This study sought to establish the trend in deposit mobilization in commercial banks of Ethiopia
and establish the extent to which the institutional factors and external factors influence the
deposit mobilization function by commercial banks .The research question and hypothesis were
developed in line with these objectives. The study employed explanatory research design to
gather the views of selected bank staff directly engaged in the saving mobilization function in 8
commercial bank branch under CBE Hawassa city branches. The collection and analysis of data
made up of qualitative and quantitative approaches. In accordance with the study objectives a
summary of findings is presented hereunder.
5.2.1 The trends and current status of saving mobilization by commercial banks
The statistics generally indicated a decreasing rate of saving mobilization by commercial banks
which the analysis in this went further to account for. For example the district released 31%&49
% slide in saving mobilization between the periods 2012-2013 and 2016-2017 respectively.
Consistently stakeholders viewed the current status of saving mobilization unsatisfactorily with
the majority (67%) rating the banks to not more than 50% in saving mobilization.
5.2.2 Factors influencing saving mobilization by commercial banks.
The banks were found to have instituted a strong institutional frameworks for enhancing deposit
mobilization (85% of respondents), though emphasis is on internal saving policy, rewarding
system, staffs re-tooling & facilitation(70-80 % of respondents) which are however ineffective in
contributing to staff motivation creating a gap in saving mobilization. Notably also, though
doing quite well in monitoring and evaluation of the saving mobilization function which is
72
essentials to draw lessons and inform management decisions for enhanced performance(68% of
respondents) , drawing from correlation result, bears no significant relations with performance in
saving mobilization.
Drawing from the descriptive analysis and correlation results the gap in rewarding system, staff
motivation &commitment is widened by the inability of the bank to provide adequate salary
remuneration (72 % of respondents) which is however a significant positive influence on staff
motivation ,job commitment and ultimately performance in deposit mobilization by commercial
banks. The result open insight into what bank can do to fill the motivation and job commitment
gap which bear a significant impact on deposit mobilization.
Regarding external factors, the majority of respondents (over 82%) consider deposit mobilization
by commercial banks to be affected by incomes of clients and competitions with other deposit
taking banks (institutions). Besides, they considered the bank to be operating under a conducive
environment for saving mobilization offered by National Bank of Ethiopia through appropriate
policy of interest rate.
5.3 Conclusion
Despite the critical role commercial banks can play in mobilizing saving for investment and
economic growth in Ethiopia, the level saving mobilization remains low necessitating empirical
evidence to establish the contribution of commercial banks in saving mobilization and the
influencing factors. The study therefore sought to establish the trend in saving mobilization in
commercial banks of Ethiopia and the extent to which the institutional factors and external
environmental factors influence the saving mobilization function by the banks. The objectives of
the study were derived from extensive review of accessible literature from the theoretical and the
empirical orientation on saving mobilization and their influencing factors in developing countries
especially in Ethiopia.
Methodologically, the study adopted explanatory design .A data survey was conducted to collect
a quantitative and qualitative data on a sample of 24banking staffs across 8 city branches. The
analysis of data employed descriptive statistics to explore the data and inferential statistics to
draw conclusions on the factors influencing deposit mobilization as functions of institutional
factors.
73
Findings indicated a deceasing rate of deposit mobilization in commercial banks with the current
status considered unsatisfactorily. The declining factor is attributed to institutional factors
particularity inappropriate incentive structures particularly inadequate salary remuneration which
does not foster staff motivation and commitment to the saving mobilization function. Further the
analysis of the institutional factors revealed that the commercial gaps have emphasized
implementation of rewards and sanctions which do not hold significance in enhancing employee
motivation job commitment and performance saving mobilization .In the face of missing
employee motivation and job commitment, the banks do not meet desired performance targets in
saving mobilization no matter how much of other performance enhancement measures they boost
such as strong monitoring and evaluation systems ,a highly tooled and facilitated staffs etc.
Besides, the institutional factors which are internal in the commercial banks, performance of
commercial banks in saving mobilization was observed to be constrained by external factors
particularly competition with other deposit taking institutions. This situation prevails in the face
of a favorable regulatory environment provided by the National Bank of Ethiopia which
particularly contributed to entry of many other players such as other private banks, & Micro
Finance Institutions in the financial sectors offering similar deposit product and therefore sharing
in the cliental base.
5.4 Recommendations
1. The leadership and the management of commercial banks need to refocus their performance
management policy and strategy by placing more on emphasis on improving remuneration of
employee to enhance staff motivation and job commitment alongside the strengthened
monitoring and evaluation system and highly tooled and facilitated staffs.
2. Premising on the study findings, improving staff motivation will more likely contribute
significantly to saving mobilizations .Or else, even when other factors remains positive
performance in saving mobilization will stagnate or backslide further .The negative impact of
competition with another deposit taking institutions on performance of commercial banks in
saving mobilization calls for innovative measures by commercial banks to position more
strategically and competitively to attract more savings
Innovative measures by commercial banks to position more strategically and competitively to
attract more savings.
74
3. In order to increase deposits mobilized in commercial banks in Ethiopia, the management of
Commercial Bank Ethiopia should design other innovative marketing strategies which can
increase the level of low cost deposits such as use of mobile van bank in collecting deposits. The
Management of Commercial Bank Ethiopia should put in place strategies that focus on unbanked
population since they represent a significant number of customers left out which can build trust
on and sustain its performance once they are included in the financial sector. The study also
recommends strengthening and streamlining the agency banking channel as it facilitates the
collection of deposits in areas where there is no presence of commercial banks. The banks should
also offer competitive rate on deposits as mechanism of mobilizing more but at the same time
balancing with the interest paid on them, use different channels of making advertisement of the
existing and new product offered to the customers, do the campaign of awareness on agency
banking in order to build the trust of customers by studying and minimizing challenges faced by
people using this channel. The banks should put in place strategies aiming at improving deposit
mobilization policy in order to attract more customers and also ensure that there is an effective
and efficient policy of converting deposit mobilized into loan in order to gain the interest paid on
the deposits.
5.5 Limitations of the study
The study focused on the factors influencing deposit mobilization by commercial banks focusing
on the factors specific to the bank s and those external. Methodologically, due to the constraint of
time and resource, the analysis of external factors could not extend to the views of savers or
clients of the banks which could have expanded the understandings of how factors like incomes
or poverty affects the ability to save in commercial banks or how clients perceptions towards in
saving commercial banks than elsewhere affects saving mobilization.
A more meaningful way of better understanding the effect of commercial banks competition with
other deposit taking institutions would have been a comparison of the client‟s choice and
intensity of saving in commercial banks in commercial banks relative to other modes. However,
the study could not take this direction owing to the limited time and financial resources .To links
the institutional factors, the analysis would estimate the extent to which the institutional factors
influence individual‟s choice to save through other modes rather commercial banks. This would
be justified by the assumptions that the roles of commercial banks on mobilizing savings are not
75
only influenced by the institutional attributes of the bank but also those of other banks. Ideally if
commercial banks improved institutionally, the extent to which they would perform better in
mobilizing savings would also depend on the institutional terrains of competitors.
5.6 Areas for further research
1. There is need to explore the influence of views or perceptions of savers or clients on their
choice to save in commercial banks than other modes in Ethiopia. This will broaden the
understanding of how external factors like clients income, poverty, convenience banks
specific factors like service quality saving mobilization by commercial bank of Ethiopia.
2. The institutional environment such as performance incentives ,employees motivation,
service quality in commercial banks need to be examined in comparison with that of
other institutions like other competitive banks and the extent it influence clients choice to
choose saving with other deposit taking institutions in competitions with the commercial
banks in Ethiopia. This will provide a broadened understanding of the effect of the
institutional factors and competition with other deposit taking institutions on saving
mobilization by commercial banks.
76
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79
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80
Appendixes
Hawassa University
College of Business & Economics
Department of Accounting and Management
Questionnaire to be filled by bank staffs and managers.
Dear Respondent;
The purpose of this questionnaire is to collect firsthand information for a study being conducted
on the topic, "Factors Affecting Deposit Mobilization of commercial banks; the case of
commercial bank of Ethiopia at Hawassa District." as partial fulfillment of Masters of
Business Administration (MBA) program at Hawassa University. To this end, I kindly request
you to provide me genuine information, to the best of your knowledge, so that the findings of the
study would be legitimate. The study is purely academic research. Therefore, for sure, all your
responses will be kept confidential. I would like to thank you for your willingness, effort and
sharing precious time to fill the questionnaire and returning it the earliest possible.
Thank you in advance for your cooperation and assistance.
Regards
Tadele Shamebo
0916315051
The questionnaire below has three parts. The first part deals with questions relating to
demographic profile of respondents. The second part deals with questions to identify with
factors that affecting deposit mobilization of commercial banks. And the third part is interview
question.
81
Part I: Demographical Information
Instruction: Please use tick mark (√) in the boxes provided to choose from the options given and
answer the interview questions in writing where appropriate. You don‟t have to write your name.
1. Gender: Male: Female:
2. Age: 20–30 yrs 31–40 yrs
41–50yrs above 50
3. Educational Qualification level:
High school complete Diploma complete First Degree
Master‟s Degree Other (please specify)
4. Indicate the number of years working experience in the bank.
1-5yrs 5-10yrs 10-15yrs above 15 yrs
5. Your position in the bank
Branch manager customer service manager SCSO
Customer service officer junior officer other (please specify)
82
PART II Factors influencing deposit mobilization of commercial banks
The major factors that affecting commercial banks deposit mobilization in Ethiopia are mentioned in
the following questions. After you read each of the factors, evaluate the extent of their effect on deposit
mobilization in relation to our bank experience and then put a tick mark (√) under the choices below
using lekiret scale measurements.
1=strongly agree 2=agree 3 = neutral 4=disagree 5=strongly disagree
A .Institutional factors: internal saving policy, PMS-incentive system & marketing strategy.
1 2 3 4 5
1
Our bank has good strategy, policy, guidelines with emphasis on
Deposit mobilization functions.
2 The savings mobilization policy ,strategy or operation guidelines are
Satisfactorily complied with or implanted in our bank.
3 Our bank has often rewarded employees for performance excellence
4 Our bank has instituted strong incentives towards enhancing
Performance of employees saving mobilization.
5 I consider the salary of employees in the deposit function to be
Adequate enough to render them highly motivated and job committed
6 employees in the deposit function are highly motivated and job committed
83
7 The deposit mobilization operations in our bank are adequately
Supervised, monitored& evaluated
8 Employees in saving mobilization function is adequately facilitated with
Tools and finical resources to do their jobs
9 The deposit mobilization function is adequately supported by
Competent staffs
10 Our bank has instituted employees supervision ,performance monitoring
And evaluating measures ex.regular supervision &monitoring schedules
11 The bank often provides specialized trainings to continuously cope
Up with the dynamic work environment.
12 There is high level of coordination and interaction between staffs
Engaged in deposit mobilization function
13 Deposit mobilization function in our bank highly influenced by
Institutional factors
14 Our bank designed effective promotional strategy on bank
Products or service to enhance deposit mobilization functions
15 Our bank provides different media advertisement to develop people
Awareness towards new products or service
16 Our bank designed effective service marketing strategy to promote
Newly innovated products or services to potential or existing customers
84
B. External environmental factors
17 Deposit mobilization function in our bank is affected by the incomes
Of our Potential customers.
18
19
Our bank has offered favorable interest rate/deposit rate to enhance
Deposit mobilization function
20 There is strong competition with other deposit taking banks that
affects our bank‟s performance in the terms of savings mobilization
21
Persistent increase of commodity price (inflation rate ) in the
22 commodity market affects saving capacity of our customers
C. Interview questions
1 Would you explain what mechanism or techniques CBE use to mobilize deposit?
2 What strategies & policies the bank implement to enhance deposit mobilization &how CBE
distinguish
From the other banks by deposit mobilization function?
3 Do you believe there is well organized deposit mobilization department in bank which monitor
the Deposit mobilization process? If yes how and what the department work?
4 What techniques the banks use to introduce new products and services for the bank customers?
5 How do you rate the government intervention to the CBE deposit mobilization effort?
6 Would you explain SWOT analysis of CBE in connection to deposit mobilization function?
85
D. Deposit mobilization statically data (the last 6 years annual deposit performance/ to be filled by
By manager/representative of the bank).
Variable 2012 2013 2014 2015 2016 2017
1 Value of deposit planned
in the last six years
6,113,214 2,498,825 1,402,255 9946807 2875580 3773434
2 Value of deposit mobilized
in the last six years
4,860,240 1,219,948 1,089,225 8590845 2489201 1492461
3 % variation of deposit mobilized in
the last six years
(20%) (51%) (22%) (14%) (13%) (60%)
Appendix .ii
Correlations results of institutional factors and deposit mobilization
Strateg
y
&polic
y
Rewardi
ng
system
Salary
remun
eration
Motivati
on
&commi
tted
Compete
nt
staffs
Deposit
mobilizati
on
Perform
ance
incentiv
es
Staff
Coordinat
ion
Stra
tegy
&policy
Pearson
Correlation 1 .415
** .267
** .436
** .363
** .416
** .316
** .240** .462
**
Sig. (2-tailed) .000 .000 .000 .000 .000 .000 .000 .000 .000 .000
N 222 222 222 222 222 222 222 222 222 222 222
Rewardi
ng
System
Pearson
Correlation .415
** 1 .104 .356
** .184
** .278
** .149
* .544** .278
** .149
* .240
**
Sig. (2-tailed) .000 .124 .000 .006 .000 .026 .000 .000 .026 .000
N 222 222 222 222 222 222 222 222 222 222 222
86
Salary
Remuner
ation
Pearson
Correlation .267
** .104 1 .392
** .372
** .257
** .403
** .561** .257
** .403
** .544
**
Sig. (2-tailed) .000 .124 .000 .000 .000 .000 .000 .000 .000 .000
N 222 222 222 222 222 222 222 222 222 222 222
Motivati
on
&commi
tted
Pearson
Correlation .436
** .356
** .392
** 1 467
** .507
** .454
** .489** .507
** .454
** .561
**
Sig. (2-tailed) .000 .000 .000 .000 .000 .000 .000 .000 .000 .000
N 222 222 222 222 222 222 222 222 222 222
Compete
nt
Staffs
Pearson
Correlation .363
** .184
** .372
** .467
** 1 .445
** .497
** .539** .445
** .497
** .489
**
Sig. (2-tailed) .000 .006 .000 .000 .000 .000 .000 .000 .000 .000
N 222 222 222 222 222 222 222 222 222 222 222
Deposit
Mobiliza
tion
Pearson
Correlation .416
** .278
** .257
** .507
** .445
** 1 .600
** .499** 1 .600
** .539
**
Sig. (2-tailed) .000 .000 .000 .000 .000 .000 .000 .000 .000
N 222 222 222 222 222 222 222 222 222 222 222
Perform
ance
incentive
s
Pearson
Correlation .316
** .149
* .403
** .454
** .497
** .600
** 1 1 .600
** 1 .499
**
Sig. (2-tailed) .000 .026 .000 .000 .000 .000 .000 .000
N 222 222 222 222 222 222 222 222 222 222 222
Staff
Coordin
ation
Pearson
Correlation .462
** .240
** .544
** .561
** .489
** .539
** .499
** 1 .539
** .499
** 1
Sig. (2-tailed) .000 .000 .000 .000 .000 .000 .000 .000 .000
N 222 222 222 222 222 222 222 222 222 222 222
87
Correlations results of external factors and deposit mobilization
deposit
mobilizat
ion
inflatio
n rate
interest
rate
incomes competition
deposit
mobilizatio
n
Pearson Correlation 1 .101 .533**
.134* .069
Sig. (2-tailed) .135 .000 .045 .304
N 222 222 222 222 222
inflation
rate
Pearson Correlation .101 1 .686**
.661**
.197**
Sig. (2-tailed) .135 .000 .000 .003
N 222 222 222 222 222
interest
rate
Pearson Correlation .533**
.686**
1 .593**
.180**
Sig. (2-tailed) .000 .000 .000 .007
N 222 222 222 222 222
incomes
Pearson Correlation .134* .661
** .593
** 1 .204
**
Sig. (2-tailed) .045 .000 .000 .002
N 222 222 222 222 222
competition
Pearson Correlation .069 .197**
.180**
.204**
1
Sig. (2-tailed) .304 .003 .007 .002
N 222 222 222 222 222
**. Correlation is significant at the 0.01 level (2-tailed).
*. Correlation is significant at the 0.05 level (2-tailed).
88
Multiple regression model results: factors that influence deposit mobilization by commercial banks.
Model Unstandardized
Coefficients
Standardize
d
Coefficients
t Sig. Collinearity Statistics
B Std.
Error
Beta Tolerance VIF
CC -.239 .118 -2.027 .044
P .082 .022 .171 3.660 .000 .751 1.331
PI .142 .017 .420 8.238 .000 .633 1.580
PRO -.055 .016 -.155 -3.500 .001 .843 1.187
IN -.067 .016 -.243 -4.189 .000 .490 2.040
INR .193 .020 .622 9.869 .000 .414 2.416
COMP .003 .017 .008 .190 .850 .903 1.108
INFRT -.147 .024 -.385 -6.036 .000 .405 2.467
a. Dependent Variable: deposit mobilization
89
Appendix iii
The target population of the study includes all branches of Hawassa District.
S.N Branch Name S.N Branch Name S.N Branch Name S.N Branch Name
1 Aare Branch 20 CheleleketuBranc 39 Gudumale Branch 58 Moyalle Branch
2 Adolla Branch 21 Chirri Branch 40 Hambela Branch 59 NegeleBorena Br
3 Alemura Branch 22 Daka Branch 41 Hanchulucha Bran 60 Otilcho Branch
4 AletaChulo Branch 23 Darakebedo Branch 42 Hantete Branch 61 Sessa Branch
5 Aletawendo Branch 24 Dato Branch 43 Harekello Branch 62 Shakiso Branch
6 AmaroKelle Branch 25 Daye Branch 44 Hawassa Branch 63 Tabor Branch
7 Anfele Branch 26 Dilla Branch 45 HIP Branch 64 Tesso Branch
8 AradaLiben Branch 27 DoriBafeno Branch 46 Hayadima Branch 65 Tula Branch
9 Arebegona Branch 28 Dume Branch 47 HokoGirja Branch 66 Tutit Branch
10 Arebsefer Branch 29 Erbamuda Branch 48 Hula DirereBranc 67 Uraga Branch
11 Aroressa Branch 30 Filtu Branch 49 Kercha Branch 68 Wadera Branch
12 Bensa Branch 31 Furra Branch 50 Kofi Branch 69 W.amanuelBranc
13 Bonna Branch 32 Gafima Branch 51 Leku Branch 70 Wonago Branch
14 Bore Branch 33 Gambo Branch 52 Manicho Branch 71 Wondogenetchuk
15 Borecha Branch 34 Gebrielsefer Branch 53 Mega Branch 72 Yabelo Branch
16 BuleHorra Branch 35 Gedeb Branch 54 Meibeko Branch 73 Y/cheffe Branch
17 Buledi Branch 36 Gidabo Branch 55 Melkasoda Branch 74 Y/rgalem Branch
18 BurjiSoyoma Branch 37 Gorche Branch 56 Mesincho Branch
19 Bursa Branch 38 Guangua Branch 57 Michile Branch
Source:cbe 2019
