DETERMINANTS OF DEPOSIT MOBILIZATION IN PRIVATE COMMERCIAL BANKS OF ETHIOPIA

Abstract

The study had looked at the potential of the country regarding deposit mobilization by taking seven private commercial banks as evidence. The study had used both primary and secondary data. Primary data analysis was used to the request of Bank employees in order to assess the perception towards the determinants of private commercial banks on deposit mobilization. The empirical results from regression analysis showed that bank branches, Deposit rate, inflation, and liquidity affects deposit of the bank positively whereas, exchange rate and gross domestic products affects the deposit of the private banks negatively. Different diagnostic tests were tested to know whether the model is valid or not, having the model is valid the regression analysis and hypothesis testing is performed using E-Views and SPSS software. Because of the hypothesis, testing it was found that all the four variables /ER, GDP, Liquidity and NOB/ could affect total deposit significantly while the remaining two/DIR and INF are affecting insignificantly. 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. Thus, management bodies of private commercial banks should strive to strengthen the identified significant factors and government bodies should see the adverse effect of tight polices imposed on the existing private commercial banks as well as for the new entrant banks. Finally, the study had recommended private commercial banks should expand their branch’s to the country side rather than concentrated on the capital and regional cities of the country and The government should have free and fair policies among the state and private owned banks to have liberalized economy to achieve welfare of the societies