AN ASSESSMENT OF DEPOSIT MOBILIZATION PRACTICE IN CASE OF DIRE

DAWA BRANCH

BACHELOR OF ARTS DEGREE RESEARCH PAPER

GROUP MEMBERS
1. GEBEYANESH MEKURIA
2. ELIAS WUBE
3. ETIFWORK H/MARIAM
4. EMAMIYE TADESS
5. TENAGNE MULAT

ADVISOR: DESALEGN Y.(MSC)

A RESEARCH PAPER SUBMITTED TO DEPARTMENT OF ACCOUNTING, RIFT

VALLEY UNIVERSITY, DIRE DAWA CAMPUS, IN PARTIAL FULFILLMENT OF
B.A DEGREE IN ACCOUNTING

JANUARY, 2022
DIRE DAWA, ETHIOPIA

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 Acknowledgement

First of all we would want to express our gratitude to the almighty GOD for providing us with
the bravery to complete our studies. Without the strength the Almighty God bestowed to us, we
could not accomplish our work. We also want to express our heartfelt appreciation to our
advisor, Mr. Dessalegn Y. for his valuable and vital guidance to us during the entire work of this
paper. Finally, we would like to acknowledge the effort and support of those individuals and
their institutions for providing us all the necessary data and information.

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 Table of Contents

Acknowledgement............................................................................................................................i

Table of Contents.............................................................................................................................ii

List of Table....................................................................................................................................iv

Acronyms and Abbreviations.........................................................................................................vii

Abstract.........................................................................................................................................viii

CHAPTER ONE..............................................................................................................................1

1. Introduction..............................................................................................................................1

Background of the Study.............................................................................................................1

Statement of the Problem............................................................................................................8

Research Questions.............................................................................................................................9

Objective of the Study.......................................................................................................................10

Significance and Implications of the Study.......................................................................................10

Scope of the Study.............................................................................................................................10

Organization of the Study.........................................................................................................11

CHAPTER TWO...........................................................................................................................12

2. Literature Review...................................................................................................................12
Introduction...............................................................................................................................12

The Concept of Banking....................................................................................................................12

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 Determinants of Bank’s Performance.......................................................................................14

The Importance of Deposits..............................................................................................................18

Types of Deposits..............................................................................................................................20

Factors Affecting Deposits of Commercial Banks............................................................................20

Empirical Review......................................................................................................................30

CHAPTER THREE.......................................................................................................................35

3. Research Design and Methodology...........................................................................................35

The Research Design.................................................................................................................35

Type of Research Design...........................................................................................................35

Sampling Design...............................................................................................................................36

Target Population..................................................................................................................36

Sampling Technique..........................................................................................................................36

Sample Size............................................................................................................................36

Sampling Procedure..........................................................................................................................37

Sources and Tools of Data Collection...............................................................................................38

Data Analysis and Interpretation.......................................................................................................38

CHAPTER FOUR.........................................................................................................................40

4. Data Presentation and Analysis.................................................................................................40

Data Presentation and Discussion.....................................................................................................40

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 Dashen Bank Deposit Mobilization Performance..................................................................40

Branch Expansion for Deposit Mobilization.....................................................................................42

Major Points on Deposit Mobilization Activities of DB (2015-2017)..............................................43

Survey Results...................................................................................................................................43

CHAPTER FIVE...........................................................................................................................60

5. Conclusion and Recommendation.............................................................................................60

Conclusion.................................................................................................................................60

Recommendations.....................................................................................................................62

References......................................................................................................................................64

APPENDIX....................................................................................................................................67

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 List of Figure and Table

Table 3.1. Number of Branches in Addis Ababa starting operation before five years and Selected
Branches with their Respective branch managers and customer service managers....37

Table 3.2. Selected Branches District offices and Head Office Respondents with their Respective
Position........................................................................................................................38

Table 4.1. Composition of DB Deposits (In ‘000 Birr)..............................................................41

Table 4.2 Composition of Income (In ‘000 Birr)..........................................................................42

Table 4.3. Sample size and questionnaires return rate.................................................................43

Table 4.4. Job position of the Respondents..................................................................................44

Table 4.5. Gender Distribution of the Respondents......................................................................45

Table 4.6. Age Distribution of the Respondents...........................................................................45

Table 4.7. Work experience of the Respondents..........................................................................46

Table 4.8. Understanding and Commitment of staffs for deposit mobilization............................47

Table 4.9. The Contribution of Recently Introduced Various New Products of Deposit
accounts in mobilizing Deposit..................................................................................48

Table 4.10. Volume of Deposits Grows because of Special Service provided for the
corporate customers.....................................................................................................50

Table 4.11. Customer’s satisfaction Rating.................................................................................50

Table 4.12 Major Cause for the variation in deposit among branches of DB...............................51

Table 4.13 Factors affecting Deposit Growth of DB..................................................................52

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Table 4.14. Major Depositors of DB.............................................................................................53

Table 4.15. Competition with Other Private and Government Banks..........................................54

Table 4.16. Banks which pose more competition to DB..............................................................54

Table 4.17. The effect of the provision of foreign currency on deposit mobilization of DB.......55

Table 4.18. The total deposit of the bank is not growing as expected comparing to the budget
during the last three years............................................................................................55

Table 4.19. The effect of the 27% bill purchase on deposit mobilization of DB.........................56

Table 4.20. Different Interest Rate Scheme Provided by the Bank.............................................56

Table 4.21. Does your bank use different advertisement to develop people awareness towards
using the bank?...................................................................................................................... 57

Table 4.22.The current aggressive branch expansion and advertisement of CBE affect your
banks deposit mobilization?........................................................................................57

Table 4.23. The branch distribution in city and outlying is fairly distributed..............................58

Table 4.24. Which factors contribute more to increase the deposit amount of the bank?............58

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Acronyms and Abbreviations

AB Awash Bank

CBE Commercial Bank of Ethiopia

DB Dashen Bank S.C

IFB Interest free banking

KPI key performance indicator

NBE National Bank of Ethiopia

NCA National Communication Association

NGO Non-governmental Organization

S.C Share Company

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 Abstract

This study aim is to assess deposit mobilization of Dashen Bank S.C. Descriptive method and
particularly survey design approaches were adopted for the study. The survey was conducted with
staff individuals working in Dashen Bank S.C at different positions using questionnaires. In addition,
the study was structured review of documents and records held by DB and NBE. The primary
objective of this study is to assess deposit mobilization of Dashen Bank S.C was taken as a model bank
through descriptive research and to recommend ways for betterment. The descriptive research
approach was used to systematical describe and assess the factors affecting deposit. Data collected
from the respondent through questionnaire and using secondary source were presented using tables
and analysis was made. In so doing frequency tables and percentages were applied. These help to
thoroughly analyze and interpret the questions one by one in order to reach meaningful results.
Seventy five questionnaires were distributed to DB management staffs with job positions. In order to
achieve its target of mobilizing deposit and inclusion of unbanked resources, Dashen bank should
develop a procedure on standard service delivery time to facilitate the delivery of fast and quality
services to its customers, since quality customer service have huge impact on deposit mobilization. In
order to obtain data for this study, non-probability purposive sampling method was employed. This is
because the selected respondents having sufficient work experience and relevant position can best
meet the research objective.

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 CHAPTER ONE
INTRODUCTION
1.1 Background of the study
A bank is a financial institution that provides banking and other financial services to their customers.
A bank is generally understood as an institution which provides fundamental banking services such
as accepting deposits and providing loans. There are also non-banking institutions that provide
certain banking services without meeting the legal definition of a bank. Banks are a subset of the
financial services industry. A banking system also referred as a system provided by the bank which
offers cash management services for customers, reporting the transactions of their accounts and
portfolios throughout the day Kapila, (2001).
One of the main objectives of financial institutions is mobilizing resources (in particular domestic
saving) and channeling these to would-be investors. Banks play a key role in improving economic
efficiency by channeling funds from resource surplus unit to those with better productive investment
opportunities. To enhance the role of banks in an economy, competition is an important driving
force; without competition, it is improbable to bring about efficiency and foster financial sector
development. In other words, insufficient banking services may result in substantial social losses on
account of higher price, higher transaction cost, lower credit supply, lack of innovation and poor
service quality. Zerayehu, ( 2013).
According to Mohammad and Mahdi, (2010), financial resources are naturally provided from
people’s deposit. Therefore, we can say that deposits are the most important resource for commercial
banks. Thus the amount of deposit a commercial bank should have at hand should be enough to make
the bank involve in the market in order to satisfy the financial needs of its customers. Given this
general facts, therefore, the bank is expected to mobilize its deposit.
Managing deposits is not possible without knowing the factors affecting it. There are several factors
that are claimed to be determinant factors affecting deposit mobilization of banks Selvaraj & Kumar,
(2015), also State that, Banks borrow and lend; they borrow money by accepting deposits from the
public including members of the bank. Deposits are the life blood of a banking institution. For
Banks, the amount of deposits is very important and therefore all banks compete among them for
mopping up deposits. The banks should introduce various deposit schemes so that these can attract a
variety of people to suit their taste. The banks offer a number of deposit schemes to the public
which include, saving deposit, current deposit, fixed deposit and the like. Selvaraj & Kumar, (2015)
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According to Richared Tuyishime, Dr.Florence, MEMBA and Dr. Zenon MBERA (November
2015), “Mobilization of Deposits is one of the important functions ofs banking business.” Since
lending is not a onetime activity, commercial banks should strive hard to further mobilize deposits
without fail. Although, deposits made by depositors are for safekeeping of their surplus funds, they
are more interested for bank deposits due to the following benefits among others. To earn interest on
deposits, for safekeeping their fund from theft, to keep money for future need, depositors believe risk
of deposit in bank is minimal, and bank facilitates convenient payment system to depositors’.
(Richared Tuyishime)
According to Tuyishime, (November 2015), “Mobilization of deposits plays an important role in
providing satisfactory service to different sectors of the economy. The success of the bank greatly
lies on deposit mobilization.” Dashen banks use different strategies to strengthen the level of deposits
and number of customers. One of the strategies is branch expansion at different location of home
country as well as opening of multinational banks at host country. Moreover, banks provide different
types deposit accounts to mobilize high amount of deposits from different classes of people. Or
banks avail various types of deposits to attract customers from all level of the economy. To facilitate
the deposits banks classify depositors in to segments and take intensive measure to market the
services to customers. Tuyishime, (November 2015)
The mobilization of resources through deposits helps the bank to meet the growing demands from
various sectors of the economy namely, agriculture, small scale industry, weaker sections of the
community and the like. It is the size of the deposits that largely decides the lending potential of a
bank. According to (Varman, 2005), deposits are foundations upon which thrive and grow. They are
unique items on a bank's balance sheet that distinguish them from other types of business
organizations. The ability of a bank's management and staff to attract checking and savings accounts
from business and individuals is an important measure of the banks acceptance by the public.
Deposits provide most of the raw materials for bank loans and thus represent the ultimate source of
bank profits and growth. If the resource not adequately managed it may lead to insolvency (in case of
low liquidity) or low profitability (in case of high liquidity) and ultimately destroy the wealth of
shareholder and breakdown of entire financial institutional framework due to strong integration,
dependencies and contagion effect (Birhanu, 2015)

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1.2 Statement of the problem
The finance literature provides support for the argument that banks with better deposit growth and
mobilization grow faster, while inefficient deposit growth and deposit growth bear the risk of bank
failure (Tuyisime & Memba, 2015). The deposit or liquidity position of a bank can be affected by
internal or external factors. This factor has a direct relationship with the organization objective
achievement especially on profit maximization and shareholder satisfactions.
According to Birhanu (2015) the liquidity position of banks can be affected by bank specific factors,
macroeconomic factors and government/central bank regulations. Firm specific factors include
profitability, loan growth, bank size, capital adequacy, the percentage of non-performing loan on the
total volume of loans which measures loan quality and others. Macroeconomic factors include gross
domestic products/GDP, the saving investment trade off, the rate of inflation, different types of
interest rates and other macroeconomic factors.
In regard to literature gap especially in Ethiopian studies, a number of studies has been undertaken to
analyze determinant or factors that influence profitability of Dashen bank in Ethiopia.
For instance, Belayneh (2011) and Habtamu (2012) examined the determinant of profitability by
employing capital adequacy, bank size, loan production, income diversification, asset quality and
administrative cost. Whereas (Getahun, 2014) on his study shows deposit fund, number of branches
bank liquidity and managerial efficiency has an impact on profitability. Other studies like sisay
(2013); zewdie (2015) and Yirgalem (2015) showed the internal and external factors that determine
profitability of private commercial banks with many variables. However, either of them did not show
us to what extent that deposit growth (excluding other variables) affects profitability and which
deposit type has a major effect on profitability.
In relation to literature gap specially conducted to other countries experience, many studies also show
the impact of deposit growth on profitability with different proxies in different countries of the world.
For instance, Richard et al. (2015), on their study on the impact of deposit mobilization on
profitability, marketing strategy, deposit interest rate and technology advancement has a direct impact
on deposit and profitability. Profitability of a Dashen bank affected by internal and external factor and
it has a significant impact on profitability (Jaber & Abdullah, 2014).
Thus, According to Eliona (2013) study was conducted on the impact of internal factors on bank
profitability are loans, bank deposits and bank interest had a positive correlation with profitability.
These are the major gaps that the researcher would like to study to show the impact of deposit growth
on profitability. Therefore, this study was attempted to determine and investigate the impact of deposit
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mobilization on profitability in selected Dashen banks in Ethiopia to investigate to what level deposit
has influence profitability
Therefore, the purpose of this study was to assess the deposit mobilization for Dashen banks and
recommend ways for enhancing the capacity for mobilizing deposit concentrating the case mainly on
Dashen bank S.C. (Abdullah, 2014)
1.3. Research Questions
The research raises and provides was answered to the following research questions regarding the
topic.

 What are the factors affecting the deposit mobilization activities of Dashen Bank S.C?
 What should Dashen banks do to record progressive deposit result?

 Why Dashen bank’s deposits performance is below its target or budget?

 What are the factors that affected the deposit mobilization of the bank?

 Which significant variables contribute for the increase of the banks deposit performance?

1.4 Research Objectives

1.4.1 General objectives

The general objective of this study is to assess the deposit mobilization activities of Dashen bank at
Dire Dawa branch

1.4.2 Specific objectives

The following are the specific objectives of the study was
 To assess deposit mobilization performance of the bank.

 To assess deposit mobilization strategies of the bank.

 To investigate factors affecting deposits mobilization of Dashen bank.

 To explain Dashen bank to which key resource mobilization factors should focus.

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  To insights Dashen bank to improve deposits through intensifying on important variables,
such as branch expansion, periodic implementation of appropriate technology, application of
service quality in its all branches, provision of attractive deposit interest rate, conducting
regular market study and focus on house hold savings.

1.5 Significance of the study

An assessment of deposit mobilization of Dashen Bank S.C has the following significances; the
study was helped Dashen banks to manage their deposit by letting them know what affects it and
which variable is the most important, it was served for further study in the sector and help as
additional input for concerned policy makers and future researchers, The study was added knowledge
on the field of banking and financial resource studies. The study benefits Dashen Bank’s
shareholders, management, staff, and other stakeholders that increase in deposit mobilization can
satisfy the current demand for financing which contributes to increase the bank’s profitability, also
support economic growth the country
1.6 Scope of the study
This study was limited to the area banks of Dashen bank S.C. Situated in Dire Dawa. Up country
branches of Dashen bank and other private banks was not included in the study due to budget and
time constraints. Hence, the questioners were collected from the selected area branch staffs of DB,
who have five years’ experience and above services in the bank.

1.7 Limitation of the study

This research did not examine other factors like political, economic and social that have an impact on
profitability but for the research purpose this paper thoroughly examined the banks marketing
strategy, branch networking, technology advancement and staff trainings that have direct relationship
with the activity of resource mobilizations. The study would have the limitation on obtaining the
adequate information and available material or information for the study on key deposit growth and
profitability determinant variable that may significantly affect bank liquidity like the impact of the
latest financial crisis, unemployment rate, and government influence.

1.8 Organization of the paper

The paper has five chapters. The first chapter comprises the introduction which includes background
of the study, statement of the problem, research questions, and objectives of the study, significant of

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the study, scope of the study and limitation of the study. The second chapter comprises Literature
review. The third chapter covers research methodology. The fourth chapter is on data presentation and
analysis. The last chapter focuses on summary, recommendation and conclusion

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 CHAPTER TWO
REVIEW OF RELATED LITERATURE
2.1 Introduction
This chapter discusses about the theoretical as well as empirical review. In this topic the researcher
has reviewed related literatures regarding the role of financial sector for economic development of a
country and major factors identified by other researchers that have an impact on deposit mobilization
activity of banks.

2.2Concept and Overview of Deposit Mobilization

Mobilization of deposits is one of the important functions of banking business. It is an important
source of working fund for the bank. Deposit mobilization is an indispensable factor to increase the
sources of the banks to serve effectively. Mobilization of deposit plays an important role in providing
satisfactory service to different sectors of the economy. The Dashen Banks must tap deposits from
urban. This helps the banks to provide large amount of funds to priority sectors for development. The
success of the banking greatly lies on the deposit mobilization. Performances of the bank depend on
deposits, as the deposits are normally considered as a cost-effective source of working fund.
Mobilization of urban savings is one of the important objectives of the Dashen Banks. It helps to
expand banking operations. The successful functioning of Dashen banks depends on the extent of
funds mobilized. Deposits are the life blood of banking companies. Deposits constitute a vital source
of funds required for banking business (Mordi, 2011).
Deposit mobilization is defined by Elser et al. (2008) as the process of encouraging customers to
deposit cash with the bank or luring new clients to come and open accounts with the bank. From an
institutional perspective, the primary motive for mobilizing savings lies in lower cost of capital
compared to other sources of funds. According to Kutan et al. (2010) banks serve as intermediaries
accepting commercial and individual deposits (savings) and transferring them in the form of loans to
investments. Banks went on a massive deposit mobilization drive by offering a range of products and
services that are tailored to their particular clientele which saw them pool substantial amounts from
the depositors. According to Oboh (2011), banks like any other business enterprises uses money input
in their normal operation. The input is customer deposits that are used for investment to the customers
of the banks. Deposits are defined as funds placed in a financial institution by economic surplus units
such as householders, corporations, investors and government. These funds can either be from cash,

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claims to money, like checks placed in depositor accounts, bank loans or money from investments
(Van Dahm, 2003)
Banks mobilize deposits from the general public (individuals, businesses, governments, cooperatives,
non-profit making associations etc) as part of their intermediation roles (Anteor & Egwu, 2016).
Deposit mobilization is an indispensable factor to increase the sources of the banks to serve
effectively. Mobilization of deposit plays an important role in providing satisfactory service to
different sectors of the economy. The success of the banking greatly lies on the deposit mobilization.
Performances of the bank depend on deposits, as the deposits are normally considered as a cost-
effective source of working fund. There are different types of deposits, with different maturity pattern
carrying different rates of interests. Deposit mobilization is depending on the cost of deposits.
Mobilization of deposits for a bank is as essential as oxygen for human being. To enhance
profitability, banks take steps to minimize the expenditure and are forced to mobilize low cost
deposits. (Sylvester, 2010)

2.3 Types of Deposit Account

2.3.1Saving Deposit
According to Yang (2009), bank savings accounts have traditionally been one of the simplest and
most convenient ways to save. These accounts typically have the lowest minimum deposit
requirements and the fewest withdrawal restrictions. Savings deposit accounts are accounts opened by
customers to help surplus funds. This type of account is usually operated or opened by small savers,
groups of individuals and unincorporated bodies like clubs, associations, etc. (Ujah, 2007). Banks pay
interest to collect sufficient deposit Singh (2010) in his study proposes substantial interest rates on
deposits for banks to lure more deposits in a competitive environment. No cheque withdrawals are
allowed on savings accounts. Savings deposit account is mainly operated to encourage savings and
thrift. According to NBE (annual report 2006/2007:35-36) the main deposit is saving account that is
an interest-bearing account that can be opened for individual organizations, financial institutions and
associations. It is suitable for the benefit of minors, interdicted persons, bankrupt firms in liquidation
and others. The Benefit of the saving in addition to the above statement it is used for emergency, old
age, specific needs, to secure the money from fire and theft, future investment and it is eligible for
ATM (Automated Teller Machine) services
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-

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sponsor education etc. In doing so the account holder earns interest on the saving balance.
2.3.2 Current Account (Demand Deposit)
Ujah (2007) posits that a current account or demand deposit account is a deposit account that is kept
with the banker on the condition that it may be withdrawn by the depositor or transferred by him to
some other persons without previous notice to the bank, at any time during banking hours. Singh
(2010) defines a cheque or current account as a transactional deposit account held at a bank that
allows for withdrawals and deposits. Elser et al (2005) elaborate that money held in a cheque or
current account is very liquid, and can be withdrawn using cheques, automated cash machines and
electronic debits, among other methods. The money is therefore repayable to the customer as soon as
he demands for it or calls for it

Current account appears to be the most popular of the various types of accounts to businessman and
people with high earnings. This can be witnessed by the different cheque leaves circulating around us
daily. Demand deposit is a non-interest bearing deposit and operates mostly by checks. Hence, it is
also named as a checking account or current account (current deposit). (Anetor and Egwu, 2016)

The benefit for such type of savings is to enhance business transactions, to reduce money circulation,
efficient method of paying bills, safe method of transmitting payments, reduces risk of theft and
losing money and to facilitate credit system as overdraft‟s facility is permitted with such types of
deposit (NBE 2006/2007 Annual report 35-36). These deposits can be withdrawn at any time during
the office hours by the issue of the checks (NBE 2008, Annual Report; 36).

2.3.3 Fixed Time Deposit (Certificate of Deposit)

This form of deposit usually has definite tenure and specified interest rate which may be fixed or
floating (Nzotta, 2004). Time deposit accounts are accounts into which customers‟ deposit money on
the condition that the money in such accounts would be left for a fixed period of time. In a typical
CD the bank accepts a deposit for a fixed term-usually a pre-set period from six months to five years
and pays interest until maturity (Tafirei & Rabson & Linda, 2014)

Since the bank was used the money deposited in this type of account for a longer period, the interest
payable on them is usually higher than that payable on ordinary savings deposit account. Fixed time
deposit that has an interest bearing with agreed maturity date and interest rate fixed for the agreed
period. That has no maximum limit for time deposit and the interest rate is also unaffected for the
duration of the deposit. Time deposit is beneficial for both parties (the banker and the depositor) in

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that it enables the bank to lend the deposited money without the fear of unexpected withdrawals by
the depositors unlike the case of the previous type of deposits and Interest rate is guaranteed for the
term of the deposit irrespective of market fluctuations. As of Gagan and Rajasekhar (2005), the
account is opened with a term in the contract between the bank and the customer that neither the
whole, nor part of the deposit may be withdrawn before the maturity date. The bank acknowledges
the deposit by issuing a certificate of deposit that contains the amount deposited, and the duration of
the deposit. This certificate of deposit used for the customer as a source document as evidence of
debt. However, the customer has a right to break the contract to withdraw the CD before the
maturity. At the end of maturity one can cash interest plus principle but now a day banks are paying
interest from the CD to their customer before the maturity periods some also pay the interest in
advance to compute other in the industry as a means of deposit growth strategy.

2.4 Theories of Bank Profitability

Dashen banks are important financial institutions in the financial system and the economy. They have
played an important role in the tremendous economic development that has taken place in the region
in recent years. Banks mobilize, allocate and invest the greatest part of the economic agents‟ savings.
In addition, their performance has important consequences on capital allocation, firm expansion,
industrial growth and economic development (Belerta, 2014). Flamini et al., (2009) noted that bank
profits provide an important source of equity if re-invested into business. This could lead to safe
banks, high profits and financial stability. Therefore, profitability of banking sector is important in
both individual and macroeconomic level.
According to Aburime (2008), profit means the difference between the revenue generated from the
sale of output and the full opportunity cost of factor used in the production of that output. Included
within costs are the premium charged for risk taking and the costs of using the owners capital. These
are not included as cost in the accountant measure of project which therefore does not correspond to
this economic definition of profit. However, profit could either be normal or supernormal. Normal
profit is that minimum amount of profit which a firm must acquire in order to induce the firm to
remain in operation. Corporate profit planning remains one of the most difficult and time consuming
aspects of financial management because of the many variables involved in the decision which are
often outside the control of the company. It is even more difficult if the company is operating in a
highly competitive economic environment

2.5 Empirical Review

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Among the articles written on the subject, the researcher has selected six studies made by: -

1) Samuel, (2015) Challenges of Deposit Mobilization for Private Commercial Banks in

Ethiopia: A case of Awash international bank.

2) Shemsu, (2015) Determinants of Dashen bank deposits in Ethiopia

3) Adem, (2015) Determinants of Dashen Bank Deposits in Ethiopia

4) Giragn, (2015) Determinants of Deposit Mobilization and Related Costs of Dasehen

Banks in Ethiopia.

5) Andinet, (2016) Factors Determining Deposit Mobilization Performance: A Case of

Dashen Banks in Ethiopia.

6) Kibebe, (2016) Determinants of Dashen bank deposit mobilization Evidence from

private commercial banks in Ethiopia

According to Samuel, (2015), the researcher used data from Awash international bank in doing the
research uses both primary and secondary data, the researcher uses applied research by using Awash
bank as model using descriptive and explanatory analysis. The data of total deposit of AIB for 3
years was used. Given the summary result of descriptive and explanatory analysis, the study had
concluded the following to commercial banks by taking AIB as evidence of the study.
According to shemsu, (2015) the researcher used both the descriptive and empirical analysis, the
study had concluded the following: -
The survival of every commercial bank in Ethiopia highly depends on deposit because mobilizing
deposit for commercial banks is a matter of survival. Without having enough deposit for commercial
banks business is nothing. According to the study deposit mobilization is very difficult tasks because
of having many factors determine bank deposit. Based on this empirical evidence from the analysis
the key factors for CBE’s deposit growth are service Excellency, branch expansion , promotional
effort, interest rate, awareness creation and using new banking technologies. Among these, interest
rate is considered as less significant in deposit growth due to a little market based rate of adjustment
are exercised in CBE.
Adem (2015), uses mixed research approach. Regarding to the qualitative data; questionnaire is used

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to gather information from the employees of commercial bank of Ethiopia particularly for those
employees who actively participated in deposit mobilization tasks in CBE city branches. Regarding to
the secondary data; time series data covering 1998 -2014 was analyzed. First, the time series data
were assessed using descriptive statistics for the variables as well as the test for hetero skedasticity,
autocorrelation and normality testing to know if the assumptions of CLRM violated or not. Second,
estimated model was a single regression equation with deposit as the dependent variable and
explanatory variables as deposit interest rate, overall inflation rate, number of branch opening, gross
domestic product, individual foreign remittance and dummy variable.
Giragn (2015), the study revealed that deposit mobilization is the main focus of many banks.
However, finding deposit is becoming a challenging job for the banks in Ethiopia compatible with the
growing need of loans. Owing to the growing need for finances from new and existing businesses of
the country coupled the banks own desire to make profits from those finances, deposit mobilization is
becoming the critical success factor for banks. The fast increasing number of branches, the service
modernization activities and the growing competition among banks all justify this fact. There are
limited types of deposit products mainly three namely saving, current and fixed time deposits services
commonly sold to the customers by the local banks. The great majority of customers are saving
account holders.
Andinet(2016), Results from the regression analysis estimated by fixed effect regression model
showed that number of bank branches has positive significant impact on bank deposit growth, deposit
interest rate has positive significant impact on bank deposit growth, bank liquidity (liquid asset to
deposit ratio) has negative insignificant impact on bank deposit growth, lagged bank deposit has
negative significant impact on bank deposit growth, Net interest margin has positive insignificant
impact on bank deposit growth, Inflation rate has negative insignificant impact on bank deposit
growth and GDP rate has positive significant impact on bank deposit growth.
Kibebe (2016) Overall, the results provide evidence that bank specific and macroeconomic variables
determine the growth of deposit in Ethiopia private commercial banks.
Summary of the empirical review-Both the internal and external factors are affecting the deposit
mobilization efforts of banks with various degree. The empirical review showed that deposit
mobilization is a major task for banks survival, from the external factors economic growth and
inflation and from the internal factors awareness of the society, convince of banks and service quality
are going to be studied, in addition the effect of provision of foreign currency, customer experience,
customer segmentation and their effect of on deposit mobilization. As stated above deposit
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mobilization in commercial banks are affected by both external and internal factors. Under each major
factor there are a number of variables by which deposit mobilization of banks are impacted. Among
these variables in this research, economic growth and inflation from external factors, and awareness of
the society, convenience of banks for customer, and service quality from internal factors are selected
because of their significant impact on deposit mobilization of commercial banks

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 CHAPTER THREE
RESEARCH METHODOLOGY
3.1 Description of the study area
This chapter briefly presents the research methodology that is used in this study. The sections under
the chapter state the approach and design that are used in the research, sampling methods and data
gathering tools. It also describes the variables that are used in the study. Research method is the
process used to collect information and data for the purpose of making business decisions. The
methodology may include interviews, questionnaires, surveys and other research techniques. The
research methodology can be qualitative, quantitative or mixed approach in nature that was provided
solutions for research questions and /or research problem. Also help management to insight on
existing problems and to devise ways to overcome the problems. The researcher in this study used
authentic or genuine sources to collect data that are helpful to complete the research successfully. As
said by (Nelson, D.L. (2011), ORGB.US: Cengare Learning.)
3.2 Research Designs
The primary objective of this study is to assess deposit mobilization of Dashen Bank S.C taken as a
model bank through descriptive research and to recommend ways for betterment. The descriptive
research approach was used to systematical describe and assess the factors affecting deposit.
Research designs is a frame work or blue print for conducting research procedure is necessary for
obtaining information to solve the problem. Research designed to assist the decision maker in
determining, evaluating and selecting the best course of action to take in a given situation.
Descriptive studies are usually the best methods for collecting information that was demonstrated
relationships and describe the world as it exists. These types of studies are often done before an
experiment to know what specific things to manipulate and include in an experiment. Descriptive
studies are designed primarily to describe what was going or what exist. In this study, it was
employed descriptive and explanatory research to study what is the impact of deposit growth on the
profitability of banks. Hence, to meet the objectives of this study, descriptive and explanatory
research design was used in this study.
3.3 Data type, source and Tools of Data Collection
The study was used both primary and secondary source of data and in addition, the study was used

22 | P a g e
quantitative and qualitative data. In order to address the research objectives, primary data was
collected from each sample of vice president offices, district offices, and branches using
questionnaires. The secondary data was gathered from, literatures and previous studies in the sector
and experience of other countries, Studies, Reports, newsletters and Annual reports of Dashen bank,
National Bank of Ethiopia, and other private banks and any other related Journals and Articles

3.4 Sampling Design

3.4.1Target Population

As the primary objective of this study was focused on assessing deposit mobilization of Dashen
banks in Ethiopia , the staffs that are included in the sample are the once which have better
experience in operational and deposit mobilization activities and believed to be better sources of
information for the study. For this reason, some of the employee that was going to select sample
staffs of DB has been taken as a target population for the study.

3.4.2Sampling Technique
In order to obtain data for this study, non-probability purposive sampling method was employed.
This is because the selected respondents having sufficient work experience and relevant position can
best meet the research objective.

3.4.3 Sample Size

Sampling is the process of selecting a small number of elements from a larger target group of
population. The information was gathered from the small group allows judgments to the larger groups.
While making sampling analysis, the researcher should be taken maximum care to save time, to avoid
high cost of collecting the data, and also the cost of an incorrect inference or conclusion resulting
from the data. However, the researcher was used optimum number of sampling to make representative
sample size and which minimizes the sampling error. Dashen bank has the following above grade I
branches that is 21 Grade II, 9 Grade III, 9 branches all over the country. Among these 9 Grades I, 6
Grade II and 8 Grade III branches are available in Dire Dawa. Hence, the research was designed to
work on all Grade II, II, & Grade III branches of Dire Dawa. Therefore, the total number of target
population was 111 management groups. From this total population 75 management members (67.57%)
have been taken as sample for this study.

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3.5Data Analysis and Interpretation
As the study uses a descriptive analysis method, the data collected was presented, Organized,
analyzed and interpreted using descriptive statistical tools such as frequency, cumulative frequency,
and percentages as per the convenience to the type of data use for best interpretation and easy
understanding.
The questionnaires were analyzed using descriptive analysis techniques. The researcher uses Excel
software to analyze the questionnaires and describe the result. Accordingly, 61 questionnaires are
analyze and interpret using the statistic result that the excel displays.

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 CHAPTER FOUR

4 Data Presentation and Analysis

The previous chapter’s was presented orientation of the study, the literature review, the empirical
review and the research methods adopted in the study. As discussed in the preceding chapters, this
study was aimed at an assessment of deposit mobilization of Dashen bank S.C. and to recommend
various ways that can help for the deposit mobilization activities. Data collected from the respondent
through questionnaire and using secondary source were presented using tables and analysis was
made. In so doing frequency tables and percentages were applied. These help to thoroughly analyze
and interpret the questions one by one in order to reach meaningful results.

4.1Data Presentation and Discussion

All private banks including Dashen bank S.C mobilize their funds from Customers, from their
operational profits and their shareholders contribution. The largest portion is coming from
customer’s deposit. Therefore, deposit mobilization is a major task for banks and their existence is
highly depending on the fund they mobilize from the public in general and their customers in
particular.
Dashen mobilize deposit mainly in three forms, i.e., saving deposit, demand deposit, and fixed
(Time) deposit. In Dashen bank demand deposit is interest bearing which makes the bank unique
from other banks. As indicated in table 4.1 here under, as of Dec.19, 2020/2021, in terms of
composition, saving deposit constitutes the largest share of the deposit, i.e., 67%, whereas demand
and time deposit make up the remaining portion of the deposit, i.e., 24% and 9%, respectively.

Dashen mobilize deposit mainly in three forms, i.e. saving deposit, demand deposit, and fixed
(Time) deposit. In Dashen bank demand deposit is interest bearing which makes the bank unique
from other banks. As indicated in table 4.1 here under, as of June 30, 2016/17, in terms of
composition, saving deposit constitutes the largest share of the deposit, i.e. 67%, whereas demand
and time deposit make up the remaining portion of the deposit, i.e. 24% and 9%, respectively.

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 Table 4.1. Composition of DB Deposits (In ‘000 Birr)
Description Financial year
2014/2015 2015/2016 2016/2017
Saving 13,595 15,227 18,498
Demand 4,762 5,939 6,749
Fixed(Time )deposit 1,458 1,592 2,536
Total 19,815 22,758 27,783
Source (DB Annual report 2014/15, 2015/16, 2016/17)

As indicted in the above table deposit of DB has been growing during the last few years. For
example, total deposits of DB has increased by Birr 5.2 billion (18 %) from 2015/16 to 2016/17.
On the other hand it has increased by 2.94 billion (13%) from 2013/14 to 2014/15. DB largely
believed that the growth reflects the effect of concerted efforts of deposit mobilization, the planned
branch expansion, and public confidence on the Bank. But as indicated in the bar graph below the
incremental growth was not satisfactory compared to peer groups in the industry.

Table 4.2 Composition of Income (In ‘000 Birr)

Description Financial year
2014/2015 2015/2016 2016/2017
Interest Income 1,414 1,522 2,070
Non-interest Income 1,101 1,212 1,345
Total income 2,515 2,733 3,415

The lion’s share of the banks income (61 %) was coming from interest income, the remaining
(39%) comes from non interest income, (2016/2017). Interest income is the result of loans and
advances that banks extended for their customers. The later is in turn highly affected by deposit
mobilized by the banks. This means that if the bank is not able to mobilize deposit, it will not be in
a position of granting loans and advances up on requested by its customers. This shows that the
bank’s profitability is mainly dependent on the amount of deposit mobilized.

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4.2 Survey Results

Seventy five questionnaires were distributed to DB management staffs with job positions such as
Grade I, Grade II, Grade III, Grade IV, and Grade V.

Table 4.3. Sample size and questionnaires return rate

Respondents’ position Questionnaire Questionnaires Response
distributed Completed and rate(61/75)
Returned
Grade I 3 3 100%
Grade II 12 9 75%
12 8 67.67%
Grade III

Grade IV 24 23 95.8%
Grade V 24 18 75%

Total 75 61 81.33%
Source: Own Survey and computation

From the above table the total rate of return of the questionnaire was 81.33%. The highest rate of
return which is 100% was from the Grade I branches where as the lowest rate of return was from
Grade III which was 67.67%. The rate of return from Grade II and Grade V was equal, i.e. 75%.
While the rate of return from Grade I were 95.8%.

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Table 4.4. Job position of the Respondents
Job Positions Frequency Frequency Cumulative
percentage Frequency
Grade I 3 5% 5%
Grade II 9 15% 20%
Grade III 8 13% 33%

Grade IV 23 38% 71%

Grade V 18 29% 100%
Total 61 100%

Source: Own Survey and computation

As indicated in the above table from the total number of respondents from whom questionnaires
were returned three (5%) were Grade I, nine (15%) were Grade II, eight (13%) were Grade III,
Twenty three (38%) were Grade IV and the remaining 18(29%) were Grade V. Therefore, the
highest numbers of respondents in terms of job positions were Grade V while the lowest
numbers of respondents were Grade I.

Table 4.5. Gender Distribution of the Respondents

Sex Frequency Frequency Cumulative
percentage Frequency
Male 55 90% 90%

Female 6 10% 100%

Total 61 100%
Source: Own Survey and computation

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The above table shows that from the total number of respondents male respondents constitute the
higher share which was 90%, the remaining 10% were female respondents.

Table 4.6. Age Distribution of the Respondents

Age Frequency Frequency Cumulative
percentage Frequency
Below 30 years
30 - 40 years 37 61% 61%
41 - 50 years 22 36% 97%
51 and above 2 3% 100%
Total 61 100%
Source: Own Survey and computation

With respect to age of the respondents 61% respondents were below 40 years, 36% of the
respondents were between 41 and 50 years and the rest 3% were 51 and above.

Table 4.7. Work experience of the Respondents

Work Experience Frequency Frequency percentage Cumulative Frequency
Below one year
1 - 5 years
6 - 10 years 6 10% 10%
10 - 15 years 22 36% 46%
16 years and above 33 54% 100%
Total 61 100%
Source: Own Survey and computation

With regard to work experience of the respondents, many of the respondents 54% were highly
experienced staffs who stay more than 16 years in the banking industry, 36% of the respondents
have a banking experience of 10 to 15 years, and 10% of the respondents with 6 to 10 years of
banking experience.

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 II. Deposit Mobilization Issues

The first question raised to respondents with regard to deposit mobilization was about the
mechanisms that the bank use to encourage/ motivate deposit mobilization efforts made by
branches. With this regard, respondent’s states that there are resource mobilization teams formed
at the Head office, District office and Branch level. These teams exert relentless effort to
increase the volume of deposits. The Head office and district office resource mobilization
committee supports the teams at branch level and the strategic office evaluates and rank
branches on monthly basis based on their incremental deposit .We can understand that deposit
mobilization activity has got attention at the bank level .

Major Key performance indicators (KPI )set for evaluating the deposit mobilization performance
of branches include; incremental deposit comparing against the budget set and comparing against
the June balance . Number of accounts growth during the month; Number of cards both visa and
American Express sold during the month; Number of re-activated or re- instated cust8omer
accounts which had been inactive before. As elucidated by respondents, DB classifies its branches
in to four grades and one Premium branch based on the number of customers, volume of deposit,
and number of loan accounts, outstanding loan balance and volume of transactions. Therefore,
branches compete with in their respective grades. Based on the cumulative results of branches for
the whole budget year, DB acknowledges the best performer branches by rewarding them during
its staff day celebration from each grade. We can understand that there is competition among
branches to record better result against the budget set with in their class and there is monitoring and
evaluation at the head office level.
Respondents also identify the strengths and weaknesses of the current deposit mobilization
efforts/practices of the bank; from the Strength side It encourages branches to exert their efforts
consistently for deposit growth Through the effort of reactivating inactive accounts, it helps to
recall loyal customers of the bank; Being net increase in number of accounts as a performance
criterion, it helps to widen the customer base of DB; The activities broaden the marketing
knowledge of staffs. From the Weaknesses, in evaluating branches, it considers only branches’
month end deposit balance, it doesn’t consider location advantages/disadvantages of branches
and doesn’t consider average monthly balance it takes only month end balance.

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 Branches effort in mobilization of deposit is encouraging, but the monitoring and evaluation
needs revision.

Table 4.8. Understanding and Commitment of staffs for deposit mobilization

Particular Frequency Frequency percentage Cumulative Frequency
Very good 12 20% 20%
Good 38 62% 82%
Satisfactory 8 13% 95%
Poor 3 5% 100%
Total 61 100%
Source: Own Survey and computation

Respondents were asked to evaluate the understanding and commitment of DB’s staffs on
deposit mobilization. 20% of the respondents evaluate as very good, 62% of the respondents
evaluate the understanding and commitment of DB’s staffs on deposit mobilization as good and
13% of them evaluate as satisfactory and 5% of the respondents evaluate that the understanding
and commitment of DB’s staffs on deposit mobilization was poor.

The understanding and commitment of the bank staffs towards deposit mobilization needs
improvement, the management has to work towards that by giving awareness training on
marketing and the importance of deposit for the existence of the bank.

Table 4.9. The Contribution of Recently Introduced Various New Products of Deposit
accounts in mobilizing Deposit

Particular Frequency Frequency Cumulative

percentage Frequency
Very good 6 10% 10%
Good 27 44% 54%
Satisfactory 19 31% 85%
Poor 9 15% 100%
Total 61 100%
Source: Own Survey and computation
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With the intension of expanding its product base, DB introduced various types of special deposit
accounts like, Hybrid, saving plus, modified youth, student, and interest plus, salary and current
account protection accounts. With this regard, respondents were asked on how they measure the
contribution of these new products for deposit mobilization. 10% of the respondents reply that
these new products have a very good contribution towards deposit mobilization of the bank, 44%
of them measure the contribution as good, 31% of the respondents measure the contribution only
as satisfactory, and 15% of the respondents believe that the contribution of these new products
for the deposit mobilization effort was poor.

From the above response we can see that the effect of the new products is not that much, the
bank has to see the problem why those new products don’t contribute much to the deposit
mobilization of the bank, is it because of the product itself? Or is it the product knowledge of the
staff is not as expected or other reasons.

What has been done in Dashen bank S.C .to promotes awareness of the society pertaining to
DB’s services?

 Use of advertisements on TV, radio, newspapers, and magazines

 Personal selling.

 Sponsoring films, TV dramas, documentaries and various events.

 Organize public awareness sessions.

 Participating in various exhibitions.

 By distributing leaflets and flyers.

The ability to attract and retain big depositors has a decisive role to the deposit growth of a bank.
And so, special consideration and handling to these corporate customers should be given.
Respondents mention what they identify as special services that DB provides for corporate
customers. These are;-

 Segmentation of customers based on their loan exposure at corporate and district

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 offices.

 Assigning relationship manager for corporate and district customers.

 Providing special consumer loans for their staffs and company owner at relative low
interest and equity contribution based on their annual account turnover and foreign
currency generation.

 Preferential interest rate on loans and advances taken by the customers based on their
export performance.

 Third party financing based on the contract agreement signed between the bank and
the customer.

 By establishing premium branch for corporate customers.

 Cash collection directly from the customers’ office.

Table 4.10. Volume of Deposits Grows because of Special Service provided for the
corporate customers
Particulars Frequency Frequency Cumulative
percentage Frequency
Yes 34 56% 56%
No 27 44% 100%
Total 61 100%
Source: Own Survey and computation

As can be seen in the above table, 56% of the respondents believed that because of the special
services given to the corporate customer’s volume of deposit were increasing; where as 44% of
the respondents do not believe the increase in deposit was due to the special services rendered to
those customers. We can see that segmentation of customer service has impact on deposit;
therefore the bank has to strengthen further.

Table 4.11. Customer’s satisfaction Rating

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 Particular Frequency Frequency Cumulative
percentage Frequency
Very good 4 7% 7%
Good 42 69% 76%
Satisfactory 13 21% 97%
Poor 2 3% 100%
Total 61 100%
Source: Own Survey and computation

Respondents were asked about their evaluation on the level of customers’ satisfaction, 7% of the
respondents believe that the level of satisfaction was very good, while 69% of the respondents
say the level of satisfaction was good, 21% of the respondents believe that the level of
customers’ satisfaction is only satisfactory and 2% of the respondents say that there was poor
customers’ satisfaction on DB’s services. From the above figures we can see that the bank has to
work on customer satisfaction in order to win the stiff competition which has effect on the
deposit mobilized.

As explicated in the questionnaire, customers express their satisfaction/ dissatisfaction about the
service of the bank using the below listed mechanisms:-

 Suggestion boxes.

 Direct reporting to the branch manager.

 Direct reporting to the District office manager or operation manager.

 Direct reporting to Head office through telephone.

 Customer’s opinion Survey.

 Reporting to Deposit Mobilization team members during their visit.

 By using Email and face book.

In order to get feedback from customers the bank is using various means, but it is not that match
enough, the bank has to have call center like other banks and the respective branch manager
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phone no or the respective district office manager phone should be posted at the counter.

Table 4.12 Major Cause for the variation in deposit among branches of DB
Particular Frequency Frequency Cumulative
percentage Frequency

Convenience of location 20 33% 33%

Availability of parking areas 14 23% 56%
Effort of the branch staffs 22 36% 92%
Other reasons 5 8% 100%
Interest rate
Total 61 100%
Source: Own Survey and computation

In relation to the main reason for the variation in deposit among branches of DB, 33% of the
respondents believe that convenience of location of the branch were the major reasons for the

variation and 23% gives the main reason to availability of parking areas. 36% of the respondents
relate the variation with the deposit mobilization efforts made by the branch staffs. Nevertheless,
8% of the respondents reasoned for other reasons like awareness of the staffs, number of other
banks branch found in the area, and competence of the branch manager. From the above
response we can see that the effort of the staffs has great impact followed by convince of
location of the bank, therefore the bank has to consider selection of the manpower for branches
that have deposit mobilization knowledge, and attention should be given to convince of the
location in opening branches.

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Table 4.13 Factors affecting Deposit Growth of DB
Particular Frequency Frequency Cumulative
percentage Frequency
Government Interventions 17 28% 28%
towards privately owned
Banks
People attitude towards 13 22% 50%
private banks
Branch office location and 12 19% 69%
poor parking area
Computation with other 13 22% 91%
private and governmental
bank

Other Reasons 6 9% 100%

Total 61 100%
Source: Own Survey and computation

The respondents were asked about the factors that affect the growth of Deposit in DB, 28% of
them respond Government Interventions towards privately owned banks,22% respond People
attitude towards private banks ,19% respond Branch office location and poor parking area, 22%
respond Computation with other private and governmental bank and 9% respond Other Reasons

like DB internal bank policy, lack of commitment and engagement of employees , and lack of
flexibility form the executive management.

Government intervention towards private banks, people attitude towards private banks and
computation with other private and government banks have impact on deposit mobilization of
the bank; therefore the bank has to work on those external factors that affect the deposit
mobilization activities.

Table 4.14. Major Depositors of DB

Particulars Frequency Frequency Cumulative
percentage Frequency
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 Individual Customers 33 54% 54%
Business 0rganizations 26 42% 96%
NGOs 2 4% 100%
Government
Total 61 100%
Source: Own Survey and computation

As can be seen in the above table, government organizations, which are the major source of
deposits, have no contribution in fulfilling deposit demand of DB. 54% of the respondents view
individuals as the major source of deposit for DB, 42% of the respondents consider business
organizations as major depositors and 4% of the respondents consider non government
organization (NGO).

The bank has to work with NGO in order to increase its deposit balance, this segment have
foreign currency resource.

Table 4.15. Competition with Other Private and Government Banks

Particularly Frequency Frequency Cumulative
percentage Frequency
Weak 4 6% 6%
Moderate 12 20% 26%
Stiff 45 74% 100%
Total 61 100%
Source: Own Survey and computation

As indicated in the above table, majority of the respondents 74% measure the competition with
government and other private banks as stiff, 20% of the respondents believe that there is a
moderate competition with other private banks and government banks, On the other hand, 6% of
the respondents measure the competition as weak. We can see from the above response that the
bank has to work hard and build its own sustainable competitive advantage in order to win the
stiff competition.

Table 4.16. Banks which pose more competition to DB

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 Particulars Frequency Frequency Cumulative
percentage Frequency
Commercial Bank of 23 38% 38%
Ethiopia
Awash bank 26 43% 81%
Abyssinia Bank 12 19% 100%
Wegagen Bank
United Bank S.C.
Nib International Bank
Cooperative Bank of
Oromiya
Other Private Banks
Total 61 100%
Source: Own Survey and computation

As indicated in the above table 43% of the respondents consider, Awash bank as the key
competitor who poses more competition to DB, 38% of the respondents consider commercial
bank of Ethiopia who poses competition to DB, and 19% of the respondents consider bank of
Abyssinia. Considering the result of the survey the bank has to work to win the competition that
is expected from Awash bank and commercial bank of Ethiopia.

Table 4.17. The effect of the provision of foreign currency on deposit mobilization of DB
Particulars Frequency Frequency Cumulative
percentage Frequency
Yes 56 92% 92%
NO 5 8% 100%
Total 61 100%
Source: Own Survey and computation
As indicated in the above table 92% of the respondents respond that the provision of foreign
currency to customers have a big impact on the deposit mobilized of DB, and only 8% of the
respondents didn’t agree on its impact on deposit mobilized of the bank. As indicated foreign
currency provision to the customers has great impact on the deposit mobilization of the bank,
therefore the bank has to work on foreign currency generation activities like working closely

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with exporters, Diasporas, embassies, accepting additional foreign cards through pos and ATMS,
and signing additional foreign remittance services.
Table 4.18. The total deposit of the bank is not growing as expected comparing to the
budget during the last three years
Particular Frequency Frequency Cumulative
percentage Frequency
Societies preference to invest 10 16% 16%
their money other than saving
The bank have less branch net 2 2% 18%
Work
The service given by the bank 23 38% 56%
is not good
The good will of the bank is 16 27% 83%
Declining
Other reason 10 17% 100%
Total 61 100%
Source: Own Survey and computation

The above table indicates that the major reason for the total deposit of the bank was not growing
as expected comparing to the budget during the last three years , 38% of the respondents respond
that the service given by the bank was not good , 27% the respondents respond that the good
will of the bank was declining where as 16% of the respondents respond that societies
preference to invest their money other saving, and 17% of the respondents respond that other
reasons like ambitious plan, depositors need incentives, in flexible procedure and internal
policy of the bank affects the deposit mobilization of the bank.

In order to meet the target set the bank has to work on customer service, as indicated by the
respondents the main reason for not meeting the target is the customer service given by the bank
is not good and the good will of the bank is declining, the bank has to work to return its good
will, which was one of the big asset of the bank.
Table 4.19. The effect of the 27% bill purchase on deposit mobilization of DB
Particulars Frequency Frequency Cumulative
percentage Frequency
Yes 35 57% 57%

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 No 26 43% 100%
Total 61 100%
Source: Own Survey and computation

As indicated in the above table 57% of the respondents indicated that the 27% bill purchase has
effect on the deposit mobilization of the bank, whereas 43% of the respondent responded that the
27% bill purchase doesn’t have effect on the deposit mobilization of the bank.

Table 4.20. Different Interest Rate Scheme Provided by the Bank

Particulars Frequency Frequency Cumulative
percentage Frequency
Yes 35 57% 57%
No 26 43% 100%
Total 61 100%
Source: Own Survey and computation

As indicated in the above table, 57% of the respondents responded that different interest rate
scheme provided by the bank has effect on the deposit mobilized; where as 43% of the
respondents didn’t agree the effect of different interest rate scheme on the deposit mobilized
amount.

The bank has to work on various products that can give interest privilege to the customers that
can differentiate from its competitors, since the interest variation has effect on deposit mobilized.

Table 4.21. Does your bank use different advertisement to develop people awareness towards
using the bank?
Particulars Frequency Frequency Cumulative
percentage Frequency
Yes 46 75% 75%
No 15 25% 100%
Total 61 100%

Source: Own Survey and computation

As indicated in the above table, 75% of the respondents responded that DB uses different
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advertisement to develop awareness towards using the bank, where as 25% of the respondents
have other idea, and the advertisement made is not enough to attract customers to use the bank.

The bank has to strengthen further its advertisement, since it has great impact on the awareness
of the customers to work with the bank.

Table 4.22. The current aggressive branch expansion and advertisement of CBE affect your
banks deposit mobilization?
Particulars Frequency Frequency Cumulative
percentage Frequency
Yes 53 87% 87%
No 8 13% 100%
Total 61 100%

Source: Own Survey and computation

As indicated in the above table, 87% of the respondents responded that the current aggressive
branch expansion and advertisement of CBE affect the deposit mobilization of DB; where as
13% of the respondents responded that the effect is not that much. As indicated in the above
table the aggressive branch expansion and aggressive advertisement made by CBE has great
impact on deposit mobilization of the bank, therefore Dashen bank has to work on branch
expansion, in order to get first move advantage in the location and the advertisement work needs
revision.

Table 4.23. The branch distribution in city and outlying is fairly distributed
Particulars Frequency Frequency Cumulative
percentage Frequency
Yes 27 44% 44%
No 34 56% 100%
Total 61 100%

Source: Own Survey and computation

The above table shows that, 44% of the respondents agreed that the distribution of the branches
was fairly distributed between the city and outlying cities whereas, 56% of the respondents
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responded that the distribution is not fair. The bank has to work on its branch opening strategy to
balance the geographical distribution.

Table 4.24. Which factors contribute more to increase the deposit amount of the bank?
Particular Frequency Frequency Cumulative
percentage Frequency
Aggressive branch expansion 13 21% 21%
Aggressive advertisement 10 16% 37%
Quality customer service 21 34% 71%
Branch working hour 5 8% 79%
Economic development of the 10 16% 95%
Country
Other reason 2 5% 100%
Total 61 100%
Source: Own Survey and computation

The respondents were asked which factors contribute more to increase the deposit amount of the
bank ,21% of them respond aggressive branch expansion ,16% of the respond aggressive
advertisement ,34% respond quality customer service ,8% respond branch working hour ,16%
economic development of the country and the rest 5% respond other reasons like saving habit of
the public at large , and peace and stability of the country .

As indicated in the above table, customer service has great impact on deposit mobilization the
bank should give huge emphases on improving customer service in order to meet the customer
need

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43 | P a g e
 CHAPTER FIVE

5Conclusion and Recommendation

5.1 Conclusion

The main objective of this paper was to assess the deposit mobilization of Dashen bank S.C and go
through with a descriptive and explanatory analysis. As a result of the analysis made, the following
were the conclusion of the findings. Dashen bank mobilizes funds from shareholders contribution,
operational profit and customers’ deposit. From these sources, the largest proportion is deposit where
in savings deposits take the lion share. The bank’s profitability is mainly dependent on the amount of
deposit mobilized. The bank encourages and motivates deposit mobilization efforts made by
branches by using resource mobilization teams formed at Grade I, Grade II, Grade III, Grade IV, and
Grade V branch level.

These teams work to increase the volume of deposits. The head office resource mobilization
committee supports the teams at district office and branch level and the district office supports
branches. The office of strategy evaluates and ranks districts and branches on monthly basis on the
major key performance indicators (KPI). Major criteria set for evaluating deposit mobilization
performance of district and branches include; Incremental target Deposit growth and compare it
against the pervious June balance, the incremental number of accounts growth during the month,
number of ATM cards (Visa, American express Green and Gold) cards sold during the month against
the budget and the amount of various money transfer entertained during the month against the budget
set for each district office and branches, in addition branches are evaluated on mobile and Internet
customers recruited during the month against the budget set for each branch. The bank acknowledges
best performer branches from each grade by rewarding them during its annual staff day. Among, E-
banking products, the various types of cards both local and international cards play a great role in
deposit mobilization of the bank, the mobile and internet banking services following cards also are
playing their part in deposit mobilization.
Dashen bank’s current deposit mobilization efforts and practices have the following strengths; it
encourages branches to exert their efforts consistently for deposit growth through the effort of,
recruiting new customers, reactivating inactive accounts. It also helps to recall loyal customers of the
bank. Being the incremental net increase in number of accounts as a performance criterion, it helps to
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widen the customer base of the bank; The activities broaden the marketing knowledge of the staffs
and it gives a chance to properly scan the environment where the branch is operating and it creates
uniformity to practice resource mobilization and it also creates awareness among performers.
Moreover, it has created the sense of competition among staff.
Dashen bank’s current deposit mobilization efforts and practices have the following weaknesses.

In evaluating branches, it only considers branches’ month end incremental deposit balance; it doesn’t
consider location advantages or disadvantages of branches. It lacks how to understand the market.

5.2Recommendations
Based on the findings and conclusions of the study the researcher recommends the following for the
bank: -
In order to achieve its target of mobilizing deposit and inclusion of unbanked resources, Dashen bank
should develop a procedure on standard service delivery time to facilitate the delivery of fast and
quality services to its customers, since quality customer service have huge impact on deposit
mobilization. DB should work in acquainting the staffs and its customers with the newly introduced
various types of special deposit accounts.
In evaluating branches for their performance in deposit mobilization, the bank should consider
average of the month deposit balance instead of month end deposit balance, considering the month
end balance will lead to factious deposit balance which might be the problem for banks. The bank
should take location advantages or disadvantages of branches in to consideration when comparing
branches.
The main source of fund for the bank is coming from deposits, the bank should give more attention
and effort to mobilize deposits, the deposit mobilization team at all levels should work consistently
and effectively since deposit mobilization is not a onetime activity, it should be done throughout the
year.
Dashen bank should go beyond the expectation of its customers by further strengthen the E- banking
services and products delivered to customers. The bank has to work on improving the customer
services since it has huge impact on the deposit mobilization, increase its accessibility to its
customers, not only in numbers but also the bank has to work on the branches to be comfortable to
customers having enough parking area.
The bank has to work on brand and image building in order to win the stiff competition. In order to
mobilize more deposits, the bank has to work on interest free banking (IFB) products.

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References

A Study on the Deposit Mobilization Pattern of the Dindigul District Central Co-operative
Bank Limited Selvaraj N1* and Balaji Kumar P2 1Assistant Professor of Commerce,
Saraswathi Narayanan College, Madurai, Tamil Nadu, India 2Assistant Professor of
Management, Saraswathi Narayanan College, Maduri, Tamil Nadu, India

Abay, S. W.(2010). Domestic Resource Mobilization in Sub-Saharan Africa: The Case of

Ethiopia. Addis Ababa.

Andinet Ferede (2016), Factors Determining Deposit Mobilization Performance: In the Case of
Private Commercial Banks in Ethiopia.

Belayneh Hailegeorgis, (2011) “Determinants of Commercial Banks Profitability: An empirical

study on Ethiopian Commercial Banks” Addis Ababa

Dagne, S. (2015, November 8). Banking a Fight for the Cream. Fortune, 16, 24

Dashen bank S.C, Annual Report for Financial Year Ended 30 June 2017

Encyclopedia Britannica (2010), Ultimate reference Suite, version 2010

Federal Negarit Gazette, Proclamation No. 780/2013 (February 19, 2013).

Gebeyaw Aychile,( 2008) ”Financial Performance of National Bank of Ethiopia Workers ‟

Savings and Credit Association with special emphasis to adjustments (NBE WSACA)”

Gedey, B. (1990) Money, Banking and Insurance in Ethiopia, Addis Ababa: Berhanena Selam
Printing Press, Addis Ababa (in Amharic).

George G. Kaufman (1972). Deposit Variability and Bank Size. The journal of financial and pp
quantitative analysis, Vol. 7, No. 5, University of Washington School of Business
Administration, 2087-2096.

Giragn, Garo, (2015) Determinants of Deposit Mobilization and Related Costs of Commercial
Banks in Ethiopia.

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Herald Finger and Heiko Hesse (2009). “Lebanon-Determinants of commercial banks Deposits
in a Regional Financial Center” IMF Working paper, WP/09/195

Kibebe Gerawork (2016), Determinants of commercial banks deposit mobilization evidence

from private commercial banks in Ethiopia.

Mohammad Namazi and Mahdi Salehi(2010). The Role of Inflation in Financial Repression:
Evidence from Iran. IDOSI Publications, World Applied Sciences Journal 11(6): 653-
661.

Desinga, R. (1975) “Deposit Mobilization by Co-operative Banks: A Comparison Economic

and Political Weekly” No. 29, pp. 1098-1100 NBE - Annual Report 2016-17

NCA, (2006) “Competition in Nordic Retail Banking”, Report No. 1/2006, Nordic Competition
Authorities - Mentioned in Zerayehu Sime Eshete, Kagnew Wolde Tesome, Teshome
Ketama Abebe, “Competition in Ethiopian Banking Industry” African Journal of
Economics Vol. 1 (5), pp. 176-190, December 2013,
www.internationalscholarsjournals.org © International Scholars Journa

Obamuyi, M. T. (2013). An Analysis of the Deposits and Lending Behaviors of Banks in

Nigeria. International Journal of Engineering and Management, 4(1), 46-54.

Samuel Tesfahunegn (2015). Challenges of Deposit Mobilization for Private Commercial

Banks in Ethiopia (The Case of Awash International Bank S.C.)

The Impact of Target Deposit Mobilization on the Banking Industry: A Study of Selected
Banks in Maiduguri Metropolis by Mohammed Alhaji Audu 1, Alexander Solomon
Oghoyone 2, Musa Garba Gulani

V. V. Bhatt(1970). “Some Aspects of Deposit Mobilization” Economic and Political Weekly,

Economic and Political Weekly, Vol. 5, No. 36, pp. 1495

www.brickworkratings.com

www.dashenbanksc.

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www.nbe.gov.et

Zerayehu Sime, Kagnew Wolde and Teshome Ketama, (2013). Competition in Ethiopian
Banking industry, African journal of economics Vol 1 (5)

Zewdu, G. A. (2014).Financial Inclusion, Regulation and Inclusive growth in Ethiopia.

Overseas Development institution, Addis Ababa.

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 Appendix
RIFT VALLY UNIVERSITY DIRE DAWA CAMPUS

DEPARTMENT OF ACCOUNTING AND FINANCE

This questionnaire is prepared to Grade I, Grade II, Grade III, Grade IV and Grade V of Dashen
Bank S.C The objective is to get an input for the accomplishment of BA Project Paper on
Assessment of deposit mobilization of Dashen bank S.C. The information you provide is
valuable for the success of the research paper and will only be used for academic purpose. It
shall also be kept confidential.

Instruction: For the close ended question Please use tick mark (√) or mark (X) in the boxes
provided to choose from the options given and for the open ended question use the blank space
provided. You don’t have to write your name.

Part I: Respondent’s Profile

1. Sex

Female Male

2. Age

Below 30 years 30-40 years

41-50 years 51 and above

3. What is your position in Dashen Bank S.C?

• Grade I • Grade II
• Grade III • Grade IV
• Grade V

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4. Work experience in the banking industry;

• Below one year • 1-5 years • 6-10 years

• 10-15 years • 16 and above years

Part II. Deposit Mobilization Issues

1. What mechanisms does Dashen bank S.C. use to encourage/ motivate deposit mobilization
Efforts made by branches?

2. How do you evaluate the understanding and commitment of staffs for deposit Mobilization?

Very Good Good Satisfactory_ Poor

3. The bank has various types of products on deposit, how do you measure their contribution
in the effort to mobilize deposit?

Very Good Good Satisfactory_ Poor

4. What has been done in Dashen bank S.C.to promotes awareness of the Society pertaining to
DB services?

5. What special services do the bank provides for corporate depositors/customers?

6. Does the volume of deposits grow because of such special services provided for the
corporate depositors?

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Yes No

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7. How do you rate your customer’s satisfaction?

Very Good Good Satisfactory_ Poor

8. What tools or techniques do customers have to express their satisfaction/ dissatisfaction?

9. What are the strengths and weaknesses of the current deposit mobilization Strategies of the
bank? /practices of the bank

Strength

Weakness

10. What is the major cause for the variation in deposit among branches of Dashen bank S.C.?

• Convenience of branch office/location • Availability of parking areas

• Effort of the branch staffs • Interest rate

• Other reasons (specify)

11. Do you think the branch distribution in city and outlying is fairly distributed?

Yes No

12. What factors from the listed affect the deposit mobilization of your bank?

• Government Interventions towards privately owned banks

• People attitude towards private banks

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 • Branch office location and poor parking area

• Competition with other private and governmental bank

• Other

13. As per the annual reports, total deposit of Dashen Bank S.C. is not growing as expected
comparing to the budget during the last three years. What was the main reason?

• Societies’ preference to invest their money other than saving

• Dashen Bank S.C. has less branches and less market share from private banks

• The service given by the bank is not good

• The goodwill of the bank is decline

• Other reasons (specify)

14. Who do you think are the major depositors of Dashen Bank S.C.?

• Individual customers • Business organizations

• Government • NGOs

15. How do you measure the competition with other private and government owned banks?

• Weak • Moderate • Stiff

16. Which banks pose more competition to Dashen bank S.C?

• Commercial Bank of Ethiopia

• Awash Bank

• Abyssinia Bank

• Wegagen Bank

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 • United Bank

• Nib International Bank

• Cooperative Bank of Oromia

• Other Private Banks

17. In your opinion the provision of foreign currency to customers affects deposit mobilized by
banks?

Yes No

18. Do you think the 27% bill purchase government policy affect negatively the deposit
mobilization of your bank?

Yes No

If your answer for question no. 18 is yes how?

19. From the listed, which factors contribute more to increase the deposit amount of the Bank?
(multiple answer can be given)

Expanding Branch Opening/ Aggressive branch Expansion

Aggressive advertisement

Quality Customer service

Branch working hour _

Economic development of the country

Others

20. In your bank do you have different interest rate scheme to attract new depositor/ customer?

Yes No

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21. Does your bank use different advertisement to develop people awareness towards using the
bank?

Yes No

22. The current aggressive branch expansion and advertisement of CBE affect your deposit
mobilization?

Yes No

23. If your answer for question no. 22 is yes, what possible solution do you suggest to overcome
the movement of CBE?

24. In your opinion do you think the starting of interest free banking (IFB) will have effect on
deposit mobilization of the bank?

25. If you have any comment which you think important for this study, please mention

Thank You for Your Cooperation

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