FACTORS AFFECTING DEPOSIT MOBILIZATION IN PRIVATE COMMERCIAL BANKS: THE CASE OF AMHARA BANK.

Abstract

Deposit mobilization refers to the acquisition of capital from the general population by financial organizations like bank. Mobilization is an essential component of banking operations. Promoting customers to deposit cash with the bank or convincing new clients to have a bank account is one of the deposit mobilizations. The objective of the study is to identify the factors that affects deposit mobilization of Amhara bank in Harar and Dire Dawa district. The study also adopted descriptive method to obtain data useful in evaluating present practices and providing a basis for decision making. The populations of the study were managers & employees of Amhara bank under Diredawa and Harar city branches. The sample design used for this study was purposive and convenient sampling technique with an objective of insuring that only those which had operated in the bank with their profession start from the bank formation. The study used the quantitative approaches and the data collection method was by employing both questionnaire and interview. The collected data was analyzed by using descriptive data analysis method. The linear regression analysis or normal distribution model revealed that a significant influence of internal and external factors on deposit mobilization. political stability and technology are positively significant factors whereas negative significant factors are inflation, covid-19 and interest rate. Using SPSS version 28 the researcher make analysis on scale of data reliability, variability, validity and the correlation of variables using Pearson correlation, heteroscedasticity, multicollinearity and normality test. In the light of the findings, the researcher recommended the bank to adjust interest rate and focus on designing strategies to minimize the inflation by cooperating with government. The researcher recommends the bank to work with government regarding inflation and interest relationships and minimizing the gap. The other one is the bank would be introducing its unique or brand products/services and activities provide for customers through medias or other advertising mechanisms this helps the bank to attract depositors and to increase deposits