EFFECT OF PRIZE LINKED SAVING (PLS) ON DEPOSIT GROWTH: A CASE OF COMMERCIAL BANK OF ETHIOPIA

Abstract

Commercial Bank of Ethiopia has launched PLS to improve saving practice and increase deposit of the banking by including different prizes. But customers are providing low attention for the promotion strategy. This study was conducted to identify effect of PLS on customer deposit. Based on this objective, the study has identified factors affecting intention to consider PLS for saving decision and its impact on deposit growth. It has targeted eligible customers for the qualifications of PLS; customers that has deposited minimum of 500 additional deposit from June 2021 at their saving accounts. For the study 400 customers were sampled and data was collected from 393 customers. Although they are eligible, 68 respondents were not included in the study because they do not know about the PLS, thus, 325 customers were used for the study. The study has followed quantitative approach and explanatory design and data for the study was collected by using questionnaire and it was analyzed by using descriptive and econometric methods. Probit model was adopted to analyze factors affecting intention to use PLS for saving decision and multivariate linear regression was used to identify effect of PLS on deposit growth. Two stages of regression were conducted; at the first stage factors affecting the intention was examined and probabilities were predicted for the second stage regression. the study has identified that demographic and socio-economic factors and the product features affect intention to use PLS and the PLS has significant and positive effect on deposit growth. Therefore, for the objective of increasing saving practice and deposit, it is important to effectively manage PLS of the bank.