ASSESSMENT ON FACTORS AFFECTING DEPOSIT MOBILIZATION THE CASE OF PRIVATE COMMERCIAL BANKS IN ARBA MINCH TOWN)

Abstract

The aim of this study is to examine factors influencing deposits mobilization in Private commercial banks. Specifically the study evaluated the impact of Awareness creation, Interest Rate, Branch Expansion and Technology on deposit mobilization. This case study employed a quota sampling technique, where 46 bank staff were sampled. However, the study captured 46respondents from seven branches of private commercial banks at Arba Minch town were selected as representatives in this study. The results from the analysis of bank officials’ shows that Awareness Creation and branch expansion, Interest Rate and Service level &Technology used are among the most important factors to facilitate deposit mobilization. Also the hypotheses have a positive impact on deposits growth was strongly supported by the results of this study. Regression results were presented, where t-statistics and standard deviation were used to support and strengthen the professional arguments. From the study, recommendations are made on improvement on Technology used in financial institutions to allow more utilization of electronic money and credit cards. The study recommends also Private commercial banks to design a way to make neglected semi-urban and rural population to get the banking services, and outsourcing some of the operational activities like mobile phone banking and Automated Tellers Machine (ATM) and Agent Banking for easing deposits mobilization and saving unnecessary expenses. The study also recommends that bank should increase deposit interest rate to attract more deposits in the banks after consultations with central bank.