EFFECT OF SALARY AND STAFF LOAN ON EMPLOYEES’ SAVING DEPOSIT STATUS: CASE STUDY OF OROMIA INTERNATIONAL BANK

Abstract

In formulating strategy on how to boost saving deposits and employee retention programs Banks shall understand the effect of income, inflation, loan, customer number and other determinant factors of saving behavior. Similarly, in designing policies to promote savings and investment, which in turn enhances economic growth through capital formation, understanding the nature of savings behavior is critically important. This paper examines the Impact salary and staff loan have on employees savings deposit status. This study is undertaken in Oromia International Bank s.c. The researcher used both qualitative and quantitative data collected from randomly selected respondents and Oromia International Bank. Also, the researcher adopted Qualitative and Quantitative research approaches. Different multiple regression analysis diagnostic tests (test for assumption of Homoscedasticity, Autocorrelation, Normality, and independent variables are non-stochastic) were conducted to check the appropriateness of the model. The conceptual framework for this study is originally derived from Life-Cycle model and appropriately modified to accommodate the peculiarities of a developing country and builds on the existing crosscountry literature on Impact of salary on savings deposit. The study implies that salary amount has a positive relationship with savings deposit. It is the most important factor that affects savings deposit growth from the two independent variables. While a staff loan has negative impact on saving. The research recommends that employers have to consider the impact of salary amount and staff loans on saving capacity of their employees while deciding salary amounts for their employees and providing loans.