DETERMINANTS OF DEPOSIT MOBILIZATION: THE CASE OF COMMERCIAL BANK OF ETHIOPIA

Abstract

The study had looked at the vital part and basic current issue in Ethiopia regarding deposit mobilization by taking CBE as evidence, the main task of any commercial bank is tomobilize deposits from the people and then supply to those who are in need of the fund in the form of loan to lubricate investment and trade which in turn promote growth to an economy. This study principally aims to investigate the determinants of deposit mobilization in the case of Commercial Bank of Ethiopia. Explanatory type of research design, descriptive statistics, correlation matrix and multiple regression technique are used based on time series secondary data collected from Commercial Bank of Ethiopia, MOFED and National Bank of Ethiopia for the sample year from 1995 to 2016GC. The researcher utilized secondary sources of data, which are sourced from reports, journals, bank’s publications and other reference books. The data for the study were the values of dependent and independent variables. The study had found variables that can affect privatesaving deposit of commercial banks. Five independent variables,which are saving interest rate, inflation rate, exchange rate, branch expansion and gross domestic product are regressed with the dependent variable CBE saving deposit. All these variables are tested using EVIews 9 application. The result indicates that saving deposit rate and branch expansion have statistically positive and significant effects, saving interest rate, exchange rate and inflation rate have contrary to the theoretical assumption before research, and exchange rate has inverse relation with Commercial Bank of Ethiopia deposit mobilization (private saving deposit). Finally the study had recommended what should be done to mobilize more deposits.