ASSESSMENT OF DEPOSIT MOBILIZATION PRACTICE AND CHALLENGES OF PRIVATE COMMERCIAL BANKS IN ETHIOPIA: THE CASE OF BANK OF ABYSSINIA

Abstract

The main objective of this study was to assess deposit mobilization practice and challenges of Private Commercial Banks in Ethiopia: The Case of Bank of Abyssinia. The study used non-probability purposive sampling technique to select the respondents. This study employed structured questionnaire to collect data from the field and secondary data from BoA annual reports and websites. The study adopted descriptive case study of research design by using both qualitative and quantitative techniques. The findings indicated that among others the performance of BoA on opening of new account was good. BoA is registering a continuous deposit growth for the last five years. In terms of deposit account holders, the BoA was able to raise its number of account holders and increased its number of branch from years to years for the past five years. Competition in the banking industry, meeting customers’ demands, shortage of foreign currency, less awareness of the society on deposit and weak location of the branch were identified as challenges of BoA in its deposit mobilization effort. The study further revealed that increase customer handling culture, use of attractive new products and incentives, improving on local and international money transfers; aggressive branch expansion/branch opening and aggressive advertisement are crucial factors in improving the deposit mobilization of the bank. Finally, based on the findings the study recommended the following. Assess and relocate branches which have weak location, improving on local and international money transfers, work more on branch expansion, increase effort of creating awareness to the society through aggressive advertisement, providing different updated technologies, introducing attractive new products and services and improving customer handling culture.