DETERMINANTS OF DEPOSIT MOBILIZATION PRACTICES IN

ABYSSINIA BANK ADAMA DISTRICT

A Thesis report Submitted to Department of Business Management in

Partial Fulfilment of the Requirements for the award of Master’s Degree

In Business Administration (MBA)

BY:

HABTAMU DABESA

RIFT VALLEY UNIVERSITY

FACULTY OF BUSINESS AND SOCIAL SCIENCES
DEPARTMENT OF BUSINESS MANAGEMENT
POST GRADUATE PROGRAM

ADVISOR: ABDELA YASIN (Ph.D.)

July, 2024

Adama, Ethiopia

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 CERTIFICATE

This is to certify that the thesis entitles Determinants of Deposit Mobilization Practices In
Abyssinia Bank Adama District”, submitted to RVU for the award of the Degree of Master of
Business Administration (MBA) and is a record of bonafide research work carried out by
Habtamu Dabesa under our guidance and supervision Dr. Abdela yasin .(PhD).

Therefore, we hereby declare that no part of this thesis has been submitted to any other
university or institutions for the award of any degree or diploma.

Main Adviser’s Name Date Signature

_______________________ __________________ __________________

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 DECLARATION
I hereby declare that this thesis entitled “Determinants of Deposit Mobilization Practices In
Abyssinia Bank Adama District.”, has been carried out by me under the guidance and
supervision of Dr. Abdela yasin. (PhD).The thesis is original and has not been submitted for the
award of any degree or diploma to any university or institutions.

Researcher’s Name Date Signature

_______________________ ___________________ ___________________

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 APPROVAL SHEET
This is to accept the thesis done by Habtamu Dabesa which is entitled “Determinants of Deposit
Mobilization Practices In Abyssinia Bank Adama District ” This work is original in nature and is
suitable for submission for the degree of Masters of business administration with the regulation
of the University.

Signature of board of examiner’s:

External Examiner: __________________ Signature: _________Date: ___________

Internal Examiner: __________________ Signature: __________________ Date: _________

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Table of Contents
CERTIFICATE...........................................................................................................................................0
DECLARATION..........................................................................................................................................i
APPROVAL SHEET....................................................................................................................................i
Abstract........................................................................................................................................................i
CHAPTER ONE..........................................................................................................................................1
1. INTRODUCTION...................................................................................................................................1
1.1 Background of the study........................................................................................................................1
1.2. Statement of the Problem......................................................................................................................2
1.3. Research questions...............................................................................................................................4
1.4. Objective of the Study..........................................................................................................................4
1.4.1 General Objective...........................................................................................................................4
1.4.2 Specific Objectives.........................................................................................................................4
1.5. Significance of the study......................................................................................................................4
1.6. Scope of the Study................................................................................................................................5
1.7. Operational Definition of Terms...........................................................................................................5
1.8 Thesis Organization...............................................................................................................................6
CHAPTER TWO.........................................................................................................................................7
2. Literature Review....................................................................................................................................7
2.1 Theoretical review.............................................................................................................................7
2.1.1 Commercial Bank Deposit..........................................................................................................9
2.1.2Determinants of Deposit mobilization.......................................................................................10
2.1.3 Organizational development strategy........................................................................................11
2.1.4 Social, political and Economic factors......................................................................................11
2.2 Empirical Review............................................................................................................................13
2.3 Research Gap...................................................................................................................................14
2.4 Conceptual Frame work...................................................................................................................14
2.5 Research Hypothesis........................................................................................................................15

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CHAPTER THREE...................................................................................................................................17
3. Research Design and Methodology.......................................................................................................17
3.1 Research Design..............................................................................................................................17
3.2 Data types and sources.....................................................................................................................17
3.3 Target Population and Sample size Determination..........................................................................18
3.4 Sampling Technique........................................................................................................................19
3.5 Data Collection Instrument..............................................................................................................19
3.6 Data Collection Procedure...............................................................................................................19
3.7 Method of Data Analysis.................................................................................................................19
3.8 Validity and Reliability....................................................................................................................20
3.8.1 Validity.....................................................................................................................................20
3.8.2 Reliability test...........................................................................................................................20
3.9 Descriptive Statistics.......................................................................................................................22
3.10 Ethical Consideration.....................................................................................................................22
CHAPTER FOUR.....................................................................................................................................23
DATA ANALYSIS, INTERPRETATION AND DISCUSSION..............................................................23
4. INTRODUCTION................................................................................................................................23
4.1Response Rate..................................................................................................................................23
4.2 Demographic Characteristics of Respondents..................................................................................23
4.2.1 Gender......................................................................................................................................23
4.2.2 Age...........................................................................................................................................24
4.2.3 Academic Qualification............................................................................................................25
4.2.4 Position at the Bank..................................................................................................................26
4.2.5 Working Experience at the Bank..............................................................................................27
4.3 Descriptive Statistics of Study Variables.........................................................................................28
4.3.1 Political, social and economic factors on deposit mobilization.................................................28
4.3.2 Influence of inflation in the deposit mobilization.....................................................................31
4.3.3 Service Quality.........................................................................................................................33
4.3.4 Organizational development strategy........................................................................................35
4.4 Correlation Analysis........................................................................................................................37
4.5 Interview about deposit mobilization...............................................................................................40
4.6 presentations of data from secondary source...................................................................................42

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CHAPTER FIVE.......................................................................................................................................44
SUMMARY, CONCLUSSION AND RECOMMENDATION.................................................................44
5.1 INTRODUCTION...............................................................................................................................44
5.2 Summary of Major Findings............................................................................................................44
5.3 Conclusion.......................................................................................................................................45
5.4 Recommendations...........................................................................................................................46
REFERENCES..........................................................................................................................................48
APPENDIX...............................................................................................................................................50

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i
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Acronyms

BOA Bank of Abyssinia

GDP Gross Domestic Product

NBE National Bank of Ethiopia

SPSS Statistical package for social science

S.C Share Company

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Abstract

This research investigates the determinants of deposit mobilization practices in Abyssinia Bank,
Adama District. The study focuses on the factors that influence deposit mobilization, including
political, social, and economic factors, organizational development strategies, inflation, and
service quality. Using a sample of 140 employees from the bank, selected through the Yemane
(1967) formula, the research employs an explanatory design to analyze the cause-and-effect
relationship between these variables and deposit mobilization. Data is collected via structured
questionnaires and analyzed using SPSS version 21, incorporating descriptive and inferential
statistics, including correlation analysis. The findings reveal that political instability and
changes in government policies significantly impact deposit mobilization, while cultural norms,
demographic shifts, and community perceptions also play notable roles. Inflation is identified as
a critical factor, influencing both deposit behaviors and the bank's interest rate policies. Service
quality at Abyssinia Bank is moderately high, with employees perceived as knowledgeable and
responsive, though physical facilities and deposit products receive mixed reviews. The bank's
organizational development strategy is well-defined but poorly communicated, affecting its
effectiveness in mobilizing deposits. The study concludes that a strong positive relationship exists
between the independent variables and deposit mobilization, suggesting that improvements in
these areas could enhance the bank's ability to attract and retain deposits. The insights provided
by this research can aid Abyssinia Bank in developing effective strategies to boost deposit
mobilization, thereby contributing to its overall growth and stability. Ethical considerations are
maintained throughout the study, ensuring participant confidentiality and adherence to data
protection regulations.

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 CHAPTER ONE

1. INTRODUCTION

1.1 Background of the study

Deposit mobilization is one of the important functions of banking all over the world. It is an
important source of the Bank's labor fund and has been proven by scholars such as Jhingan
(2001), Bakare (2011), Orji (2012) among others as an indispensable factor for increasing the
sources of banks to operate effectively. Deposit mobilization is the collection of cash or funds by
a financial institution from the public through its current, savings, fixed accounts and other
specialized schemes. Since deposits are normally considered as a cost effective source of
working fund, the bank’s ability to lend more as well as its success greatly lies on its deposit
mobilization. However, the bank’s ability to manage and mobilize enough funds from the public
through its current, savings, fixed accounts and other specialized schemes will depend on the
systems employed in this highly competitive industry (Digaria, 2011).

The mobilization of deposits plays an important role in providing satisfactory service to various
sectors of the economy. However, the ability of banks to generate growth and economic
development depends on the health, solidity and stability of the banking system itself (Alex,
2012).

Mobilizing deposits is one of the essential issues in developing countries as domestic funds
provide cheap and reliable source of funds for development, which is of great value to those
countries, especially when the economy has difficulty raising capital from international donors,
financiers and markets. Banking over the years has lived up to its definition of safe keeping of
customers funds and ensuring that the customers get the money upon demand. And this has been
the basic function of banking just as a raw material is for a business; to banking institution is
cash.

Cash mobilization therefore the world over has continually been part of the primary and
important component of banking. In both retail and corporate banking, this important aspect of
banking has been practiced in different forms with the commonly known aspect being direct

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deposit by the customer in the banking hall. Withdrawal of cash is also made in the banking halls
or any permitted premises as approved by the bank or financial institution.

In countries like Ethiopia, where the banking industry dominates the financial sector, the bank's
successful and productive operation plays a critical role in catalyzing economic development
(Adem {2015). The financial resources of banking systems are primarily provided by customer
deposits (Namazi,{2010). As a result, the going concerns of every commercial bank are highly
relying on deposits collected from customers. Low level of deposit growth in commercial banks
leads to the inability to disburse loans, unable to cover operation costs, to pay debts, unstable
board of directors due to frequent reshuffle as disgruntled members vote officials out, quitting of
members to competitors. In today’s world, the concern of bank resource (deposit) has become
one of the most important and crucial in the field of business due to the greater ineffectiveness of
lots of commercial banks in the world in terms of their operation and it’s unfortunate effect on
their performance. Lack of enough deposits in banks’ treasury or inability to pay operational
costs and unable to satisfy customers resulted in a failure for the banking industry before, during,
and after the financial crisis of 2007-2009 all over the world

In Ethiopia there are a limited number of bank branches to meet the demand of financial services
to all its corners, especially in remote rural areas. Financial services are largely concentrated in
urban areas. The country’s economic growth requires a huge amount of investment and high
saving that has been given high attention to encourage and develop domestic saving mobilization
culture (Misrak, {2019). The deposit mobilization activity is the focus area for both the state &
private banks in Ethiopia (Giragn {2015).

1.2. Statement of the Problem

Deposit has been globally acknowledged for their unique role as an engine of growth and
development in any economy. Their intermediation role can be said to be a catalyst for economic
growth and development as investment funds are mobilized from the surplus units in the
economy and made available to the deficit units (Jonathan et al, 2013).

Deposit is one of the resources banks highly motivated to mobilize and the most liquid money
that is found in the treasury of the bank and which is ready to be borrowed in need of the fund.
Private Banks should mobilize enough deposit to disburse the loan request of the customer.

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Deposit mobilization is an integral part of banking activity. Mobilization of savings through
intensive deposit collection has been regarded as the major task of banking in Ethiopia today
(Samuel, {2015).

One of the bank resources are mobilized deposit this mobilized deposit facilitate for various
country level as well as individual level investment at most the china is very high. Ethiopian
commercial banks have a great role to support financial gaps of the all business and Government
project but it is not sufficient to fill those gaps. This problem is arises from very low level of
deposit in commercial banks (Gebre, 2019).

Ethiopian bank industry is still in its growing stage. The deposit generated by the country
economy not yet been mobilized as much as expected. NBE indicates that from deposit that
should be mobilized by banks only 7% is mobilized as of 2012 (Mamo 2017). This indicates that
from the money that should be deposited in the bank 93% of was not mobilized. Therefore the
banking sector in Ethiopia must increase their deposit by overcoming the existing challenges;
hence they need to know the factors that determine deposit or financial savings.

Various research works are reviewed, Inflation Rate taken as explanatory variable by (Ketema,
2017) the result of his study indicates inflation has a negative relation and insignificant to
Commercial Banks Deposit. (Giragn, 2015) also used the variable in his study to determine the
effect of inflation to Commercial Bank Deposit Growth result of the study was positive relation
and significant for deposit. Finally (Shemsu, (2015) used Inflation rate as an explanatory variable
to determine the effect on the Commercial bank of Ethiopia deposit result was positive relation
and insignificant to the dependent variable deposit. To the researcher knowledge, no research of
the same type has been done in the past at BOA Adama district. Hence, filling the knowledge
gap, this study examines;

1. To identify the challenge of deposit mobilization in BOA Adama district.

2. What techniques are used BOA Adama district managing deposit mobilizations?

3. To examines the deposit mobilization practice of BOA.

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 1.3. Research questions
The research questions of this study attempted to answer the following:

 What was the effect of organizational development strategy on the growth of deposit
mobilization of Abyssinia bank Adama District and selected Branches?
 What was the influence of inflation in the deposit mobilization in Abyssinia bank Adama
District and selected Branches?
 What was the effect of service quality in the sustainable growth of deposit mobilization in
Abyssinia bank Adama District and selected Branches?
 What was the effect of political, social and economic factors on deposit mobilization of
Abyssinia bank Adama District and selected Branches?

1.4. Objective of the Study

1.4.1 General Objective
The general objective of the study was to investigate Determinants of Deposit Mobilization
Activity in Abyssinia bank Adama District and selected Branches.

1.4.2 Specific Objectives

Specific Objectives of the study were:
I. To evaluate political, social and economic factors on deposit mobilization Abyssinia bank
Adama District and selected Branches.
II. To examine influence of inflation in the deposit mobilization in Abyssinia bank Adama
District and selected Branches.
III. To identify effect of service quality in the sustainable growth of deposit mobilization in
Abyssinia bank Adama District and selected Branches.
IV. To assess effects of organizational development strategy in the growth of deposit
mobilization Abyssinia bank Adama District and selected Branches.

1.5. Significance of the study

Studying the determinants of deposit mobilization in Abyssinia bank Adama District and
selected Branches is beneficial for different stake-holders. Accordingly, the following are the
significances that will be attained from the study:

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 This study is helpful to Abyssinia bank to manage their deposit by identifying factors
determining deposit mobilization and further identify which variable is the most important so
that more emphasis has to be given.
 It is also helpful to the regulatory body to take as an additional input for future policy
making.
 It provides information for all stakeholders especially for boards and management of the
Abyssinia bank in order to minimize the impact of factors determining deposits mobilization by
making them to design effective strategies.
 It serves as source of reference for further studies in the area of deposit mobilization.

1.6. Scope of the Study

The focus of this research was limited to Abyssinia Bank's Adama District and selected
branches. It is important to note that this study did not encompass all branches of Abyssinia
Bank or all factors that impact deposit mobilization. Instead, a purposive selection of branches
based on seniority was made, along with the inclusion of certain factors in the study

1.7. Operational Definition of Terms

Bank: is a legally authorized business institution by state and federal laws to discount and deal in
negotiable instruments, to lend money, to receive deposits, and to buy and sell foreign exchange

Deposit: the most significant components of the money supply used by the public and changes in
money growth are highly correlated with changes in the prices of goods and services in the
economy (Kelvin, 2001).

Deposit Mobilization- is the process of mobilizing funds by financial institutions from the
surplus units to the deficit units to create better opportunities for productive investment. From an
institutional perspective, the primary motive for mobilizing savings lies in lower cost of capital
compared to other sources of funds (Linh 2020)

Profitability - The profitability of banks is important to the creditors, owners, employees and
management. Some of the variables commonly used to measure banks profitability are Return on
Asset, Return on Equity and Net Interest Margin. Return on Asset (ROA) is calculated by net
income or profit after tax over total assets. It is also measured by net income over average total
assets (Eliona, 2013)

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1.8 Thesis Organization
This study is organized into five chapters. The first chapter is discuss the background of the
study, problem statement, research questions, research objectives, significance of the study,
scope and limitation of the study, and also provide definitions of basic terms. The second chapter
is deal with reviewing the theoretical aspects of related topics, conducting an empirical review of
literature related to the topic, and presenting a conceptual framework that indicate how the
particular variables in the study connect with each other. This is done in order to form a
substantial basis for the analysis of the findings and draw possible conclusions.

The third chapter is cover the research methodology and design, describing the type and design
of the research. It outlines the target population and sampling techniques to be used in the study,
as well as the data collection instruments and procedures that will be employed. The method of
data analysis is also explained in this chapter.

The fourth chapter is deal with the analysis, presentation, and interpretation of the data obtained.
Finally, in the fifth chapter, a summary of the findings, conclusions, and recommendations is
presented.

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 CHAPTER TWO

2. Literature Review
2.1 Theoretical review
Banks have historically been viewed as playing role in financial markets for two reasons. The
first one is that they perform a critical role in facilitating payments. Commercial banks, as well
as other intermediaries, provide services in screening and monitoring borrowers; and the other
one is by developing expertise as well as diversifying across many borrowers, banks reduce the
cost of supplying credit (Katherine, 2004).Thus in their role as lenders, banks are often not
merely buying someone’s debt, rather they are providing significant financial services associated
with extending credit to their customers directly. The main providers of additional financing are
domestic commercial banks (Herald et al, 2009).

Bank deposits are all set to deposit accounts at a banking institution, such as savings accounts,
checking accounts, time deposit accounts and money market accounts. The account owner has
the right to take out any deposited funds, as set forth in the conditions and circumstances of the
account. The "deposit" itself is liability allocated by the bank to the saver and refers to this
liability rather than to the real funds that are deposited. (Jacewitz et al. 2018)

There is a direct affiliation between income and deposit. That means when the income of the
society raise, the level of commercial banks deposits also raise. Gorgeous services in the bank
optimistically manipulate the intensity of banks deposits and thereby uplift the rate of growth of
bank deposits via boosting rate of saving. This affiliation exists among the two variables enable
to direct the degree to what the extent economic growth escalating as rate of saving is increased
significantly. To what extent the deposit growth rate is increased, the public would have more
valuable direct over the allotment of financial resources for well-designed motives. In this
regard, transaction overheads also significantly determine the level of banks deposits in which
the lower transaction cost is an important pointer of management’s effectiveness in a bank
(Nahidul et al. 2019).

Also the economic development of any country is dependent on its financial system which
includes its banks, stock markets, insurance sector, pension fund and the like. These sectors
influence a nation’s currency and interest rates. In developed countries, they work together to

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promote growth and avoid runaway price inflation. When a country is still in a developing stage,
the lack of a strong, sound financial system generally works against the national economy.
The financial system plays an important role in the allocation of resources in any economy. It
also assists in the allocation of investment funds among companies and enables the sharing of
risks between firms and the household sector.
In the context of African continent, financial institutions in particular the banking industry
carries the greater share of the financial system (Sheku, 2005). Most of the businesses rely on
banking sector as a source of financing (Medhat, 2004).
In Ethiopian context, Ethiopia is low income country has been the reason for reliance on foreign
debt and aids from international community, in general, the rate of investment in Ethiopia has
remained very low. For the past few years, the government has recognized the importance of
mobilizing domestic savings for huge investments. Currently, Ethiopia has allowed some foreign
banks to open liaison offices in Addis to facilitate credit to companies from their countries of
origins. Chinese, German, Kenyan, Turkish, and South African banks have opened liaison
offices in Ethiopia.
From existing Banks in Ethiopia, Abyssinia bank is one of the top ranked Bank which mobilizes
deposit. Accordingly, the Bank has achieved growth in assets by 26.81% and an increase in
profitability by 12.36% under the duress of such a competitive market and tough macroeconomic
conditions. Total assets have increased by Birr 40.15 billion over that of last year and reached
Birr 189.60 billion, while the Bank earned a gross profit (before tax) of Birr 5.23 billion
representing an increase of Birr 13 million from that of the preceding year. Deposits increased by
Birr 36.49 billion, which is a 29.89% growth over that of the preceding year, and the total
deposits amount was raised to Birr 158.54 billion as at June 30, 2023. Total loans and advances
increased by 29.27% from last year’s position and reached Birr 146.51 billion (P+I).The Bank’s
interest free banking business has also made progress. During the year, the Bank mobilized a
total of Birr 6.04 billion in IFB deposits, which brought total IFB deposits to Birr 18.07 billion.
In addition, the Bank has been increasing its interest free financing products and outstanding
financing has become Birr 3.03 billion as at June 30, 2023. The Bank shall continue to further
strengthen IFB services with more innovative products and service offerings tailored to the needs
and preferences of customers. The number and composition of service outlets across the Bank in

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which the Bank extends IFB services have increased over time accompanied by enhanced
operational efficiency and service excellence. (Annual report 2022/2023)

2.1.1 Commercial Bank Deposit

The term commercial bank refers to a financial institution that accepts deposits, offers checking
account services, makes various loans, and offers basic financial products like certificates of
deposit (CDs) and savings accounts to individuals and small businesses. A commercial bank is
where most people do their banking.
Commercial banks are the most dominant depository institution. They serve investors by offering
a wide variety of deposit accounts, and they transfer deposited funds to deficit units by providing
direct loans or purchasing debt securities. Commercial banks serve both the private and public
sectors, as their deposit and lending services are public sectors, as their deposit and lending
service are utilized by households, business and government agencies.(Ketema 2017)
Commercial banks are dependent on depositor’s money as a source of funds. According to the
Keynesian theory of demand for money, there are three main motives why people hold money;
transactions, precautionary and investment motives. In order to cater for these motives,
commercial banks offer three categories of deposit facilities that are demand, savings and time
deposits. Demand deposit facility is most commonly referred to as current account and is
designed for those who need money for transaction purposes. This motive can be looked at from
the point of view of consumers who want income to meet their household expenditure and from
the viewpoint of businessmen who require money and want to hold it in order to carry out their
business activities. Hence, the purpose of deposit facility is for convenience or for making daily
commitments. (Keynesian theory).

The three types of deposits, namely saving, demand deposit and term of fixed time deposits
accounts services, are provided by all the commercial banks in Ethiopia. Although the forms of
the three deposits and how they are being opened and used differ, they are all installed to
mobilize deposits to the banks. The definitions of the three deposits types are mentioned as
followed.

1) Time or term deposits: These deposits are kept by the bank for specified period of time per the
agreement between the bank and depositor. Higher interest rate are paid by the banks for such

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kinds of deposits depending upon the amount of deposits and the length of period for keeping the
deposits provided there is no breach of the agreement.

2) Saving deposits: These accounts are opened by many people who need to save their wealth
usually beyond current consumption and in anticipation of future investment such as building
own house, buy car and to self-sponsor education etc. In doing so the account holder earns
interest on the saving balance. Saving accounts are the most favoured deposit account for
commercial banks as they are cheap and are usually stable in nature. They are the services with
which banks reach out the broad mass of people.

3) Current deposits: These deposits are generally used by business persons to settle debts usually
through use of cheques. They are most often ready for payment upon demand anytime and
usually no interest are paid on these accounts.(Giragn 2015).

2.1.2Determinants of Deposit mobilization

Inflation
The rate of inflation and the inflationary expectations might have some influence on the growth
of overall deposits with the banking system. It is generally assumed that the growth of total
deposits is to be negatively related with inflationary expectation. As inflation accelerates,
deposits become less attractive, depending on the interest rate. In this case, the assumption would
be that as deposit interest rates rise, deposits would increase in principle as well. The narrower
the spread between deposit rates and inflation, the less attractive it should be to hold deposits
above the required level. As the rate of inflation increases, people will be tempted to divert their
savings from bank deposits to any other kind of tangible assets because these assets act as hedge
against. This is the persistent increase or decrease in the average price of goods and services.
(Baherdin Awol, 2016).

Service Quality

Service quality has been viewed as a significant issue in the banking industry, and it becomes
imperative for banks to strive for improved service quality if they want to distinguish themselves
from the competition. Service quality has five major dimensions that distinct one bank from
other. Customers who receive quality service from commercial bank stay longer, spend more,

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and become loyal. Hence, a bank should implement comprehensive service quality to outshine
the competition and attract more deposits.

Good service quality helps to satisfy and satisfy customers’ needs. This is an important tool for
banks to attract capital. It shows enthusiasm and customer care in a considerate and friendly way
through dedicated, thoughtful and clear guidance as well as timely resolution of customer
problems and difficulties. A number of previous studies by Phan et al. (2015); Gunasekara and
Kumari (2018); Miklós et al. (2019); Vuong et al. (2020) and Nguyen (2020) stated that the
better the quality of customer service, the higher the Satisfaction of customer to stay longer.
The study by Goiteom (2011), on the bank selection decisions customers more emphasize on
factors such as convenience, service provision, employers influence and bank image. Therefore,
banks should consider these factors when implementing their market strategies to absorb more
deposits.
Generally, banks are providing services but competition among banks is determined by the
quality of the banking services. According to Khalily (1987), there should be strategy requires as
policy and procedural changes, development of innovative programs and improvement in the
quality of services provided to the depositors. Furthermore, the quality of banking services
mainly depends on several factors as, Branching Policy: The expansion of banking facilities is
the key factor for deposit mobilization and when providing facilities accessibility is the most
important factor, Innovative approaches, Interest rate policy, more incentives to depositors, more
incentives to bank employee when achieving targets on deposit mobilization, Training for bank
employees and Expansion of infrastructure.

2.1.3 Organizational development strategy

The mechanism of banks is manifested through the development strategies of banking
operations. It reflects compliance and consistency in regulations as well as compliance with
policies and mechanisms. Procedures and processes are implemented flexibly in practice. These
key policies and regulations ensure flexibility that will have a positive impact on Deposit
mobilization and recognized by Byusa (2016); Far and Zadeh (2016) and Maxwell et al.(2018).

2.1.4 Social, political and Economic factors

According to M. A. Baqui et al (1987), some analysts argue that demand for deposits is
influenced by education level which in turn increases the awareness of the rural people about

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banking services (Mauri; Von Pischke). Since the study of M. A. Baqui et al (1987) conducted
by taking rural area as its base it is obvious that it considers the awareness as a factor of deposit
mobilization. It was also found that literacy as a proxy for awareness about banking, positively
influence deposits.

Customers select a bank to deposit their money based on several determinants as attractiveness
of the deposit interest rate, attractive adverting on mass media, minimum loan conditions and
also sometimes customers assumed that state-owned banks are more reliable than the private
banks. Moreover, some customers assume that when banks have wide branch network then that
bank is good for their deposits. Although all the aforementioned factors are important when
depositing money, among them bank image is the most important factor of choosing a secured
place to deposit valuable deposits of customers. Bank image can be determined through the
financial business and the management information about the business activities of the bank.
Therefore, one of the most significant factors affecting for deposit mobilization is bank image.
Since customers always expect a secured place for their deposits, most of the time they tend to
deposit money in the institutions or banks which have a positive image (Samarasiri, 2014).

According to Telatela (2013), bank image is determined by the reliability, responsiveness,

assurance and empathy. Savers are always nosy about the safety of their funds, recurring cases of
forgeries, theft and bankruptcies occurred. Therefore, they always deposit more money in banks
which have good bank image.

Another social factor is awareness a component which increases the collective consciousness
among the people and generates confidence in the industrial to face problems confidently.
However, the success of the banks depends on to which extent people in the particular country
aware about the banking activities. When considering about the deposit mobilization, customer
awareness is a key element to absorb high amount of deposits. Customer awareness about the
services depends upon many factors such as return on investments, promptness, care, security,
convenience, growth, flexibility etc. hence integral part of banks is deposit mobilization,
therefore banks should pay attention to attract more deposits by giving knowledge and promoting
them (Kanthi, Singu, 2015).

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2.2 Empirical Review
Various numbers of studies have examined the determinants of deposit mobilization in many
countries around the world. Most of the studies considered banks specific internal factor and
external factors and examine either a particular country or a number of countries and a number of
explanatory variables have been proposed three categories, according to the nature and purpose
of each study. Azmi & Haron (2006) this study investigates the structural determinants of
deposits level of commercial banks in Malaysia, using Co integration techniques. The results
suggest that determinants such as rates of profit of Islamic bank, rates of interest on deposits,
Base Lending Rate, Kuala Lumpur Composite Index, Consumer Price Index, Money Supply and
Gross Domestic Product have significant impact on deposits. We also find that in most cases,
customers of conventional system behave in conformity with the savings behaviour theories.

Andinet (2016) the aim of this study is to examine factors influencing deposit mobilization in
private commercial banks in Ethiopia. In doing so, the study adopted quantitative methods
research approach using secondary data. The study had found variables that can affect the total
deposits of the banks. Seven variables are regressed with the dependent variable i.e. total deposit.
The explanatory variables are number of bank branches, deposit interest rate, liquid asset to
deposit ratio, lagged value of bank deposits, net interest margin, inflation rate and economic
growth (GDP). The data for these variables were collected from the respective private
commercial banks‟ financial statements, national bank of Ethiopia, central statistical authority
and MOFEC of the sample year 2005 up to 2015. Different diagnostic test were performed to
know whether the model is valid or not. All the tests were valid and eventually regression
analysis was performed using E view statistical package. The result from regression analysis
showed that number of bank branches, deposit interest rate, net interest margin and GDP were
significantly and positively correlated with the explained variable. Lagged value of bank deposit
was significantly and negatively correlated with total deposit. However, liquid asset to deposit
ratio and inflation rate were insignificantly negatively correlated with bank deposit. Finally the
study had recommended what should be done to mobilize more deposits. Dereje (2017) the
purpose of his study is to investigate determinants of deposit mobilization in private commercial
banks of Ethiopia using panel data of six private commercial banks from year 2002 to 2012. The
study will use both quantitative and qualitative research approach. Secondary financial data are
analysed using multiple linear regressions models for the six bank’s deposit. Fixed or random

13
effect regression model was applied to investigate the impact of bank branches, exchange rate,
Real Gross domestic product, Capital Adequacy and Liquidity on private commercial banks
deposits. Besides, the study used primary data analysis to solicit managers‟ perception towards
the determinants of private commercial banks deposit mobilization. The empirical results from
regression analysis showed that bank branches, exchange rate, and real gross domestic product
affects deposit of the bank positively whereas, capital adequacy and liquidity affects the deposit
of the private banks negatively. This implication show that better capitalized banks tend to create
less liquidity that leads to mobilize little deposit amount. 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
significantly. Thus, management bodies of private commercial banks should strive to strengthen
the identified significant factors and government bodies should also see the adverse effect of
tight polices imposed on the existing private commercial banks as well as for the new entrant
banks.

2.3 Research Gap

Most researchers conducted on Determinants of Deposit Mobilization activity in bank sectors in
both developed and developing countries. And made different suggestions and they use different
independent variables to see Determinants of Deposit Mobilization activity on different study
areas in the country. Therefore, aforementioned problems necessitate this study to be carried out
and doing this research assumed to fill the gap of methodology and other gaps mentioned above
about Determinants of Deposit Mobilization activity in Abyssinia bank Adama district and
selected branches.

2.4 Conceptual Frame work

From the above theoretical and empirical literature reviews the main factors that determine the
deposit growth of financial institution specifically banks is divided by mainly by both macro and
micro economic factors. This study used both macro and micro determinants of bank deposit that
includes Inflation rate, Service quality, Political, Social and Economic factors and Organizational
development strategy. The study has quantified how these variables are determining the deposit
of Abyssinia bank Adama district.

14
The researcher will reveal that there are independent factors determining deposit mobilization at
Abyssinia bank Adama district and selected branches (the dependent variable). Deposit
mobilization is a deliberate effort by relevant organ vested that right by the central bank. Among
the factors Inflation, organizational development strategy, service quality, political, social and
economical factors are claimed to affect the deposit mobilization activity.

The Conceptual framework of these variables is a guide to this research and shows how they
determine deposit mobilization at Abyssinia bank Adama district and selected branches. Four
variables will be selected while assuming other variables remain constant during the research.
Based on the overall review of related literatures and theoretical framework, the following
conceptual model had been developed. The model used in the current study to analyse how
independent variables affect dependent variable (Deposit Mobilization).

Inflation

Service Quality
Deposit Mobilization
Political, Social and Economic
factor

Dependent Variable
Organizational Development
Strategy
Independent Variable

Fig2.1 Conceptual framework of the researcher

2.5 Research Hypothesis

Based on the conceptual framework and research questions, the hypothesis of main questions is
outlined in such manner as follows:

H1: Inflation has positive and significant effect on Deposit Mobilization of Abyssinia bank
Adama district and selected branches.

15
H2: Service Quality has positive and significant effect on Deposit Mobilization of Abyssinia
bank Adama district and selected branches.

H3: All Political, Social and Economic factor have positive and significant effect on Deposit
Mobilization of Abyssinia bank Adama district and selected branches.

H4: Organizational Development structure has positive and significant effect on Deposit
Mobilization Abyssinia bank Adama district and selected branches.

16
 CHAPTER THREE

3. Research Design and Methodology

3.1 Research Design
The choice of research design depends on objectives that the researcher wants to achieve (Admas
et al., 2007).

Besides, deductive reasoning is applicable for quantitative research whereas inductive reasoning
is for qualitative research (Admas et al., 2007). Thus, due to quantitative nature of data, the
researcher used deductive reasoning to examine the cause and effect relationships between bank
deposit and its determinants in this study.

As noted by {Kothari, (2004) explanatory research design examines the cause and effect
relationships between dependent and independent variables. Therefore, since this study examined
the cause and effect relationships between growth of deposit and its determinant, it was an
explanatory research. The objective to be achieved in the study was a base for determining the
research approach for the study. In case, if the problem identified is factors affecting the outcome
having numeric value, it is quantitative approach (Creswell, 2003).

Therefore, the researcher employed quantitative research approach and explanatory research
design to examine the correlation analysis with respective empirical literatures on the
determinants of bank deposit.

3.2 Data types and sources

The study used both primary and secondary data. The primary data was collected from BOA
customers through dispatching the standard questionnaire to them. Secondary data of the study
was gathered from different sources like annual report bulletins published by the National Bank
of Ethiopia (NBE) and Ministry of Finance and Economic Development (MoFED) and BOA
Annual reports.

The advantage of using secondary data was comparability character. The researcher used the
secondary data to validate and compare the data obtained through questionnaire to existing
literature and articles.

17
3.3 Target Population and Sample size Determination
The targeted population for this study is employees at Abyssinia bank Adama district and
branches under this region are the pool of the study. BOA Adama district have 75 branches right
now and 20% of the branches were only focus of this study including the district departments.
This percentage was chosen because Mugenda and Mugenda (2003) also note that a sample size
of 10%-30% of the target population for a social study is adequate for research. The sample size
would consider as representative of the Abyssinia bank adama district employees and this would
expect as large enough to allow for precision, confidence and to generalize the research finding.
Accordingly, 140 respondents were selected out of 214 employees. So that, the researcher used
the following sample size determination formula developed by (Yemane, 1967). It is calculated
as follows: n = N/1+N (e2), where, n= sample size, N= Population size and e= the margin of
error. Then at 5% significance level, the total sample size n = (214/1+214 (0.0025) is
approximately equal to 140 employees. To determine the proportional sample size the following
will be used ni =n*pi/N,

Where ni= Sample size for branch,

Pi= The total number of employees in each branch,

N = the total number of target employees in the Abyssinia bank Adama district,

n = the total sample size for Abyssinia bank Adama district. Accordingly, the table below shows
the

Proportionate sampling for each branch based on the above given formula. Accordingly, the
table

Below shows the proportionate sampling for each branch based on the above given formula

No Branches Name Target Population Proportional Sample

Size
1 Adama district office 40 27
2 Adama main branch 22 15
3 Adama menahariya 16 11
4 Gendegara branch 12 8

18
5 Abageda ranch 12 8
6 Bole branch 12 8
7 Kereyu branch 12 8
8 Boset branch 12 8
9 Modjo branch 14 9
10 Awash melkasa 12 8
11 Degaga branch 10 6
12 Sinke branch 10 6
13 Haro koka branch 10 6
14 Dembela branch 10 6
15 Adama posta branch 10 6
Total Fifteen branches (15) 214 140
Source: Own computation, 2024

3.4 Sampling Technique

In order to obtain representative data, stratified random sampling technique was employed in

this study.

3.5 Data Collection Instrument

Primary data was collected using the self-administered questionnaire and interview. The
Respondents were asked to indicate the extent to which they agree or disagree with each
statement using 5-point Likert scale [(1) = strongly disagree; (2) = disagree; (3) = neutral; (4) =
agree and (5) = strongly agree] response framework.

3.6 Data Collection Procedure

The researcher developed questionnaire for the study. The questionnaires were printed and
physically distributed to the respondents. Respondents shall were given two days to fill in the
questionnaire, after which, the researcher collected physically the questionnaires.

3.7 Method of Data Analysis

The data that collected through questioner was recoded in to SPSS (Statistical package for social
science). According to the variables selected and the questions asked. The data analyses were

19
performed using descriptive and inferential statistics for independent and dependent variables.
SPSS Version 26 was used to analyse the data

3.8 Validity and Reliability

3.8.1 Validity
Before the questioner was distributed to the respondent, the validity of the instrument was
checked by the advisor as to whether it measures what it purported to measure. Accordingly
based on the approval obtained from the advisor the questioner was used considering that, they
are valid. Validity was concerned with the degree to which the designed questioner items fairly
and accurately represented the main variable (dependent and independent) discussion in
literature review.

3.8.2 Reliability test

The reliability test is an important instrument to measure the degree of consistency of an attribute
which is supposed to be measured. As stated by Yen (2003), the less variation of the instruments
produces in repeated measurements of an attribute the higher its reliability. Reliability can be
equated with the stability, consistency, or dependability of a measuring tool. Cronbach's alpha is
one of the most commonly accepted measures of reliability. It measures the internal consistency
of the items in a scale. It indicates that the extent to which the items in a questionnaire are related
to each other. It also indicates that whether a scale is one-dimensional or multidimensional. The
normal range of Cronbach ‘s coefficient alpha value ranges between 0 - 1 and the higher values
reflects a higher degree of internal consistency.

According to Nunnally (1978), the generally accepted guidelines for interpreting Cronbach's
alpha are:

- **Excellent reliability: ** 0.90 and above

- **Good reliability: ** 0.80 to 0.89

- **Acceptable reliability: ** 0.70 to 0.79

- **Questionable reliability: ** 0.60 to 0.69

- **Poor reliability: ** 0.50 to 0.59

- **Unacceptable reliability: ** Below 0.5

20
Table.1 Reliability Analysis, Cronbach’s alpha result.

No. of Items Cronbach’s Alpha Coefficient

political, social and economic factors on 7 0.802
deposit mobilization
organizational development strategy 6 0.987
influence of inflation on deposit mobilization 4 0.977
Service quality 7 0.985

Source: (SPSS result 2024)

The Cronbach's alpha coefficients provided indicate a high level of reliability across the different
scales measured. The "political, social and economic factors on deposit mobilization" scale,
comprising 7 items, has a Cronbach's alpha of 0.802, which falls within the "Acceptable" range
for reliability. This suggests that the items within this scale demonstrate good internal
consistency and reliability in measuring the construct. For the "organizational development
strategy" scale with 6 items, the Cronbach's alpha is an exceptionally high 0.987. This value falls
within the "Excellent" range, indicating that the items in this scale have extremely high internal
consistency and reliability in assessing the organizational development strategy construct.
Similarly, the "influence of inflation on deposit mobilization" scale, with 4 items, also exhibits
excellent reliability with a Cronbach's alpha of 0.977. This high coefficient suggests that the
items in this scale are highly correlated and consistently measure the influence of inflation on
deposit mobilization. Lastly, the "Service quality" scale, comprising 7 items, has a Cronbach's
alpha of 0.985, which again falls within the "Excellent" range. This demonstrates that the items
in this scale have an extremely high degree of internal consistency and reliability in assessing
service quality.

Overall, the Cronbach's alpha values provided indicate that the scales have strong to excellent
reliability, with the "organizational development strategy", "influence of inflation on deposit
mobilization", and "Service quality" scales exhibiting particularly high internal consistency.
These results suggest that the items within each scale are closely related and reliably measure the
intended constructs.

21
3.9 Descriptive Statistics
The demographic profiles of target respondents were analysed using descriptive analysis such as
frequency, percentage, tables and bar charts, central tendencies like mean and standard deviation
(SD) to measure the variability of collected data.

3.10 Ethical Consideration

The primary responsibility of the researcher was confirming the strict confidentiality and
guaranteeing the privacy of the respondents during the treatment of the information given by
them. The purpose of the research was explained to the respondents before conducting the
survey, by preparing them with covering letters. The researcher was also more concerned about
not violating the self-esteem and self-respect of the subjects. The data and study results were
confidential, secured, and not disclosed to anyone; they were solely used for academic purposes..

22
 CHAPTER FOUR

DATA ANALYSIS, INTERPRETATION AND DISCUSSION

4. INTRODUCTION

This chapter describes the analysis of data followed by a discussion of the research findings. The
findings relate to the research questions and objectives that guided the study. Data were analyzed
to identify and describe the overall deposit mobilization practices.

4.1Response Rate

The study was mainly conducted to access determinants of deposit mobilization practices in
Abyssinia Bank Adama District. It was based on a sample of 140 employees. A total of 140
questionnaires were distributed to the respondents and from those 134 (96%) questionnaires were
collected through a self-administered survey, properly filled and ready for analysis. Then after,
the data were entered into SPSS. The dataset was rechecked to ensure the accuracy of the data
entry. The minimum and maximum data values on each variable related to each case were
checked to detect any irregular or unusual data values

4.2 Demographic Characteristics of Respondents

The first part of the questionnaire consists of five items about the demographic information of
the respondents. It covers the personal data of respondents, such as gender, age, educational
qualification, year of service and current job position. This demographic information of the
respondents was not used to understand their relationship with the dependent variable which is
deposit mobilization. Rather they are just used to understand the composition of the bank staffs
as it is. The response of personal information are presented and discussed below.

4.2.1 Gender
Figure 4.1 Gender of the respondents

Gender
N %
Male 80 59.7%
23
Female 54 40.3%
 Gender
Male
Female

Source: (SPSS result 2024)

As it is shown in Table 4.1, the demographic data for gender shows that, out of the 140
respondents there were 80 males and 54 females. Table 4.1 shows that the male respondents
formed majority of the target population with a percentage of 59.7%, while female respondents
were representing 40.3%.

4.2.2 Age
Figure 4.2 Age of the respondents

Age
N %
23-30 40 29.9%
31-40 60 44.8%

41-50 34 25.4%

24
 Frequency
Age

60

50

40

30

20

10

0
23-30 31-40 41-50
Age

Source: (SPSS result 2024)

From the above figure 4.2 ages of the respondents 29.9% were between the age of 23-30, 44.8%
were between the age of 31-40 and the remaining respondents 25.4% were between the age of
41-50 .This implies 74.7% of the employees of the bank between the age of 23-40. It was a good
opportunity for the bank for deposit mobilization because they have young employees. All
participants have direct experience at deposit mobilization; it enabled the researcher to get all
required data from the participant.

4.2.3 Academic Qualification

Figure 4.3 Academic Qualification of the respondents

Academic Qualification
N %
Degree 110 82.1%
Master and above 24 17.9%

25
Source: (SPSS result 2024)

From the above figure 4.3 Academic qualifications of the respondents 82.1% were degree holder
and the remaining respondents 17.9% were masters and above. The majority of the respondents
were degree holder would help respondents understand and fill the questioners correctly so that
the finding would be viable.

4.2.4 Position at the Bank

Figure 4.4 Working Experience of the respondents

Position at the Bank

N %
Relationship Manager 24 17.9%
Branch Manager 66 49.3%
Resource mobilization officer 14 10.4%

Banking business Officer 30 22.4%

26
Source: (SPSS result 2024)

Figure 4.4 show that 17.9% were at the Relationship Manager, 49.3% branch Managers, 10.4%
Resource Mobilization Officer and 22.4% were Banking Business Officer. From this, we can
understand most of the respondents were a senior and management staffs of the bank. All
participants have direct experience at deposit mobilization; it enabled the researcher to get all
required data from the participant.

4.2.5 Working Experience at the Bank

Figure 4.5 Working experience

Working Experience at the Bank

N %
3-7year 40 29.9%
7-12year 60 44.8%
above 12 year 34 25.4%

27
Source: (SPSS result 2024)

It can be viewed on figure 4.5 that of the 40 respondents 29.9%) fall in the 3-7 years service
category and 60 respondents (44.8%) fall in the 7-12 years service category. The other group of
respondents 34 (25.4%) fall in service category of 12 years and above. According to the above
figure the list work experience were three years because employees less than three years
experience were not included in the study. 70.2% of the respondent’s service year were 7 and
above years which show the majority of the respondents were well experienced. The composition
of work experience of the representative samples may have a positive effect on the quality of the
finding of the study as it incorporates the views of each group.

4.3 Descriptive Statistics of Study Variables

4.3.1 Political, social and economic factors on deposit mobilization

Table 4.2

Strongly Disagree neutral Agree Strongly Mean St.Dev

Items Disagree agree
% % % % %

Changes in government
policies and regulations

28
related to banking affecting
customers' willingness to
deposit funds 11.2 18.7 22.4 37.3 10.4 3.17 1.186
Political instability or
uncertainty impacting 3.7 11.2 7.5 44.8 32.8 3.92 1.090
deposit mobilization
Government
intervention/control limiting
Abyssinia Bank's ability to
offer competitive deposit 18.7 29.9 18.7 22.4 10.4 2.76 1.281
products and services
Cultural norms and
preferences around saving
and investment behaviour
11.2 18.7 22.4 29.9 17.9 3.25 1.265
affecting deposit habits
Demographic shifts
impacting Abyssinia Bank's
customer base and deposit
14.9 18.7 26.1 22.4 17.9 3.10 1.314
mobilization
Community's perception
and trust in the banking
sector influencing deposit
11.2 18.7 22.4 37.3 10.4 3.17 1.186
decisions
Alternative investment
options divertingfunds 7.5 14.9 14.9 44.8 17.9 3.51 1.168
away from deposit accounts
Source: (SPSS result 2024)

From Table 4.2, mean score of 3.17 indicates that respondents generally agree that policy
changes negatively affect customer deposit behaviour. 47.7% of respondents agree or strongly

29
agree with the statement, while 29.9% disagree or strongly disagree, suggesting polarization on
this issue. Standard deviation of 1.186 implies a moderate level of variation in responses.

At the same time respondents are asked about the impact of political instability or uncertainty on
deposit mobilization.

Mean score of 3.92 indicates that respondents generally agree that political instability or
uncertainty negatively affects deposit mobilization. 77.6% of respondents agree or strongly agree
with the statement, while only 14.9% disagree or strongly disagree, suggesting a strong
consensus on this issue. Standard deviation of 1.090 implies a relatively low level of variation in
responses, indicating a fairly consistent perception among respondents. The results highlight the
significant impact of political factors on the banking system's ability to attract and retain
customer deposits. This underscores the importance of political stability and predictability for the
development of a robust and resilient banking sector.

In contrast, "Government intervention/control limiting Abyssinia Bank's ability to offer

competitive deposit products and services" had the lowest level of agreement, with a mean of
2.76 and only 32.8% agreeing or strongly agreeing. This suggests that direct government policies
are not viewed as the primary constraint on the bank's deposit mobilization efforts.

Mean score of 3.25 indicates that respondents generally agree that cultural factors affect deposit
habits. 47.8% of respondents agree or strongly agree with the statement, while 29.9% disagree or
strongly disagree, suggesting a mixed response. Standard deviation of 1.265 implies a
moderately high level of variation in responses, indicating that the influence of cultural norms
and preferences on deposit behaviour may vary across different segments of the population. The
results suggest that cultural factors play a significant role in shaping deposit habits, but the extent
of this influence may differ among individuals and groups.

Demographic Shifts Impacting Abyssinia Bank's Customer Base and Deposit Mobilization,
Mean score of 3.10 suggests that respondents generally agree that demographic shifts impact the
bank's customer base and deposit mobilization. 40.3% of respondents agree or strongly agree,
while 33.6% disagree or strongly disagree, indicating a mixed response. Standard deviation of
1.314 implies a relatively high level of variation, suggesting that the perceived impact of
demographic shifts may vary across different segments of the customer base.

30
Community's Perception and Trust in the Banking Sector Influencing Deposit Decisions: Mean
score of 3.17 indicates that respondents generally agree that the community's perception and trust
in the banking sector affect deposit decisions. 2. 47.7% of respondents agree or strongly agree,
while 29.9% disagree or strongly disagree, suggesting a polarized response. Standard deviation
of 1.186 implies a moderate level of variation, indicating that individual perceptions may vary
based on personal experiences and backgrounds.

Alternative Investment Options Diverting Funds Away from Deposit Accounts: Mean score of
3.51 suggests that respondents generally agree that alternative investment options divert funds
away from deposit accounts. 62.7% of respondents agree or strongly agree, while 22.4% disagree
or strongly disagree, indicating a relatively strong consensus. Standard deviation of 1.168
implies a moderate level of variation, suggesting that the perceived impact of alternative
investments may vary across different customer segments.

4.3.2 Influence of inflation in the deposit mobilization

Table 4.3

Items Strongly Disagre Neutral Agree Strongly

Disagree e Agree Mean St.Dev
% % % % %
Inflation rates in the local
economy have a significant
impact on the deposit
mobilization efforts of 18.7 22.4 11.2 26.1 21.6
Abyssinia Bank. 3.1 1.450
When inflation rates are
high, customers tend to
withdraw their savings from
Abyssinia Bank to hedge
against the erosion of their 11.2 14.9 22.4 41.04 10.4 3.25 1.173
purchasing power.
Abyssinia Bank adjusts its
deposit interest rates in
response to changes in

31
inflation rates to maintain
the real rate of return for its
depositors. 26.1 33.6 18.7 13.4 8.2 2.44 1.242
The bank's deposit
mobilization strategies are
heavily influenced by the
prevailing inflation
18.7 22.4 14.9 26.1 17.9 1.401
environment in the local 3.02
economy.

Source: (SPSS result 2024)

The data suggests that inflation rates in the local economy have a significant impact on
Abyssinia Bank's deposit mobilization efforts. Respondents generally agree (mean score of 3.1)
that inflation rates affect the bank's deposit mobilization, with 47.7% of respondents agreeing or
strongly agreeing. However, the relatively high standard deviation of 1.450 indicates that the
perceived impact of inflation may vary across different segments of the customer base.

When inflation rates are high, customers tend to withdraw their savings from Abyssinia Bank to
hedge against the erosion of their purchasing power. The mean score of 3.25 suggests that
respondents generally agree with this statement, and 51.4% of respondents agree or strongly
agree. The moderate standard deviation of 1.173 implies that individual withdrawal behaviours
may differ based on personal financial circumstances and risk tolerance.

In response to changes in inflation, the data suggests that Abyssinia Bank does not actively
adjust its deposit interest rates to maintain the real rate of return for its depositors. The mean
score of 2.44 indicates that respondents generally disagree with this practice, and 59.7% of
respondents disagree or strongly disagree. The moderate standard deviation of 1.242 suggests
that some respondents may perceive the bank's interest rate adjustments differently.

The data also reveals that Abyssinia Bank's deposit mobilization strategies are heavily influenced
by the prevailing inflation environment in the local economy. The mean score of 3.02 suggests
that respondents generally agree with this statement, but the mixed response (44% agree or
strongly agree, 41.1% disagree or strongly disagree) and the relatively high standard deviation of

32
1.401 indicate that the perceived influence of inflation on the bank's strategies may vary across
different respondents.

Overall, the data highlights the significant impact of inflation on Abyssinia Bank's deposit
mobilization efforts, customer withdrawal behaviour, and the bank's response in terms of interest
rate adjustments and deposit mobilization strategies.

4.3.3 Service Quality

Table 4.4 Service Quality

Strongly Disagree neutral Agree Strongly mean St.Dev

Items Disagre agree
e
% % % % %

Abyssinia Bank provides

consistently high-quality services
to its customers across all its 11.2 18.7 17.9 35.8 16.4 3.28 1.259
branches.
The bank's employees are
knowledgeable, helpful, and
3.7 11.2 7.5 44.8 32.8 3.92 1.090
responsive to customer needs.
The physical facilities, equipment,
and technology used in Abyssinia
Bank branches are modern and 18.7 26.1 14.9 29.9 10.4 2.87 1.312
well-maintained.
The bank's deposit products and
services are reliable, trustworthy,
14.9 31.3 26.1 18.7 9.0 2.75 1.185
and meet customer expectations.
Abyssinia Bank provides a safe,
secure, and confidential
environment for customers to 11.2 14.9 14.9 36.6 22.4 3.44 1.295
conduct their banking transactions.
Abyssinia Bank offers convenient
operating hours and accessibility to
7.5 16.4 23.1 29.1 23.9 3.46 1.230
meet the needs of its customers.

33
Abyssinia Bank provides prompt
and accurate resolution of
customer queries and complaints 20.1 36.6 26.1 9.0 8.2 2.49 1.155
related to deposit services.
Source: (SPSS result 2024)

The data suggests that Abyssinia Bank generally provides high-quality services to its customers
across its branch network. The mean score of 3.28 indicates that respondents tend to agree with
this statement, with 52.2% of respondents agreeing or strongly agreeing. However, the relatively
high standard deviation of 1.259 suggests that there may be some variation in customer
perceptions across different branches or segments.

Abyssinia Bank's employees are perceived as knowledgeable, helpful, and responsive to

customer needs. The mean score of 3.92 suggests a strong consensus among respondents, with
77.6% agreeing or strongly agreeing with this statement. The relatively low standard deviation of
1.090 further reinforces the consistency of these positive perceptions.

In terms of the physical facilities, equipment, and technology used in Abyssinia Bank branches,
the data indicates a more mixed response. The mean score of 2.87 suggests a neutral to slightly
negative perception, with 44.8% of respondents disagreeing or strongly disagreeing. The high
standard deviation of 1.312 implies that customer experiences may vary significantly across
different branch locations.

Respondents generally have a neutral to slightly negative perception of Abyssinia Bank's deposit
products and services, with a mean score of 2.75. Only 27.7% of respondents agree or strongly
agree that the bank's deposit offerings are reliable, trustworthy, and meet customer expectations.
The standard deviation of 1.185 suggests a moderate level of variation in customer perceptions.

Abyssinia Bank is perceived to provide a safe, secure, and confidential environment for
customers to conduct their banking transactions. The mean score of 3.44 indicates that
respondents generally agree with this statement, with 59% agreeing or strongly agreeing.
However, the relatively high standard deviation of 1.295 suggests that some customers may have
different experiences or perceptions.

34
Respondents generally agree that Abyssinia Bank offers convenient operating hours and
accessibility to meet the needs of its customers, with a mean score of 3.46. The majority of
respondents (53%) agree or strongly agree with this statement, while the standard deviation of
1.230 indicates a moderate level of variation.

Regarding the prompt and accurate resolution of customer queries and complaints related to
deposit services, the data suggests a more negative perception. The mean score of 2.49 indicates
that respondents tend to disagree with this statement, and 56.7% of respondents disagree or
strongly disagree. The standard deviation of 1.155 implies a moderate level of variation in
customer experiences.

Overall, the data suggests that Abyssinia Bank performs well in certain areas, such as employee
responsiveness and the provision of a safe and secure banking environment. However, there are
areas that require improvement, such as the consistency of service quality across branches, the
reliability and trustworthiness of deposit products, and the resolution of customer queries and
complaints. The varying perceptions and experiences among customers highlight the need for the
bank to address these areas and strive for a more consistent and satisfactory customer experience.

4.3.4 Organizational development strategy

Table 4.5 Organizational development strategy

Items Strongly Disagree Neutral Agree Strongl

Disagree y Agree Mean St.Dev
% % % % %
Abyssinia Bank has a clear and
well-defined organizational
development strategy. 3.7 14.9 22.4 37.3 21.6 1.099
3.58
The bank's organizational
development strategy is
effectively communicated to all 18.7 33.6 18.7 21.6 7.5 1.221
employees. 2.66
The organizational
development strategy focuses
on improving deposit
mobilization as a key business
objective. 22.4 26.1 18.7 18.7 14.2 1.367
2.76

35
 The bank allocates sufficient
resources (financial, human,
and technological) to
implement the organizational
development strategy for
deposit mobilization. 18.7 33.6 22.4 14.9 10.4 1.240
2.65
The organizational
development strategy has
resulted in the implementation
of effective marketing and
promotional campaigns to
attract new depositors. 18.7 26.1 22.4 26.1 6.7 1.221
2.76
The organizational
development strategy has
enabled the bank to improve its
branch network and
accessibility, leading to 11.2 26.1 14.9 33.6 14.2 3.13 1.267
increased deposit mobilization.
Source: (SPSS result 2024)

The data on Abyssinia Bank's organizational development strategy provides a nuanced picture of
the bank's strengths and challenges in this area.

To begin, the bank appears to have a clear and well-defined organizational development strategy,
with 37.3% of respondents agreeing and 21.6% strongly agreeing with this statement, resulting in
a mean score of 3.58. This suggests that the bank's leadership has put significant effort into
formulating a strategic plan for the organization's development.

However, the bank faces difficulties in effectively communicating this strategy to all employees.
Only 21.6% agreed and 7.5% strongly agreed that the strategy is effectively communicated,
while 18.7% strongly disagreed and 33.6% disagreed, resulting in a mean score of 2.66. This
disconnects between strategy formulation and strategy dissemination could hinder the successful
implementation of the bank's organizational development plans.

The alignment between the organizational development strategy and the key business objective
of deposit mobilization is also questionable. While 18.7% agreed and 14.2% strongly agreed that
the strategy focuses on improving deposit mobilization, 22.4% strongly disagreed and 26.1%

36
 disagreed, resulting in a mean score of 2.76. This lack of strategic focus on a critical driver of the
bank's performance could limit the strategy's overall effectiveness.

The bank also appears to face challenges in allocating sufficient resources to implement its
organizational development strategy for deposit mobilization. Only 14.9% agreed and 10.4%
strongly agreed that the bank allocates enough resources, while 18.7% strongly disagreed and
33.6% disagreed, leading to a mean score of 2.65. This resource allocation issue could hinder the
strategy's execution.

Furthermore, the results of the bank's organizational development strategy are not yet clearly
evident. While 26.1% agreed and 6.7% strongly agreed that the strategy has resulted in effective
marketing and promotional campaigns, 18.7% strongly disagreed and 26.1% disagreed, resulting
in a mean score of 2.76. Similarly, the strategy's impact on the bank's branch network and
accessibility, which could contribute to increased deposit mobilization, is mixed, with a mean
score of 3.13.

4.4 Correlation Analysis

The hypotheses discussed in the first chapter aimed to investigate the relationship between
independent variables (Political, social, and economic factors, organizational development
strategy, inflation and service quality) and dependent variable (Deposit Mobilization) in
Abyssinia bank S.C. Correlation analysis is done to examine this relationship.
The Pearson Product-Moment Correlation Coefficient is a statistic that indicates the degree to
which two variables are related to one another. The sign of a correlation coefficient (+ or -)
indicates the direction of the relationship between -1.00 and +1.00. Variables may be positively
or negatively correlated. A positive correlation indicates a direct positive relationship between
two variables. A negative correlation, on the other hand, indicates an inverse, negative
relationship between two variables (Ruud et. al. 2012).

Table 4.6 below clearly shows that the relationship between two variables will be negligible,
low, moderate, substantial, or very strong.

Table 4.6 Correlation Coefficient

Correlation coefficient(r) Strength of the correlation

37
From 0.01 up to 0.09 Negligible association

From 0.10 up to 0.29 Low association

From 0.30 up to 0.49 Moderate association

From0.50 upto0.69 Substantial association

From 0.70 and above Very strong association

Source: Joe W. Kotrlik, J. C. Atherton, A. Williams and M. KhataJabor. (2011)

Determining the degree of association between the selected factors (Political, social, and
economic factors, organizational development strategy, inflation and service quality) and deposit
mobilization is the main purpose of conducting an analysis using Pearson correlation. So, in this
section the four hypotheses were tested based on the correlation result.

Table 4.7 Correlation Analysis between Independent variables and Dependent Variable

Correlations
A B C D
political, social and influence of service quality
Organizational
economic factors on inflation on deposit
deposit mobilization development mobilization
strategy

A. political, Pearson 1 .961** .969** .984**

social and Correlation
economic Sig. (2-tailed) <.001 <.001 <.001
factors on Sum of 4396.843 5299.261 3784.701 6153.425
deposit Squares and
mobilizatio Cross-products
n Covariance 33.059 39.844 28.456 46.266
N 134 134 134 134

B. organizatio Pearson .961** 1 .989** .987**

nal Correlation
developme Sig. (2-tailed) <.001 <.001 <.001
nt strategy Sum of 5299.261 6909.231 4845.164 7730.291
Squares and
Cross-products

38
 Covariance 39.844 51.949 36.430 58.122
N 134 134 134 134
C. influence Pearson .969** .989** 1 .989**
of inflation Correlation
on deposit Sig. (2-tailed) <.001 <.001 <.001
mobilizatio Sum of 3784.701 4845.164 3470.955 5492.239
n Squares and
Cross-products
Covariance 28.456 36.430 26.097 41.295
N 134 134 134 134
** ** **
D. service Pearson .984 .987 .989 1
quality Correlation
Sig. (2-tailed) <.001 <.001 <.001
Sum of 6153.425 7730.291 5492.239 8885.560
Squares and
Cross-products
Covariance 46.266 58.122 41.295 66.809
N 134 134 134 134
**. Correlation is significant at the 0.01 level (2-tailed).
Political, social, and economic factors on deposit mobilization (variable A) have a very strong
positive correlation with organizational development strategy (variable B), influence of inflation
on deposit mobilization (variable C), and service quality (variable D). The Pearson correlation
coefficients are all above 0.96 and statistically significant at the 0.01 level.
Organizational development strategy (variable B) is also very strongly correlated with the
influence of inflation on deposit mobilization (variable C) and service quality (variable D), with
Pearson correlation coefficients above 0.98 and statistical significance at the 0.01 level.
The influence of inflation on deposit mobilization (variable C) is extremely strongly correlated
with service quality (variable D), with a Pearson correlation coefficient of 0.989 and statistical
significance at the 0.01 level.
The consistently high correlation coefficients above 0.96 suggest that these variables are closely
interrelated. The political, social, and economic factors, organizational development strategy,
influence of inflation, and service quality appear to be mutually reinforcing and have a
substantial impact on deposit mobilization. This indicates that a holistic approach considering all
these factors would be important for understanding and improving deposit mobilization. Further
analysis could explore the directionality and potential causal relationships between these

39
variables. Overall, the correlation analysis points to the multifaceted and interdependent nature
of the factors influencing deposit mobilization in your research area.

4.5 Interview about deposit mobilization

Interview with a Manager:

1. How does Bank of Abyssinia mobilize funds?

"Bank of Abyssinia utilizes a multi-pronged approach to deposit mobilization. We focus on

attracting both retail and corporate deposits through a combination of competitive interest rates,
innovative product offerings, and superior customer service. Our branch network, digital banking
platforms, and specialized relationship managers play a crucial role in reaching out to diverse
customer segments and meeting their evolving needs."

2. Do you have a deposit plan, and what are your strategies to achieve it? Is the plan achievable?

"Absolutely, we have a comprehensive deposit mobilization plan that is reviewed and updated
annually. Our key strategies include: 1) Expanding our branch and ATM network to improve
accessibility, 2) Enhancing our digital banking capabilities to cater to tech-savvy customers, 3)
Diversifying our deposit product suite to offer tailored solutions, 4) Providing attractive interest
rates while managing liquidity, and 5) Investing in relationship management to build trust and
loyalty.

We believe this plan is highly achievable given our strong brand reputation, skilled workforce,
and the growing demand for banking services in the market. We have set ambitious but realistic
deposit growth targets, and we are confident in our ability to deliver on them through disciplined
execution."

3. How do you rate the government's intervention in your deposit mobilization efforts?

"The government plays a constructive role in supporting deposit mobilization in the banking
sector. Policies such as favourable interest rate regulations, deposit insurance schemes, and
efforts to promote financial inclusion have all contributed positively to our deposit growth. That
said, we would welcome further initiatives to deepen capital markets and provide alternative
investment options, as this could potentially free up more funds for bank deposits."

40
4. is there a dedicated department that monitors the deposit mobilization process, and how does it
function?

"Yes, we have a centralized Deposit Mobilization Department that is responsible for overseeing
and optimizing our deposit portfolio. This department closely monitors deposit trends, analyzes
customer behaviour, and works closely with our branch network and relationship managers to
devise targeted strategies. They also coordinate with our Finance, Risk, and Product
Development teams to ensure deposit growth aligns with our overall balance sheet management
and business objectives. This integrated approach allows us to identify opportunities, address
challenges, and continuously enhance our deposit mobilization capabilities."

Interview with a Resource Mobilization Officer:

"As the Resource Mobilization Officer, I'm responsible for developing and implementing deposit
growth strategies across our various customer segments. This involves closely tracking market
trends, competitor analysis, and customer feedback to identify untapped opportunities.

I work closely with our branch managers, relationship teams, and product development unit to
design innovative deposit products, competitive pricing, and tailored marketing campaigns. We
also utilize data analytics to better understand customer preferences and optimize our deposit
mix.

Interview with a Relationship Manager:

"As a Relationship Manager, I'm on the frontline of deposit mobilization, working closely with
our retail and corporate customers. My primary focus is on building long-term, trust-based
relationships that enable me to thoroughly understand their financial needs and preferences.

Based on this deep customer insight, I'm able to offer tailored deposit solutions, provide financial
guidance, and deliver a seamless banking experience. This personal touch is crucial for attracting
new deposits as well as retaining and growing our existing deposit base.

4.6 presentations of data from secondary source

Deposits

41
The bank planned to grow deposits by 45% annually and thereby raise total deposit amount to
Birr 206.02 billion at the end of the strategic period. Commendable growth during the years and
the Bank’s deposits increased by CAGR of 50.4%. Significant annual growth was registered in
2021 fiscal year, with 86.6% annual growth while lower growth rates were registered in
subsequent years. Compared with that of industry players, the resource mobilization increase of
the Bank has been above the Industry average of 30.7% (not including new banks), and that of
peer bank average growth of 31.4% (Awash, Dashen and CBO) in the years under review.
Source: BOA annual report 2023-2024

The following has been observed in relation to deposit mobilization performance:

The underlying reason for lower share of demand deposit correlates partly to the bank’s
unbalanced focus on retail vis-a-vis corporate customers. The Bank’s weak linkage between
resource mobilization with allocation and the Bank’s limited provision of FCY to business
customers over the last two consecutive years contributes its part.

Customer Service

- While the continuous efforts have showed notable improvements, there still remained much to
be done to bring about a consistent service provision that differentiates the Bank in the market
competition

Price and Exchange Rate Development

Year-on-year headline inflation stood at 28.7% in December 2023, indicating slow abatement
compared to 35.1% in November 2022 and 34.2% in March 2023. Food inflation, accounting for
53.5% of the CPI weight, is the major driver of the general price level. Food and non-food
inflation rates stood at 30.6 percent and 26.1% respectively in December 2023.

Ethiopia has the highest inflation compared to East African peers like Kenya, Rwanda, and
Uganda. Key inflation drivers include accommodative and expansionary monetary policy,
imported inflation, and depreciation of local currency, domestic trading system, and supply side
issues.

Implication:

42
Inflation remains high and persistent, threatening price stability. It has impacted both the retail
and business communities. Rising prices affect household consumption expenditures and
domestic savings. Rising prices deplete production capacity and the propensity to save.
However, customers continue to save for precautionary or emergency cases.

Implication: The data indicate there is still untapped potential for banking to expand services via
account opening, comparing the ever-increasing population with the total number of bank
account holders. Apart from this, the Ethiopian population is very young; 60% is below 25 years
old, and 71% is literate, which implies they are a technology-savvy group with enormous market
potential for digital banking for the coming year.

Regulatory Framework

NBE's stringent regulations and directives still influence the bank's performance and restrict or
limit activities. Some of the regulations and directives that directly or indirectly affect the
banking business are the capital market, opening up the financial sector to foreign banks, FCY
surrender requirements, credit expansion caps, treasury bonds, and deposit insurance. In addition
to these, NBE is expected to issue different directives in the coming years following the policy
changes. Implication: The sector continues to be in the midst of a rapidly changing market
environment marked by a shifting regulatory framework (with periodic changes to policies
governing cash transactions, forex surrender rules, and credit allocations), the joining of large
numbers of new banks, and the very near-term prospect of intensifying competition from foreign
banks, and capital markets. Source: BOA annual report 2023-2024

CHAPTER FIVE

SUMMARY, CONCLUSSION AND RECOMMENDATION

5.1 INTRODUCTION
In this chapter the conclusions derived from the findings of this study on determinants of deposit
mobilization practices in Abyssinia Bank S.C are described. The conclusions were based on the

43
purpose, research questions and results of the study. The implications of these findings and the
resultant recommendations were explained. Recommendations were based on the conclusions
and purpose of the study.

5.2 Summary of Major Findings

The findings from the analysis of data collected from 140 employees of Abyssinia Bank Adama
District, achieving a 96% response rate. The demographic analysis reveals that the majority of
respondents were male (59.7%), aged between 31-40 years (44.8%), and held a degree (82.1%).
Most respondents worked in management positions such as branch managers (49.3%) and
relationship managers (17.9%), with a significant portion having over 7 years of service (70.2%).

Descriptive statistics highlight the impact of various determinants on deposit mobilization.

Political, social, and economic factors significantly influence deposit mobilization practices, with
changes in government policies (mean score 3.17) and political instability (mean score 3.92)
being particularly impactful. Cultural norms and demographic shifts also play a role, with mean
scores of 3.25 and 3.10, respectively. Community perception and the availability of alternative
investment options further affect deposit behaviour, as indicated by mean scores of 3.17 and
3.51.Inflation is another critical factor, with respondents indicating that inflation rates
significantly impact deposit mobilization (mean score 3.1). High inflation prompts withdrawals
to hedge against purchasing power erosion (mean score 3.25). However, there is a general
disagreement that Abyssinia Bank adjusts interest rates in response to inflation (mean score
2.44). The strategies for deposit mobilization are moderately influenced by inflation, with a
mean score of 3.02.

Service quality at Abyssinia Bank was rated moderately high overall, with a mean score of 3.28.
Employees were perceived as knowledgeable and responsive (mean score 3.92), while physical
facilities and deposit products received neutral to slightly negative perceptions, with mean scores
of 2.87 and 2.75 respectively. Safety and convenience in banking operations were positively
rated, with mean scores of 3.44 and 3.46. However, customer query and complaint resolution
was perceived negatively (mean score 2.49).

The organizational development strategy of Abyssinia Bank was found to be clear and well-
defined (mean score 3.58), though its communication to employees was less effective (mean
44
score 2.66). The focus on deposit mobilization as a key objective had a mean score of 2.76, and
resource allocation for strategy implementation was perceived as inadequate, with a mean score
of 2.6.

Correlation analysis reveals very strong positive relationships between the independent variables
(political, social, and economic factors, organizational development strategy, inflation, and
service quality) and deposit mobilization, with Pearson correlation coefficients above 0.96 for all
variables. This indicates that each of these determinants plays a significant role in influencing
deposit mobilization practices.

5.3 Conclusion
The study conducted on Abyssinia Bank Adama District highlights several key factors that
influence deposit mobilization. The analysis reveals that political, social, economic, and
organizational factors significantly impact how deposits are mobilized. Political factors, such as
government policies and political instability, are particularly influential. Social elements,
including cultural norms and demographic shifts, also play crucial roles. Economic factors, like
community perception and the availability of alternative investment options, further affect
deposit behaviours. Inflation is another critical factor, prompting increased withdrawals as
people seek to protect their purchasing power, although there is a perception that Abyssinia Bank
does not adequately adjust interest rates in response to inflation. Service quality at Abyssinia
Bank is moderately high overall, with knowledgeable and responsive employees. However,
improvements are needed in physical facilities, deposit products, and customer query resolution.
The bank's organizational development strategy is clear but poorly communicated to employees,
and resource allocation for implementing these strategies is seen as inadequate. Strong
correlations between these factors and deposit mobilization practices indicate their significant
impact. To enhance deposit mobilization, Abyssinia Bank should adjust its policies and strategies
more dynamically in response to political and economic changes, particularly inflation, to better
align with customer expectations and market conditions. Additionally, the bank should focus on
improving service quality, especially in areas such as physical facilities, deposit products, and
customer query resolution. Strengthening the communication of organizational strategies to
employees and ensuring adequate resource allocation for successful strategy implementation are

45
also essential steps. By addressing these areas, Abyssinia Bank can significantly improve its
deposit mobilization efforts, fostering greater customer loyalty and financial stability.

5.4 Recommendations
In connection with the summary of finding and conclusions drawn above, the following
recommendations are provided to address the gaps identified by the study.

 Since deposit is the main source of funds for commercial banks, therefore due emphasis
should be given by all the concerned bodies of the bank to enhance its deposit
mobilization level.
 The bank should provide excellent service for its customers to mobilize more deposits
through giving various incentives such as coupon prizes for the potential customers.
 The bank should be flexible, transparent and have strong relationship to handle the
existing in sustainable way and to encourage others.
 The bank should arrange enough and secured parking areas for their customers to
maintain the potential depositors.
 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 To improve
management efficiency the bank should give due attention in providing training packages
consistently for their employees to update their knowledge and skills.
 The bank must be focused in doing with exporters and foreign banking agents to have
enough foreign currencies which attracts potential depositors.
 BOA should meet its customers demand by evaluating the existing product and determine
in which stage of its life cycle each product falls. The bank can use various sources of
information to evaluate products, including client complaints, staff observations, market
research, and competitive activities.
 Bank of Abyssinia should offer well designed new products so that customers of all types
can customize their use of these products to meet their own need which help the bank to
mobilize more deposit.
 The bank should be watch the bank loan policy to provides smooth loan distribution to
attract new potential customers.

46
.

REFERENCES
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commercial bank of Ethiopia. Degree of Master Thesis, Addis Ababa University.

Andinet (2016) Factors Determining Deposit Mobilization Performance: In the case of Private
Commercial Banks in Ethiopia, Addis Ababa University

BahredinAwol 2016. “Determinants of commercial banks deposit growth (Evidence from

Ethiopia)‟, Degree of Master’s Thesis, Addis Ababa University

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Bakare, A. S. (2011). A theoretical analysis of capital formation and growth in Nigeria. Far East
Journal of Psychology and Business, 3(2), 11-24.

Byusa, M. (2016).Factors Influencing Savings Mobilization by Commercial Banks.PhD thesis,

Strathmore University, Rwanda.

Gebre, T. (2019).Determinants of Private Commercial Banks’Deposit Growth in

Ethiopia.Degree of Master Thesis, Addis Ababa University

Getachew, K. (2017). Determinants of Commercial Banks Deposit Mobilization in Ethiopia.

Degree of Master Thesis, St.Mary's University

Giragn G. 2015. Determinants of Deposit Mobilization and Related Costs of Commercial Banks
in Ethiopia” MSc, A.A.U.

Goiteom, W. (2011), Bank Selection Decision: Factors Influencing the Choice of Banking
Services. Addis Ababa, Ethiopia: University of Addis Ababa, Ethiopia.

Gunasekara, H. U., &Kumari, P. (2018).Factors Affecting for Deposit Mobilization in Sri

Lanka.International Review of Management and Marketing, 8(5), 30-42.

Jacewitz S, Pogach J. Deposit Rate Advantages at them Largest Banks.J FinancServ Res. 2018;
53 (1).

Kanthi, K.P., Singu, B.H. (2015), A survey report on customer awareness towards
bharatiyamahila bank with special reference to Coimbatore City. International
Journal of Advance Research and Innovative Ideas in Education,

KetemaGetachew (2017). Determinants of commercial Banks deposit mobilization, St.Merry

University.

MamoE(2017). An investigation of Determinants of Deposit Mobilization in commercial banks

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MedhatTarawneh(2004). A Comparison of Financial Performance in the Banking Sector: Some

Evidence from Omani Commercial Banks. International Research Journals of
Finance and Economics, Euro Journals Publishing.

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Nahidul Islam S, Nahidul Islam S, Julfikar Ali M, AtifWafik H. Determinants of Deposit Mobilization of
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[Internet]. 2019; 8 (10): 26–33. Available from: www.ijbmi.org

Orji, A. (2012). Bank Savings and Bank Credits in Nigeria: Determinants and Impact on
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Phan, D. K., Thai, V. D., Hoang, T. H., & Nguyen, Q. T. (2015). Factors affecting customer satisfaction
level of savings deposit services: The case of AgribankBinh Minh of Vinh Long
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Samarasiri, P. (2014), Money Transactions, Banks and Economy. 6th ed. S.l. Colombo 01, Sri Lanka:
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Sheku A.F. Bangura(2005). “Statistical Information and the Banking Sector” For Presentation at the
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Commercial Bank of Ethiopia, Addis Ababa University.

APPENDIX
Questionnaire

Questionnaire to be filled by the employees of Abyssinia bank Adama district

Dear respondent,

The purpose of this questionnaire is to collect firsthand information for a study being conducted
on the topic "Determinants of Deposit Mobilization Practices In Abyssinia Bank Adama

49
 District." This study is being carried out as partial fulfillment of a Master's of Business
Administration degree at Rift Valley University.

I kindly request that you provide genuine information to the best of your knowledge, so that the
findings of the study will be legitimate. This is purely academic research, and your responses
will be kept completely confidential. I would like to thank you for your willingness, effort, and
for taking the time to fill out this questionnaire and return it as soon as possible.

Instructions: Please use a tick mark (√) or an “X” to choose from the options provided. Write in
the spaces where appropriate. You do not need to write your name.

I appreciate your participation in this important research study.

SECTION I: RESPONDENT'S PROFILE

1. Gender: [ ] Male [ ] Female

2. Age: [ ] 23-30 [ ] 31-40 [ ] 41-50

3. Academic Qualification: [ ] Degree [ ] Master's and above

4. Position at the Bank: [ ] Relationship Manager [ ] Branch Manager [ ] Resource mobilization

officer [ ] Banking business Officer

5. Working Experience at the Bank: [ ] 3-7 years [ ] 7-12 years [ ] Above 12 years

Section II-Please read each statement in this part carefully and show the extent of your
agreement on the statement by putting “ ’’or “ X ’’ mark in the boxes using the following
rating scales (like scales);Strong disagree(1), disagree (2),Neutral (3), Agree(4), and Strong
agree (5).

A. Question related with effect of political, social and economic factors on deposit mobilization

S.NO Factor 1 2 3 4 5
1 Changes in government policies and regulations related
to banking affecting customers' willingness to deposit
funds

50
2 Political instability or uncertainty impacting deposit
mobilization
3 Government intervention/control limiting Abyssinia
Bank's ability to offer competitive deposit products and
services
4 Cultural norms and preferences around saving and
investment behavior affecting deposit habits
5 Demographic shifts impacting Abyssinia Bank's
customer base and deposit mobilization
6 Community's perception and trust in the banking sector
influencing deposit decisions
7 Alternative investment options diverting funds away
from deposit accounts

B. Question related with organizational development strategy on the growth of deposit

mobilization

S.NO Questions 1 2 3 4 5
8 Abyssinia Bank has a clear and well-defined organizational
development strategy.
9 The bank's organizational development strategy is effectively
communicated to all employees.
10 The organizational development strategy focuses on improving
deposit mobilization as a key business objective.
11 The bank allocates sufficient resources (financial, human, and
technological) to implement the organizational development
strategy for deposit mobilization.
12 The organizational development strategy has resulted in the
implementation of effective marketing and promotional campaigns
to attract new depositors.

51
13 The organizational development strategy has enabled the bank to
improve its branch network and accessibility, leading to increased
deposit mobilization.

C. Question related with influence of inflation on deposit mobilization

S.NO Question 1 2 3 4 5
14 Inflation rates in the local economy have a significant impact on
the deposit mobilization efforts of Abyssinia Bank.
15 When inflation rates are high, customers tend to withdraw their
savings from Abyssinia Bank to hedge against the erosion of
their purchasing power.
16 Abyssinia Bank adjusts its deposit interest rates in response to
changes in inflation rates to maintain the real rate of return for its
depositors.
17 The bank's deposit mobilization strategies are heavily
influenced by the prevailing inflation environment in the local
economy.

D. Question related with service quality

S.NO Questions 1 2 3 4 5
18 Abyssinia Bank provides consistently high-quality services to its
customers across all its branches.
19 The bank's employees are knowledgeable, helpful, and responsive to
customer needs.
20 The physical facilities, equipment, and technology used in Abyssinia
Bank branches are modern and well-maintained.
21 The bank's deposit products and services are reliable, trustworthy,
and meet customer expectations.
22 Abyssinia Bank provides a safe, secure, and confidential
environment for customers to conduct their banking transactions.

52
23 Abyssinia Bank offers convenient operating hours and accessibility
to meet the needs of its customers.
24 Abyssinia Bank provides prompt and accurate resolution of customer
queries and complaints related to deposit services.

Interview Questions

Rift Valley University School of Graduate Studies

MBA Program

1- How does Bank of Abyssinia mobilize funds?

2- Do you have deposit plan, if yes what are your strategies to achieve your deposit

Plan, and is the plan achievable?

3- How do you rate the government intervention to your deposit mobilization effort?

4- In your bank, is any department which monitors the deposit mobilization process?

If yes how and what this department work?

53