FACTORS AFFECTING DEPOSIT MOBILIZATION IN COMERCIAL BANK OF ETHIOPIA

Abstract

The study primarily aims at factors that affect deposit mobilization of Commercial Bank of Ethiopia. The study uses both primary and secondary data and uses both descriptive and regression analysis by using SPSS and OLS methods. The study empirically ascertains that, managing deposits is not possible without knowing and controlling the factors affecting it. It is well known that deposit mobilization is the major services of commercial bank of Ethiopia. In view of that without having deposit CBE can’t survive as a bank. The study find out that the key factors for deposit growth are employees’ skill and capabilities, top management cooperation, government rule and regulation, population, exchange rate and nominal GDP. Also even if the inflation and CBE branch expansion didn’t have key factors but they have role in determining deposit mobilization. For the qualitative analysis a total of 244 respondents answered the entire survey. The overall respondent rate for survey was approximately 97.6%. The respondent answer for the question “What do you think the most influencing internal factors in deposit mobilization activity, which make people to deposit in your branch?” are Public trust and reliability, Customer handling, Big depositor Rewarding system , Service efficiency, Delivery time, Accessibility and Different packages of bank product. On the other hand, results from the qualitative analysis, based on economic analysis model population, exchange rate and nominal GDP was found to have a positive relationship with bank deposit growth and the effect on bank deposit is significant. Inflation and branch expansion are affects positively and can increase CBE’s deposit but these factors are not as such significant. These results have important policy implications for both domestic policy makers and the bankers working in the country and specifically for developing of reliable deposit mobilization policy by the commercial bank of Ethiopia.