ST.

MARY’S UNIVERSITY
SCHOOL OF GRADUATE STUDIES

FACTORS AFFECTING DEPOSIT MOBILIZATION

IN PRIVATE COMMERCIAL BANKS: THE CASE
OF AMHARA BANK.

ALEBACHEW BAYE MELESE

SGS/0004/2014A

JUNE 2023
ADDIS ABABA, ETHIOPIA
 FACTORS AFFECTING DEPOSIT MOBILIZATION IN PRIVATE
COMMERCIAL BANKS: THE CASE OF AMHARA BANK.

ALEBACHEW BAYE MELESE

SGS/0004/2014A

A THESIS SUBMITTED TO SCHOOL OF POST GRADUATE

STUDIES (INSTITUTE OF MBA IN ACCOUNTING AND
FINANCE) ST. MERRY UNIVERSITY

IN PARTIAL COMPLETION OF THE REQUIREMENTS FOR THE

DEGREE OF MASTER OF BUSINESS ADMINISTRATION

JUNE 2023
ADDIS ABABA, ETHIOPIA

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 APPROVAL SHEET
As members of board of examining of the final MSc thesis open defense, we certify
that we have read and examined the thesis prepared by Alebachewchew Baye Melese
under the title “factors affecting deposit mobilization in private commercial banks: The
case of Amhara bank

Approved by board of examiners

_________________ _____________
Dean, Graduate Studies Signature
_________________ ____________
Advisor Signature
_________________ __________
External Examiner Signature
_________________ ___________
Internal Examiner Signature

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 DECLARATION
The person who signed this document, declare that the thesis is my original effort,
completed under the guidance of Kiros Haftu (Asst.Prof). Every one of resources used
for this academic paper have been properly recognized. I additionally assure that the
research paper has not been delivered in entirely or in partial to another institution of
higher education for the intention of receiving a degree.

___________________
Alebachew Baye Melese Signature

June 2023
St. Mary’s University, Addis Ababa, Ethiopia

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 ENDORSMENT
This thesis has been submitted for evaluation to St. Mary's University's School of
Graduate Studies with my prior approval as a University advisor.

___________________________ ___________________________
Kiros Haftu (Asst. Prof.) Signature

June 2023
St. Mary’s University, Addis Ababa

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 TABLE OF CONTENTS

Table of Contents Pages

ACKNOWLEDGMENT ............................................................................................................................ viii

ACRONYMS ......................................................................................................................................... ix

LIST OF FIGURES ...................................................................................................................................... x

ABSTRACT........................................................................................................................................... xi

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

INTRODUCTION TO THE STUDY .............................................................................................................. 1

1.1. Back Ground of the Study ....................................................................................................... 1

1.2. Statement of the problem ........................................................................................................ 2

1.3. Objective ...................................................................................................................................... 3

1.3.1. General Objective ................................................................................................................. 3

1.3.2. Specific Objective ................................................................................................................. 3

1.4. Basic Research Questions ....................................................................................................... 4

1.5. Research Hypothesis ............................................................................................................... 4

1.6. Scope of the Study .................................................................................................................. 5

1.7. Limitation of the Study ........................................................................................................... 5

1.8. Significant of the Study........................................................................................................... 6

1.9. Organization of the Study ....................................................................................................... 6

CHAPTER TWO .................................................................................................................................... 8

LITERATURE REVIEW ....................................................................................................................... 8

2.1. Theoretical Review....................................................................................................................... 8

2.1.1. The Development of Bank..................................................................................................... 8

2.1.2. The Development of Bank in Ethiopia .................................................................................. 9

2.1.3. The Role of Banks in Financial Systems............................................................................... 10

2.1.4. The Importance of Deposit for Banks ................................................................................. 12

2.2. Factors Affecting Commercial Bank Deposits ............................................................................ 13

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 2.2.1. Exogenous Factors .............................................................................................................. 13

2.2.2. Endogenous Factors ............................................................................................................ 17

2.3. Approaches to Attract Cash Depositor ...................................................................................... 18

2.4. Empirical review ......................................................................................................................... 19

2.4.1. Determinants of Commercial Bank Deposit in Ethiopia ..................................................... 19

2.4.2. Determinants of Bank Deposit Growth in Rwanda ............................................................. 21

2.5. Summary and Knowledge Gap ................................................................................................... 22

2.6. Conceptual Frame Work of the Study........................................................................................ 23

CHAPTER THREE .................................................................................................................................... 25

RESEARCH METHODS ............................................................................................................................ 25

3.1. Research Design ......................................................................................................................... 25

3.2. Data Source ................................................................................................................................ 26

3.3. Procedure of Data Collection ..................................................................................................... 26

3.4. Research Tools ........................................................................................................................... 26

3.5. Population, Sample Frame, Sample Size and Sampling Technique ........................................... 27

3.5.1. Population of the Study ...................................................................................................... 27

3.5.2. Sampling Frame .................................................................................................................. 27

3.5.3. Sampling Technique ............................................................................................................ 27

3.5.4. Sample Size ......................................................................................................................... 27

3.6. Data Analysis .............................................................................................................................. 28

3.7. Ethical Considerations................................................................................................................ 30

CHAPTER FOUR ..................................................................................................................................... 31

RESULTS AND DISCUSSION.................................................................................................................... 31

4.1. Descriptive Analysis of Demographic, Independent Variables and Dependent

Variable ............................................................................................................................................. 31

4.1.1. Interpretation of Frequency of Demographic Variables ..................................................... 31

4.2. The Reliability of the Analysis .................................................................................................... 34

4.2.1. Cronbach’s Alpha Interpretation ......................................................................................... 35

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 4.3. Statistical Analysis of the Dependent and Independent Variables ............................................. 39

4.4. Testing for Correlation ............................................................................................................... 40

4.5. Testing the Classical Linear Regression Model (CLRM) Assumptions ........................................ 41

4.5.1. Discussion of the Regression Analysis Result...................................................................... 41

4.5.2. Test of Heteroscedasticity ................................................................................................... 43

4.5.3. Tests of Normality ............................................................................................................... 45

4.5.4. Multicollinearity Test .......................................................................................................... 46

4.6. Hypothesis Testing ..................................................................................................................... 47

4.7. Discussion................................................................................................................................... 50

CHAPTER FIVE .................................................................................................................................. 53

SUMMARY, CONCLUSION AND RECOMMENDATION ........................................................................... 53

5.1. Summary of Findings.................................................................................................................. 53

5.2. Conclusion of the Study ............................................................................................................. 54

5.3. Recommendations ...................................................................................................................... 55

REFERENCES ..................................................................................................................................... 57

APPENDICES ...................................................................................................................................... 60

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 ACKNOWLEDGMENT
First and foremost, I'd like to thank my families who support with material and for
their appreciation. I express my deepest gratitude to my adviser, Kiros Haftu (asst.
prof), for her invaluable support in the whole process of writing this
research. Finally, I'd would like to thank those individuals and institutions for their
time and effort in supplying all of the required data and information, which
are (Amhara Bank and Employees of the bank).

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 ACRONYMS

SPSS Statistical Package for Social Sciences

CBE Commercial Bank of Ethiopia
Q1 Quarter one
GDP Growth domestic product
TB Terra byte
GB Giga byte
CD Compact disk
Pcs pieces
E.C Ethiopian calendar
G.C Gregorian calendar
ATM Automated teller machine
CLRM Classical linear regression model

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 LIST OF TABLES
TABLE 3.1. NUMBER OF POPULATION AND SAMPLE SIZE ........................................................... 28
TABLE 4.1 GENDER OF THE RESPONDENT .................................................................................. 32
TABLE 4.2 AGE OF THE RESPONDENT......................................................................................... 32
TABLE 4.3 EDUCATION STATUS OF THE RESPONDENT ................................................................ 33
TABLE 4.4 JOB TITLE OF THE RESPONDENT ................................................................................ 33
TABLE 4.5 WORK EXPERIENCE OF THE RESPONDENT ................................................................. 34
TABLE 4.6 DESCRIPTIVE STATISTICS OF DEPENDENT AND INDEPENDENT VARIABLES ................ 39
TABLE 4.7 CORRELATION TEST.................................................................................................. 41
TABLE 4.8 LINEAR REGRESSION ANOVA TESTING ...................................................................... 44
TABLE 4.10 LINEAR REGRESSION ANALYSIS COEFFICIENTS ....................................................... 47

LIST OF FIGURES
FIGURE 2.1 CONCEPTUAL FRAME WORK OF THE STUDY ............................................................ 23
FIGURE 4.1 BRANCH EXPANSION RELIABILITY STATISTICS ........................................................ 35
FIGURE 4.2 NUMBER OF EMPLOYEE’S RELIABILITY STATISTICS ................................................ 35
FIGURE 4.3 INTEREST RATE RELIABILITY STATISTICS ................................................................ 36
FIGURE 4.4 INFLATION RELIABILITY STATISTICS ....................................................................... 36
FIGURE 4.5 GDP RELIABILITY STATISTICS ................................................................................ 36
FIGURE 4.6 CONVENIENCE LOCATION RELIABILITY STATISTICS ................................................ 37
FIGURE 4.7 POLITICAL STABILITY RELIABILITY STATISTICS ...................................................... 37
FIGURE 4.8 TECHNOLOGY RELIABILITY STATISTICS .................................................................. 37
FIGURE 4.9 EXCHANGE RATE RELIABILITY STATISTICS ............................................................. 38
FIGURE 4.10 COVID-19 RELIABILITY STATISTICS ...................................................................... 38
FIGURE 4.11 DEPOSIT MOBILIZATION RELIABILITY STATISTICS ................................................. 38

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 ABSTRACT
Introduction: 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 mobilization.
Objective: The objective of the study is to identify the factors that affects deposit
mobilization of Amhara bank in Harar and Dire Dawa district.
Method: 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.
Result: 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 recommend the bank to work with government regarding
inflation and interest relationships and minimizing the gap. The other one is the bank
would be introduce 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.
Key words/phrases: Deposit mobilization, effect of covid-19 pandemic, inflation rate,
interest rate, political stability, technology, Amhara bank and Ethiopia

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 CHAPTER ONE

INTRODUCTION TO THE STUDY

Introduction is the first part of the research which helps to introduce the topic and the
aims of the research and gives an overview of the paper. The chapter contains
background of the study, statement of the problem, research questions, research
hypothesis, general and specific objectives, significance of the study, Limitations of
the study, scope of the study, and finally organization of the study.

1.1. Back Ground of the Study

By directing cash from resource surplus units to those with better productive
investment prospects, banks play a critical role in enhancing economic efficiency. By
dramatically lowering transaction costs and enhancing convenience, banks also play
a crucial role in the commerce and payment systems (NCA, 2006). Commercial banks
serve as Ethiopia's primary financial system controllers and financial intermediaries.
They are the primary creditors of corporate entities and private investors and control
a large percentage of the investment funds from domestic deposits.
For instance, the majority of businesses, particularly in Ethiopia, rely heavily on bank
loans as a source of capital, and banks' capacity to extend loans is heavily influenced
by their capacity to draw deposits. Even though mobilizing deposits is every
commercial bank's primary activity, controlling and detecting the deposit's deciding
elements is a requirement for banks. Without being aware of and in control of its
determining variables, mobilizing deposits is not conceivable. The largest portion of
the public's money supply is made up of bank deposits, and shifts in the money supply
are closely tied to shifts in the costs of goods and services in the economy (Sergeant,
2001).
Bank deposits are made to deposit accounts, such as savings accounts, checking
accounts, and time deposit accounts at a financial establishment. According to the
terms and conditions of the account, the account holder has the right to withdraw any
money that has been deposited. The term "deposit" refers to this responsibility rather
than the actual monies that are deposited, as it relates to the bank's obligation to the

1
depositor (the individual or company that made the deposit). There are a number of
things that are asserted to determine deposits in the literature. Accordingly, exogenous
and endogenous factors, which affect commercial banks' deposits, were divided into
two categories by the scholars. Exogenous variables are further separated into two
categories: country-specific variables and bank-specific variables. The real interest
rate, the per capita income of the society, the population growth of the nation, the
economic growth (as measured by real GDP), the consumer price index, and shocks
are all country-specific elements. Bank-specific considerations include the bank's
liquidity, profitability, and the security of its ices (Design, 1975). Endogenous and
internal factors are investigated in this study, and the link between endogenous
variables and internal factors with the total deposit of Amhara Bank is identified. This
research helps the bank to maintain control over the deposit problem, which is critical
to the security of their operations as well as the country's economy as a whole. The
purpose of this article is to assess and identify the elements that influence Amhara
bank's deposit.

1.2. Statement of the problem

Commercial banks' primary service is deposit mobilization. Deposits are really
mobilized to satisfy the liquidity needs of bank credit clients. This, however, is partly
reliant on the availability of credit facilities and the amount borrowed. Given the
economy's large funding needs, the banking sector's current rate of mobilizing
appropriate resources would be inadequate, resulting almost likely in a liquidity
imbalance. The fundamental causes of the liquidity gap, according to Shemsu (2015),
are that money is held in conventional ways and that the majority of people are
financially excluded. This suggests that deposit mobilization strategies used by
Ethiopian banking sector are modest or poor. As a result, traditional banking methods
should be updated and replaced with a more appropriate deposit mobilization strategy.
Depositors invest their money in commercial banks and make bank deposits,
according to Shemsu (2015). To continue this procedure, funds must be made
available. Deposit is the most easily accessible money held in commercial banks'
treasuries and available for borrowing by an entity in need of funds. According to the
National Bank of Ethiopia in the fiscal year report the domestic liquidity increased by
17% in fiscal year 2019/2020 to reach 1.04 trillion (NBE annual Report 2019/20).
This demonstrates the financial sectors' have significant deposit potential.

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According to the Ethiopian national bank annual report (NBE annual Report 2020/21)
CBE earns 142.25 billion birr through public mobilization, and it also improves
liquidity with 24% annual deposit growth. This demonstrates that the majority of
money available for deposit in a bank has yet to be mobilized.
This means the bank requires detail investigation on deposit mobilization factors.
Shemsu (2015) conducted research on one dependent variable (commercial bank
deposit) and six independent factors. Economic study revealed that in the instance of
CBE, deposit interest rate, general inflation rate, gross domestic product, number of
branches created, individual foreign remittance, and dummy variables were all linked
positively with total deposit. Among these variables, branch opening is a crucial
method for deposit mobilization; it is far more essential than the others. Individual
remittances from Diasporas, in addition to branch opening, have a substantial impact
on Commercial Bank of Ethiopia's deposit volume. According to many newspapers
and the researcher's own observations, Amhara bank is still in its early stages. As a
result, the deposit has not yet been mobilized to the extent expected. Therefore it is
critical to determine the key factors affecting bank the deposit of the bank. As a result,
the purpose of this study was to investigate the drivers of deposit mobilization at the
bank.

1.3. Objective
1.3.1. General Objective
To identify the factors that affect Amhara Bank deposit mobilization in the area of
Diredawa and Harari Region.
1.3.2. Specific Objective
To ascertain the level of connection between Amhara Bank deposit
mobilizations with the factors included in this research.
To identify insignificant and significant factors of deposit mobilization in Amhara
bank.
To determine the factors which increases the competitiveness of the bank in the
financial sector.
To examine the effect of covid-19 pandemic diseases on the deposit of Amhara bank.

3
 1.4. Basic Research Questions
What are the key elements that may affect Amhara Bank's deposit mobilization?
What are the most likely strategies that helps for examining bank in promoting their
deposit balance?
What should be done to grow Amhara banks' total deposits?
What is the effect of political stability in the case Amhara bank?
What is the effect of covid-19 pandemic on deposit mobilization of Amhara bank?

1.5. Research Hypothesis

Hypothesis testing is the process of measuring the strength of evidence from a sample
and providing an outline for making population-related estimations, i.e., it provides a
method for understanding how reliably observed findings in a sample under study can
be projected to the larger population from which the sample was drawn. The
researcher develops a specific hypothesis, investigates data from the sample, and uses
the data to determine if the specific hypothesis is supported. The goal of statistical
analysis is to make deductions about a population based on evidence from a selected
portion of that population.
There are three kinds of hypothesis such as, working hypothesis, null hypothesis, and
alternate hypothesis. A working or trail hypothesis is a hypothesis that is chosen
provisionally to explain the relationship between some observable facts in order to
guide a researcher in the exploration of a subject matter.
A statement is a trail or working hypothesis that has to be tested, conformed, modified,
or even rejected as the inquiry progresses. A null hypothesis is defined in contrast to
the working hypothesis; it contradicts the working hypothesis's statements. It is
written in such a way that when a researcher rejects a null hypothesis, he or she
actually demonstrates a working hypothesis. When a researcher completely rejects the
null hypothesis, an alternate hypothesis is developed. The hypothesis is developed by
the researcher with acceptable arguments. Only after rejecting the null hypothesis does
a researcher construct a hypothesis (Mukamal R, 2006).
Alternative hypothesis is more appropriate for this research because, it provide a
precise explanation on the research questions or threats and it directs an investigation
that can be utilized to collect data and get results that are relevant to the researcher.
Based on the working hypothesis the searcher hypothesis as the following:
(H1):- Branch expansions have significant effect on the bank's deposit mobilization.

4
(H1):- The inflation rate of the country has significant impact on the bank’s deposit
growth.
(H1):- The political stability of a nation have significant effect on the banks deposit
increment.
(H1):- Covid-19 pandemic affect the deposit mobilization of Amhara bank.
(H1):- Technology have positive effect the deposit mobilization of Amhara bank.
(H1):- Convenience of the branch location is significant to the deposit mobilization
of Amhara bank.
(H1):- Number of employee have significant effect on the deposit mobilization of
Amhara bank.
(H1):- Interest rate is significant to the deposit mobilization of Amhara bank.
(H1):- Exchange rate is significant to the deposit mobilization of Amhara

1.6. Scope of the Study

The scope of this study is limited to a few significant elements that influence bank
deposit mobilization in the case of Amhara Bank in Ethiopia. The research does not
cover all Amhara bank branches; rather, specific branches were chosen on purpose
based on their regional location. The study centered on three branches in Diredawa
and two branches in Harar because they are located in the eastern region and which
serves a significant number of customers, and the locations are easy to reach for the
researcher and have an important role to play in achieving the research objectives.
Deposit mobilization determinants can take many forms; however, this study focuses
particularly on key internal and endogenous determinants of Amhara bank deposit
mobilization in Diredawa and Harar.

1.7. Limitation of the Study

 Deposit mobilization is carried out by commercial banks in Ethiopia.
However, this study only utilized data from branches in Diredawa and Harar.
To overcome this limitation the researcher recommend for other researchers
to cover the other areas located in Ethiopia.
 Because of the current instability of the country, there is unavailability of
employees, not all targeted populations may be available and respond to the
questionnaires; however, the researcher overcomes these limitations by

5
 constantly going to their office and developing the questionnaire using
online Google Form application and sharing through their personal email.
 Unpredictable market price of research equipment’s, or market inflation. This
is a common challenge in our country; to overcome this limitation, online data
collection data collection mechanism used, because it saves time cost and
travelling cost.

1.8. Significant of the Study

The results and findings of this study used to financial organizations,
particularly banks, in understanding the problems and opportunities of
resource mobilization. It also make a significant contribution to existing
information in the domain of deposit mobilization factors in the case of
Amhara bank. It helps Amhara Bank management to understand the elements
determining deposit mobilization and formulate and carry out successful
deposit mobilization strategies, as well as to make appropriate adjustments to
fix such problems.
Furthermore, this paper might serve to support other researchers who are
interested in using it as an input for future research.
This study is helpful to private commercial banks to manage their deposit by
identifying factors and determining deposit mobilization and further identify
which variable is the most important.
The research has an importance to stakeholders like government, NBE,
financial experts.
The study contributes to the pool of knowledge by presenting a possible
relationship between bank deposits and the factors that affect them.
It provides valuable insight and baseline for other researchers to conduct
their research.

1.9. Organization of the Study

The research was divided into five chapters. The first chapter dealt with the study's
introduction. The second chapter examines the literature on theoretical and empirical
studies of bank deposits and the factors that influence deposit mobilization activities.
It includes an evaluation of studies conducted on variables that impact deposit
mobilization. Chapter three describes the study's methodology, which comprised

6
qualitative and quantitative approaches for measuring deposit mobilization factors.
The findings of the analysis are presented and discussed in chapter four. Finally,
Chapter 5 summarizes and sums up the empirical findings of Chapter 4 and offers
suggestions for policy consideration.

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 CHAPTER TWO

LITERATURE REVIEW
The theoretical review and the empirical review are the two pieces that make up a
literature review. Theoretical review: In this section, hypotheses concerning
commercial bank deposits and the factors that are supposed to influence deposits are
reviewed. The empirical literature section discusses previous researches on the topic
of the factors that determine commercial banks' deposits. The variables that were
employed, the research technique, and the findings of the study under consideration
are all explained in this section.

2.1. Theoretical Review

2.1.1. The Development of Bank

Banks are crucial to increasing economic efficiency because they direct money from
resource excess units to those with more lucrative investment options. Bank deposits
are the most important components of the money supply utilized by the general public
because they mobilize cash in the form of deposits from families, institutions, and
governmental agencies (Mishkin and Eakins, 2018).
According to theory, the buffer-stock theory (Deaton, 1989; Carroll et al., 1992), the
perpetual income hypothesis (Friedman, 1957), and the lifecycle hypothesis
(Modigliani and Brumberg, 1954) offer the most logical explanations for depositors'
saving behavior. The lifecycle model states that individuals' income within a certain
time period mostly influences consumption. This implies that individuals save up
money for long-term, steady spending. Given the fluctuating nature of income across
an individual's life, the stage of an individual's life dictates his/her savings pattern,
meaning that individuals are net savers during their working years and become
dissevers upon retirement. Individuals' present savings are diminished by increased
future income, according to the permanent income theory. Changes in individuals'
temporal income are handled through consumption smoothing, in which increased
spending tomorrow is supported by money windfall conserved today. On the contrary,
changes in permanent income do not justify current savings, because more may be
consumed regardless of the period (i.e. both present and future). According to the
buffer-stock idea, individuals protect their consumption against unexpected income
swings by keeping additional assets. Individuals become irritable and prudent when

8
faced with income uncertainty, according to the hypothesis. Individuals acquire
impatient as a result of borrowing against future earnings to cover current needs.
Individuals exhibit prudence as well, given their preventive intentions. To mitigate the
risks associated with future income changes, as well as to guarantee that consumption
remains consistent, precautionary reserves are created by limiting current
consumption and thereby saving more to satisfy contingent instances. As a result, the
savings rate tends to be pro-cyclical, suggesting that when people' income levels are
high, they seek to save more to assure smooth consumption in difficult times. On the
empirical front, there is little study on what variables promote deposit growth, as most
studies focus on understanding the causes of saves behavior. In general, the variables
influencing bank deposits and savings are divided into microeconomic and
macroeconomic aspects. Whereas microeconomic factors are related to bank-level
variables, macroeconomic level determinants reflect a country's broader
macroeconomic fundamentals. This section goes into further detail on how these
factors impact bank deposit and savings behavior.
2.1.2. The Development of Bank in Ethiopia
A bank is commonly defined as an institution that performs basic financial services
such as receiving deposits and making loans. Non-banking firms may also provide
some banking services while not matching the legal definition of a bank. Banks are a
type of financial services company. A banking system is a system supplied by a bank
that provides cash management services to consumers while also reporting the
transactions of their accounts and portfolios throughout the day. Banking in Ethiopia
dates back to 1905 E.C., when the Bank of Abyssinia was formed with a capital of
$500,000.00. The establishment of this bank heralded the start of modern banking in
Ethiopia. Under a 50-year franchise deal, the Ethiopian government and Egypt's
central bank jointly controlled it. The closure of Abyssinia Bank in 1931 owing to
inefficiency and poor profit orientation was followed by the founding of Bank of
Ethiopia with a capital of $750,000.00, the country's first indigenous bank.
Ethiopia's transitional state established the groundwork for the country's transition
from a centrally planned economic system to a market economy in which the
important role of the private sector in growth is formally accepted. The policy was
implemented into operation in the banking industry with the issuing of the license and
supervision of banking activity 84/94, which permitted the Ethiopian private sector to

9
build privately proclamation No owned banks. On the basis of this proclamation
Amhara bank established in 2022 G.C.
Amhara bank is a public share company with over 169,000 shareholders contributing
a total of birr 4.8 billion in paid-up capital and birr 6.5 billion in signed capital. The
bank's broad ownership reflects its capacity to collaborate to build a successful
business venture and provide commercial banking services. Amhara Bank aspires to
take advantage of the enabling conditions to deliver a quality service that responds to
the ever-diversifying and expanding demands of clients who expect more from banks
in the form of customized and competitive banking services. The Bank intends to
provide a secure, responsive, dynamic, and conducive banking environment to
customers with a commitment to values and unwavering confidence, deploying the
best technology, standards, processes, and procedures where customer convenience is
of critical importance in order to increase the value of stakeholders. The banking
business is recognized as one of the most significant aspects of an economy's
soundness in terms of investment, job creation, and enabling the mobility of cash both
domestically and worldwide. Similarly, Amhara Bank is committed to promoting
savings, investment, job development, and economic growth, as well as fulfilling its
Corporate Social Responsibilities.
Bank deposits are the most important components of the public supply of money, and
variations in money growth are closely linked to changes in the price of goods and
services within the economy (Sergeant, 2001).
Bank deposits are made into deposit accounts of a financial institution, such as
savings, checking, time deposits, and money market accounts. The account holder has
the right to withdraw any deposited funds, subject to the terms and conditions of the
account. The term "deposit" refers to the bank's liability to the depositor (the person
or entity that made the deposit), not the actual savings deposited (Feven. 2017).
2.1.3. The Role of Banks in Financial Systems
One of the main difficulties in theoretical economics and finance is understanding the
many functions that banks play in the financial system. The effectiveness with which
funds are diverted into productive activities is critical for growth and overall well-
being. Banks play a role in this process. Households and business firms are the primary
money lenders.

10
These lenders can provide money to the final borrowers, who are mainly firms,
governments, and households, in two ways. The first route is via financial markets,
which include money markets, bond markets, and equities markets. The eighth route
is via banks and other financial intermediaries such as money market funds, mutual
funds, insurance firms, and pension funds. The financial sector is broad and includes
the banking sector as well as other financial institutions (such as insurance
corporations and pension funds, brokers, public exchange and securities markets, and
so on), but in the context of the African continent, the banking industry accounts for
the majority of the financial system (Feven, 2017).
Banks perform various roles, but their fundamental duty is to accept funds from
customers who have money, pool them, and lend them to others who need money.
Banks act as go-betweens for depositors (those who lend money to the bank) and
borrowers (to whom the bank lends money). The amount that banks pay for deposits
and the money they get from loans are both referred to as interest.
Individuals and households, financial and nonfinancial companies, and national and
local governments can all be depositors. Borrowers are, well, borrowers. Deposits can
be made accessible on demand (such as a checking account) or with certain limits
(such as savings and time deposits) (Jeanne, 2023).
The banking industry provides finance to the vast majority of enterprises (Medhat,
2004). Banks have historically been seen to have a role in financial markets for two
reasons. One is that they are crucial in payment facilitation. Commercial banks and
other intermediaries screen and monitor applicants, and banks reduce loan provision
costs by developing expertise and diversifying among a large number of customers
(Samolyk, 2019). Thus, banks provide important financial services associated with
granting credit to their customers in their function as there, and to the extent that
investors want to maintain bank liabilities, banks can fund borrowers directly. The
principal sources of additional finance are domestic commercial banks (Herald
&Heiko, 2018).
Commercial banks are financial firms that participate in two separate sorts of
activities: deposit taking and lending. As a result, banks primarily perform
intermediation functions, which is backed by (Russell &Bamindele, 2019).
(Mahindra, 2018) identifies banks as the backbones of trade and commerce, serving
as intermediaries for capital generation and supply. Even when alternative financial
institutions are available, banks play a significant role in supporting the financial
11
sector's operations. As a result, banks are the most essential of all financial
organizations. Banks have an impact on the macroeconomic environment; according
to Adam (2018), bank failures incur severe macroeconomic consequences. He offered
9 pieces of evidence demonstrating that bank failures have significant and seemingly
long-term effects on real economic activity. As a result, banks have a substantial effect
on the macroeconomic environment. Banks are mostly utilized by individuals and
businesses to save money in order to get loans for project initiatives. Commercial
banks, according to Kelvin (2021), are important financial intermediaries that serve
the broad people in any society. Commercial banks often have larger assets than any
other financial organization. Commercial banks, in addition to their different roles,
promote growth and development. Banks lend in a variety of economic sectors.
Furthermore, commercial banks have an impact on the general economy of the
country, either positively or negatively. Commercial banks play an important role in
transmitting government economic policies (especially monetary policy) to the rest of
the economy. When bank credit is scarce and costly, for example, economic
expenditure tends to stall.
2.1.4. The Importance of Deposit for Banks
Banks obtain cash from two sources. Specifically, from capital contributions as well
as debt/deposit liabilities. Deposit is the primary source of funding for many
commercial banks. According to Kelvin (2021), commercial bank deposits account
for around 75% of commercial bank liabilities. Banks are channeling the deposits that
have been obtained at a cost to those who want loans with a profit margin. Banks face
default risks when acting as mediators between depositors and loaners. Deposit funds
are less expensive than capital funds. According to a research conducted by Harvey
and Spong (2021) on bank financing sources and their impact on community banks in
the Tenth District of Kansas City, deposits are migrating away from community
banks, and sustaining and increasing retail deposits would be a big challenge. A bank's
capacity to service consumer credit needs and conduct other banking functions is
dependent on collecting deposits at one set of interest rates and then lending or
investing these money at higher rates. Because of the significant roles that deposits
play in overall bank performance, there has been a lot of focus on bank financing
policies and individual banks' capacity to preserve or develop their deposit base.

12
 2.2. Factors Affecting Commercial Bank Deposits
The amount to which a credit agency, which is also a banking organization, is capable
of attracting the community's funds in the form of deposits is an important indicator
of its success and efficiency. However, deposit mobilization is a complex job.
It is determined by both external and endogenous influences in the financial sector
(Desinga, 1975). Exogenous influences include the region's general economic climate,
the amount of business transactions, and people’s trust in the banking system, people's
banking habits, and the region's saving potential. Even though external variables are
more favorable for deposit mobilization, banks may fail due to negative endogenous
factors such as location, building type, and window dressing (furniture, cheque books,
vouchers, pay slips, and so on), which reassure clients about a bank's physical
soundness (Desinga, 1975). Desinga (1975) divided the variables that are said to have
an influence on commercial bank deposits into two categories: exogenous and
endogenous factors. Exogenous has further subdivided country-specific factors and
bank-specific ones for clarity. The financial system can manage endogenous factors
but not external factors. Bank specific variables are those that are unique to the
banking system, whereas nation specific factors are those that exist outside of the
banking system.
2.2.1. Exogenous Factors
The political stability, growth domestic product, inflation, Covid-19, technology,
and exchange rate are some of exogenous factors selected for this research.
According to the research finding of (Nesru and Mekonen, 2022) political stability
have a negative impact on commercial bank deposit mobilization. These are nation
and bank factors that might influence the growth of commercial bank deposits. The
following are discussed:
Commercial banks can be influenced by the country's economic, social, and political
aspects. According to Nesru and Mekonnen (2022), country-specific risks such as
political, economic, and financial concerns might influence depositors' willingness
to deposit cash in the banking system. Any single bank functions under the rules and
regulations of the country to which it belongs, and various difficulties and shocks
that have occurred in the country have their own impact on the banks' operations. In
general, the success of a bank depends primarily on the environment in which the
business is conducted.

13
a) Political stability
The country's economic, social, and political aspects may influence depositors'
willingness to invest funds in the banking system, and bank performance is mostly
determined by the environment in which the business is conducted (Finger and Hesse.
Political stability stimulates investment and economic growth, which increases a
company's profitability. Economic freedom indices are positively associated to
political stability in democratic regimes because more economic freedom promotes
investment and economic growth. Conflicts and political instability, on the other hand,
might increase the danger of a systemic financial crisis and low bank deposits.
Conflicts harm the financial sector's performance and undermine banks' capacity to
maintain their role as financial intermediaries. Political unrest may enhance the
volatility of bank deposits. The Syrian crisis had a significant impact on the banking
system, generating deposit and asset runs and increasing non-performing loans.
Political stability boosts deposit mobilization significantly (Nesru & Mekonnen,
2022).
b) Inflation
Inflation is described as a general and sustained rise in prices of goods and services in
the economy. Inflation affects bank deposits in two ways. First, it reduces the
purchasing power of money and thus leads to high living costs. This means that
households can hardly buy with disposable income and therefore may have little or no
deposit in a bank. Second, in situations where hyperinflation occurs, i.e., Cash or bank
savings are because the purchasing power of money is so much less than the sudden
and excessive runaway price increases in the economy. Inflation has a significant
negative effect on deposit mobilization (Nesru & Mekonnen, 2022).
c) GDP/Growth Domestic Product/
The gross domestic product, or GDP, of a country is the total monetary or market
worth of all goods and services developed within its territorial limits over a particular
period of time. GDP per capita is an amount of a country's GDP per person. This
indicator represents a country's level of income and development. In general, a high
GDP per capita correlates with a good level of livelihood. (Tamplin, 2023).
As defined by Jim (2008), per capita GDP is the amount of GDP divided by a
country's or region's population. Changes in real GDP per capita over time are
sometimes regarded as a measure of a country's average standard of living.
Deposits rises as families and businesses groups choose to keep more money in
14
 bank (Evan et al, 2006).Thus, the link between income and deposits is positive,
implying that as a society's revenue rises, so do commercial bank deposits. The
society's per capita income rises, the commercial bank deposits also increased.
d) Covid-19
The Corona Virus Diseases (Covid-19) epidemic that shrinks the efficiency of
most businesses, including the global economy. Banking as a business group was
also influenced, as the reduction in firm performance had an impact on the decline
in banks, including Islamic banks, particularly the probability effect. This is
because the high number of affected customer organizations reduces financing,
which reduces profitability. According to the researcher, the impact of the Covid-
19 pandemic on the financial condition of Islamic banks in Indonesia includes
capital adequacy ratio (CAR), non-performing financing (NPF), profitability
measured by return on assets (ROA), return on equity (ROE), and net operating
margin (NOM), operational costs to operating income ratio (OEIR), and financing
to deposit ratio (FDR). The data was collected in four quarters prior to the
pandemic and three quarters during the epidemic, and the hypothesis was tested
using an independent sample t-test. The findings revealed that profitability, as
assessed by return on equity (ROE) and net operating margin (NOM), has a
considerable impact, as does the financing to deposit ratio. Meanwhile, the Covid-
19 pandemic had no effect on CAR, NPF, ROA, or OEIR (Sutrisno, 2020).
The Covid-19 pandemic hits all major international countries, and a catastrophic
global economic disaster is predicted for 2020. Ethiopia is not an exception, as
multiple negative trends appear to dominate the country's immediate economic
predictions. The input-output paradigm was used in the study to investigate the
effects of the COVID-19 epidemic on Ethiopia's Private Banking System and to
inform interventions and policy responses It used ten years of aggregate private
commercial bank historical data from 2010 to 2019 to study patterns and examine
the effect of pandemic on past essential success determinants. The findings reveal
that the pandemic has an impact on both the balance sheet and the income
statement of banks. The analysis showed an immediate liquidity need for private
banks of roughly Birr 17 billion in order for them to easily meet the NBE's
liquidity requirement. This was constrained by lower resource mobilization and
loan collection of Birr 10 billion per quarter.

15
 According to this study, the covid-19 has a negative impact on private commercial
banks' deposit mobilization (Boru, 2020).
e) Exchange rate
Exchange rates are expressed as foreign currency per unit of domestic currency or
domestic currency per unit of foreign currency. As currencies weaken in one
country, deposits diminished because investors tend to withdraw deposits and
exchange them for appreciating currency (hard currency) or engage in other forms
of investment rather than bank deposits. An increase in the exchange rate of 1%
results in an increase in deposits of 8.490617 units of measurement. This reverses
economic theory, hence it requires further investigation as to why it did not
function in this subject. In the example of CBE deposit growth, a probability value
of 0.0001 suggested that the exchange rate has significance for deposit growth
(GEBREYOHANNES, 2016).
f) Technology
New technology is a necessary component of international financial systems. A
variety of social, political, and economic issues may prevent the adoption and
usage of new technology in developing countries such as Ethiopia. Technology
has become ingrained in banking, making it easier and less expensive to design
and deliver financial services (Banson, 2013). Because of the highly
technological environment produced in the banking industry throughout the
world, the growing number of ways of distribution for financial services is
dependent on a very complicated network of alliances.
Banking technology has a huge chance to connect lower-income individuals at
cheaper costs and bring millions of consumers into the formal financial markets
via digital platforms. Adoption of Internet banking should be more appealing to
banks with larger fixed costs. As a result, the estimated indicator for Costs was
positive. The empirical results from regression analysis showed that technology
affects deposit of the bank positively.
Since technology is an intrinsic part of the bank, it causes significant modifications
in financial transactions system (Lidet, 2021).

16
 2.2.2. Endogenous Factors
In the literature three endogenous factors are identified that can affect the growth of
banks deposits. They are convenience of Bank’s office and service in the banks.
a. Convenience of Bank’s Office
Road and vehicles directly influence interest bearing deposits because of the
reduction in depositors’ transaction costs through reduced time spent in travelling
to and from banks (Baqui et al, 1987). Banks can mobilize more deposit when they
make themselves closer to their customers (depositors).
b. Number of employee
According to the research (Girma, 2015) bank staffs are committed to mobilize
deposit. This indicates that most of the respondent’s think that BOA staffs are
work hard to mobilize deposit. The motivated and confident employees can attract
new depositors to the bank, therefore the number of employee is positively affects
the development of bank deposit.
c. Branch expansion
Branch expansion is a vital approach to deposit mobilization through large customer
base and various depositors, it substantially increases deposit (Lidet, 2021).

There is a relationship between commercial banks deposits and commercial bank’s

branch expansion is not only are deposits influenced by bank branches, but the
expansion of bank branches is also influenced by the level of deposits in any area
(Baquiet al, 1987). It is expected that banks make decisions on expanding their
facilities by considering factors such as level of competition, deposit potential,
regional income and existence of road and vehicles. As deposit potential is one thing
that banks consider in expanding its branches, the deposit can also be a reason for
branch expansion strategy that the banking sector uses. According to Erna and Ekki
(2004), there is a long run relationship between commercial bank branch and
commercial banks deposits. An argument commonly articulated in the literature is that
branch banking stabilizes banking systems by reducing their vulnerability to local
economic shocks; branching enables banks to diversify their loans and deposits over
a wider geographical area or customer base (Mark and Kris, 2006). Restrictions on
branching have been linked to the instability of banking systems.

17
 d. Saving Interest Rate/Deposit Rate
An interest rate is the amount of interest due per period, as a proportion of the amount
lent, deposited, or borrowed (called the principal sum). The total interest on an amount
lent or borrowed depends on the principal sum, the interest rate, the compounding
frequency, and the length of time over which it is lent, deposited, or borrowed. The
interest rate is defined as the proportion of an amount loaned which a lender charges
as interest to the borrower, normally expressed as an annual percentage and it is the
rate a bank or other lender charges to borrow its money, or the rate a bank pays its
savers for keeping money in an account. The annual interest rate is the rate over a
period of one year. One of the deposit attraction techniques used by commercial banks
to get more deposits from the surplus sector is by providing attractive interest payment
on savings, and which is reasonable and acceptable to the owner of the money. The
dynamic economic situation and the shift of depositors to risky investment to earn
higher profit derived Commercial banks to device alternative strategies to improve
their deposits. Because, the type of bank, type of interest-bearing account and deposit
balance can play a significant role in savings rates. Offering higher interest rate on
saving attract customers to return back to banks. Savings account deposits that earn a
higher savings interest rate grow at a faster pace. Savings rates can also differ by
account balance. More deposits may qualify for a higher savings rate (Hailesilase,
2021).

2.3. Approaches to Attract Cash Depositor

Kumar (2000) stated that, these are some of the more important expected changes in
banking industry operations in the near future. Most banks adopt at least a few of these
policies to maintain enough cash deposit and profitability. Perform a savings account
comparison to take advantage of improved bank rates and terms. Take advantage of
the positive changes in this group and closely examine their new income ideas.
Always compare your institution with its competitors to learn of the best and most
cost-effective offers. Go beyond interest rates to attract new customers. Most banks
not able to beat the interest rates offered on a national level. One of the most difficult
things for a bank to communicate to potential customers is the quality of customer
service offered. Use testimonial-based advertisements to highlight the benefits of
customer service. This is particularly important for long-term loan relationships such
as mortgages. As the customers believe the loan officer at the bank attentive to their

18
individual needs, they likely to overlook differences in interest rates (Kumar, 2000).
Increase customer access to funds by expanding ATM networks and improving online
banking offerings. ATMs and online banking are less expensive than training and
paying tellers. But building an ATM network is expensive, particularly if you're not a
franchise of a larger national bank. Many smaller banks have gotten around this issue
by subsidizing fees 19 19 Paid to out-of-network ATMs. This allows smaller banks to
offer the same ease of access as larger banks at a relatively low cost (Kumar, 2000).
Create time-limited marketing incentives to attract new deposits. Offer to pay
termination and transfer fees from old banks. Offer cash payments for deposits over a
certain amount. To maximize effectiveness, limit the offer to a period of 60 days or
less and emphasize that fact in advertisements. Offer tiered rewards depending on the
level of deposit made. In most cases, customers stay with a bank that they have opened
an account with for years (Kumar, 2000). Measure the effectiveness of your
marketing. Try to run only a few marketing initiatives at any one time so you can more
easily measure their effectiveness. Repeat promotions that have measurable results,
and curtail the campaigns that fail. Consider how profitable a campaign was per dollar
amount (Kumar, 2000). Offer higher interest rates on savings accounts and lower
interest on loans to existing customers with high bank balances. It's much less
expensive to keep a customer that you already have than to attract a new one. Tiered
accounts create incentives for your customers to keep their business with you rather
than shop around elsewhere (Kumar, 2000). Adding "rewards" features to transaction
accounts (checking, money market accounts, etc.).The success of rewards credit cards
is sparking interest in offering similar features to other deposit and transaction
accounts. Individuals should examine these offers from their current institution and
competing programs from other banks. Compare money market rates and "rewards"
to find the best program for you (Kumar, 2000).

2.4. Empirical review

The empirical literature section discusses previous studies on the factors influencing
commercial bank deposits. The section covers the factors and method applied to
conduct the research, and the findings of the study under discussion.
2.4.1. Determinants of Commercial Bank Deposit in Ethiopia
Mamo (2017) studied deposit mobilization factors in the case of an Ethiopian
commercial bank using descriptive and econometric analysis. As predictors of

19
customer deposit mobilization in the bank, five explanatory variables were included:
loan, availability of competitors, interest rate, and branch expansion. The econometric
results show that loan provision, branch expansion, and customer quantity all have a
strong beneficial impact on deposit mobilization growth. However, the arrival of new
competitors and interest rates are not proven to have a favorable impact on the bank's
deposit mobilization. The study suggests that banks expand in new areas, increase the
number of clients through various incentive provisions, and compete with growing
competitors as potential strategies of promoting deposit mobilization.
According to the study of Lidet B. (2021),
Deposit mobilization is one of the most important problems for banks, thus reaching
the ideal amount of deposit earning is essential. The objective of this research was to
identify the factors that influence deposit mobilization at Debub Global Bank S.C. She
adopts a hybrid research methodology (qualitative and quantitative) with primary and
secondary data sources. Purposive sampling was utilized to collect primary data from
Debub Global Bank S.C.'s nine branches and head office workers in Addis Abeba,
who were chosen to respond to the questionnaire. While secondary sources of data
would derive data from Debub Global Bank S.C annual reports from 2015 to
2019G.C. According to the study, the number of branches, deposit mobilization
strategy, interest rate, technology, and competition all have an impact on deposit
migration. As a result, the study suggested that banks collaborate with other economic
units to boost deposit mobilization and engage in operational enhancements.
Furthermore, the bank should maintain an increased number of branches in order to
mobilize more resources.
Deposit mobilization is one of the key functions of the banking system, according to
Getaneh.Y (2020). Banks mobilize the financial resources needed for investment and
economic growth from consumers, companies, corporate organizations, and the
government. Identifying factors influencing deposit mobilization is important for
being effective, competitive in the market, and maintaining liquidity. With this in
thoughts, the goal of this research is to determine the factors of bank deposit
mobilization in the case of the Commercial Bank of Ethiopia. In order to accomplish
this objective, primary data acquired through the distribution of 238 valid
questionnaires to selected bank customers is predominantly employed. Secondary data
is used to supplement primary data to some extent. SPSS is used to help in quantitative
data analysis. According to the study findings, branch expansion, the range of services
20
given by the bank, the confidentiality of information about customers, trust in the
banking system, and the way individuals save are major variables influencing deposit
mobilization. Furthermore, interest rates and inflation are important macroeconomic
factors influencing deposit mobilization (Getaneh.Y, 2020).
As of (Shemsu, 2015) empirical study on commercial banks in Ethiopia the objective
was identify and assess those determining factors affecting bank deposits in the case
of CBE. The researcher uses both quantitative and qualitative research methods to
examine the drivers of bank deposits in the case of the Commercial Bank of Ethiopia.
The study included both primary and secondary data sources, with the primary data
source using a questioner and the secondary data source analyzing time series data
from 1998 to 2014. The information collected was regressed using the time series OLS
regression method and interpreted using various financial relationships and statistical
descriptions such as standard deviation, average, minimum, maximum, and median
(descriptive statistics), and multiple regression (significant test). The research focused
on one dependent variable (commercial bank deposit) and six independent variables:
deposit interest rate, general inflation rate, GDP, number of branches opened,
individual foreign remittance, and dummy variable. In the case of CBE, the economic
analysis showed that all of the explanatory variables had a positive correlation with
the explanatory variable. Among these variables, branch opening is a crucial method
for deposit mobilization; it is much more important than the others. Individual
remittances from Diasporas are also significantly impacted, but these influences are
not as significant.
2.4.2. Determinants of Bank Deposit Growth in Rwanda
According to Kamugisha's (2022) empirical study: The research experimentally
examined the relationship between chosen variables and the development of bank
deposits in Rwanda. According to empirical findings, both macroeconomic and bank-
specific factors can affect bank deposit growth in Rwanda. The research uses quarterly
time series data from 2005 (Q1) to 2019 (Q4) to assess the long run and short run
relation. The results supported both a long-run and a short-run relationship between
bank deposits and their predicted drivers. The relationship between chosen variables
and bank deposits in Rwanda has been experimentally studied, and the model's results
suggest that macroeconomic and bank-specific factors both have a role to play in the
growth of bank deposits in Rwanda. The study estimated a long-run and a short-run

21
association using quarterly time series data spanning from 2005 Q1 to 2019 Q4. The
findings support both a long-run and a short-run relationship between bank deposits
and their predicted factors. Empirical findings show that gross domestic product,
government spending, the number of bank branches, and the deposit interest rate all
have a long-run impact on bank deposit growth in Rwanda. In the near run, data show
that government spending and GDP are the most important factors of bank deposit
growth. The number of bank branches and the deposit interest rate were signed
properly, although insignificantly, suggesting that they had no short-run influence on
bank deposits. Based on the study findings, the article proposes that policymakers at
the macro level endorse measures to improve the overall macroeconomic
environment, especially policies to boost economic growth. Furthermore, banks
should set deposit interest rates dependent on the quantity of client deposits, so that
customers who deposit more of their surplus income get a greater interest rate,
encouraging people to save. Furthermore, in order to pay high interest on client
deposits, banks must engage in feasible initiatives that offer larger profits. Finally,
because branch expansion has a negative long-term impact on bank deposits, banks
may limit branch expansion and shift their priority to developing more sophisticated
electronic platforms that allow clients to trade effortlessly.

2.5. Summary and Knowledge Gap

According to the above theoretical and empirical assessment, deposit mobilization is
a key activity for all banks, particularly commercial banks, because their mission is to
mobilize deposits to meet the requisite liquidity for bank credit clients. However, this
is also dependent on the availability of credit facilities, which is dependent on the
quantity of bank deposit. It also found that bank deposits are influenced by a variety
of factors, including bank-specific and macroeconomic (endogenous and exogenous)
influences. This study concentrated on some of the bank-specific and external factors
that influence bank deposits. Theories about bank deposits may be found in a variety
of publications. However, empirical research on bank deposits are few, particularly in
Ethiopia. Based on this, there is still a significant vacuum in the empirical literature
on deposits and their drivers. To the best of the researcher's knowledge, no empirical
studies have been conducted on the determinants of bank deposits in the instance of
Amhara bank. Because Amhara Bank is still in its early stages, inflation, interest rates,

22
exchange rates, branch office convenience, GDP, political stability, branch expansion,
covid-19, staff size and technology have not yet been evaluated.

2.6. Conceptual Frame Work of the Study

According to the above theoretical and empirical literature reviews, the key factors
that impact the deposit improvement of financial institutions, particularly private
banks, are separated into two categories: macroeconomic factors and microeconomic
ones. This study examined both macro and micro factors of bank deposits, such as
inflation, interest rates, exchange rates, branch office convenience, GDP, political
stability, branch expansion, technology, covid-19 and staff size. The study quantified
how these characteristics influence Amhara bank deposits in the Diredawa and Harar
regions.
The following diagram depicts the conceptual framework of the connection between
the dependent variable (Amhara bank deposit mobilization) and the independent
variables (branch office convenience, Interest Rate, Inflation, political stability, GDP,
number of employees, branch expansion, technology, covid-19 and exchange rate):

Independent variables
Dependent variable
Internal factors
 Branch expansion
Deposit
 Saving interest rate
mobilization
 Number of
employee
 Office convenience
External factors
 Political stability
 Inflation
 GDP
 Covid-19
 Exchange rate
 Technology

Figure 2.1 Conceptual frame work of the study

23
Deposit mobilization is a key function of the banking industry. It is a vital source of
working capital for the bank. Deposit mobilization is a critical aspect in increasing
banks' ability to manage deposits successfully. Deposit mobilization is critical to
providing acceptable service to many areas of the country's economy. The success of
the banking industry is dependent on deposit mobilization. Deposits are important to
the bank's performance since they are a low-cost source of working capital.

24
 CHAPTER THREE

RESEARCH METHODS

This section illustrates the procedure that has been maintained with the objective to
achieve the expected outcomes in accordance with the general and specific objectives
defined. The theoretical framework that is used to produce applicable knowledge
about the particular research topic that the researcher has already proposed to take part
in, and it explicitly provides the appropriate information on the basis of understanding
the existing reality of factors affecting deposit mobilization in the selected Amhara
bank branches. Furthermore, this section displays the methods that are applied during
data collecting as well as the statistical instruments needed to evaluate and analyze
data. This section comprehensively explains the study's data sources, research design,
study population characteristics, sample and sampling procedures, and data collection
schedule. It defines the types of data used in the study as well as the methods used to
identify the factors influencing bank deposits. The researcher uses a descriptive study
design and both quantitative and qualitative research approaches to figure out the
determinants of bank deposits in the case of Amhara Bank.
Thus, in order to create reliable information, this study entails the careful selection of
methods; the entire research process is directed by the following methodological
components.

3.1. Research Design

The framework of study methods and techniques chosen by the researcher is commonly
referred to as the research design.
A research design is a form of investigation that uses a qualitative, quantitative, or mixed
methods approach to provide precise guidance for the processes in a study design (John
W.Creswell, 2014).
The course of study enables researchers to focus on research methodologies that are
appropriate for the subject matter and set up their lessons for success. Explanatory research is
a research conducted in order to identify the extent and nature of cause-and-effect
relationships, explanatory research was conducted in order to assess patterns of relationships
and impacts of selected variables on mobilizing deposit of Amhara bank. The subjects of
research employ either quantitative or qualitative approaches, the researcher decided which

25
method provides the greatest signal for the study's objectives. Researcher choose to
incorporate both qualitative and quantitative data in their research because these methods offer
various viewpoints on the subject matter; thus, qualitative as well as quantitative methods
(Mixed approach) are used to generate necessary information and produce more rich and
comprehensive data. The term "mixed methods" refers to a developing research methodology
that promotes the systematic integration, or "mixing," of quantitative and qualitative data
within a single study or ongoing program of investigation. The main justification for this
method is that such mixed method allows for a more comprehensive and synergistic data
processing than separate quantitative and qualitative data collection and analysis. The
qualitative approach examines respondents' real experiences, including their own expression
and interpretation of more subjective perspectives, whereas the quantitative approach focuses
on the critical interpretation of quantifiable statistical data ( (Barlett, 2001)). The following
tasks are part of the study's while using mixed method: Gathering and analyzing quantitative
(closed-ended) and qualitative (closed and open-ended) data suitable to every approach,
ensuring the correct number of samples for quantitative and qualitative analysis, and
combining the data during data collection, analysis, or presentation. Implementing an
interpretation for qualitative data and a research model for quantitative data, which includes
a linear regression model helps in understanding the research's key findings inside a single
model.

3.2. Data Source

The researcher employs both primary and secondary data to determine factors of
Amhara bank deposits. A questionnaire used to obtain primary data. Secondary data
are those that have previously been gathered by someone other than the investigator.
Secondary data were gathered from a variety of sources, including E-sources and key
publications on the subject.

3.3. Procedure of Data Collection

During the data collecting phase, the researcher obtains approval from all targeted
branch offices in Diredawa city and Harar. The questionnaires are offers to the
participants when permission has been granted. A copy of the cover letter and the
questionnaire are included in the survey kit.

3.4. Research Tools

The questionnaire is the primary research tool used in this study. Because it is less
expensive and takes less time than other measurement tools. The questionnaire is

26
divided into two parts, the first one is about the demographic characteristics of the
respondents. This section includes information such as gender, age and year of service
in the Bank. The second part contains eleven sections and these sections are the factors
of deposit mobilization which has basic research questions under each of the section.
The format of the questionnaires used in this study adapted from Gragn G. (2016)

3.5. Population, Sample Frame, Sample Size and Sampling Technique

3.5.1. Population of the Study

The employees who work in the branch of Sabian, Ashewa, Kezira, Shewa and
Harar branch were the research participants or the population of the study and the
questionnaires also delivered to those employees.
3.5.2. Sampling Frame
After the bank launched from June 18, 2022 it have 220 branches until this research
is conducted. Among these branches 5 are the area branches found in Diredawa and
Harari region till 30 May 2023. The sample includes the employees of Sabian,
Ashewa, and Kezira branches from Diredawa and Shewa and Harar branch from
Harari region.
3.5.3. Sampling Technique
Purposive sampling means a researcher selects individuals from the sampling frame
based on characteristics that the researcher is looking for.
A researcher begins with a particular characteristic of interest that he/she want to
analyze, and then chooses investigating individuals who cover all types of those
characteristics. (Hugh, 2014). The researcher used purposive sampling to select the
respondents of this research.
In this research the area of the study is selected by using convenience sampling method
because this sampling technique is used to select the data based on the proximity and
convenience of the area.

3.5.4. Sample Size

The research area was chosen using a non-probability sampling approach, while the
target employees were chosen using purposive sampling selection. Because of a
researcher begins with a particular characteristic of interest that he/she want to
analyze, and then chooses investigating individuals who cover all types of those
characteristics. (Hugh, 2014). The convenience, purposive and proportional sampling
methods used for this study.

27
Taro Yamane's (1967) sample size determination formula was used to calculate
sample size. For this formula to calculate sample size, a 95% confidence level was
assumed. For this formula to calculate sample size, a 95% confidence level was
assumed. As of:
e=0.05. , n =N/1 + N (e) 2
Where n is the required sample size, N is the population size and e is the level of
accuracy. n=200/ (1+200(0.05)2
n=200/1.5=133
Thus, of the 200 employees in the target population, the researcher chose 133 as a
sample to distribute the questionnaires. Because the number of persons in each branch
differs, the number of samples for each branch was determined using the following
formula:
n1 = nN1/N, Where n= total number of samples
N= total number of population
N1= total number of population in each branch Based on the above formula the
following number of sample developed from each branch using proportional sampling
method for each branches.
Table 3.1. Number of population and sample size

Branches Tot Tot Sample

targeted of
population Population
Sabian branch 60 46
Kezira branch 50 37
Ashewa branch 35 21
Harar branch 35 17
Shewa branch 20 12
Total 200 133

3.6. Data Analysis

The data gathered from the respondents is examined and interpreted in order to arrive
at relevant conclusions. The researcher used SPSS version28 software tool for
analysis. The questionnaire collected by google form through online data collection

28
mechanism and the data responded by the participant is coded in an Excel spreadsheet
before being exported to SPSS for analysis. The researcher used this type of data
collection mechanism or the new form of questionnaire for the purpose of overcoming
the limitations of the research. In this type of data collection there is no security issue,
absence of the respondent is not the issue because the research can easily distribute
through their email or telegram where ever they are. It also used to save time and
money; the transportation cost, white paper cost, print cost and time cost have saved.

The raw data about the respondents' demographic and deposit mobilization factors
displayed using tables.
Following the presentation of the respondent profile, the deposit mobilization factors
like technology, branch office convenience, interest rate, inflation, political stability,
GDP, number of employees, branch expansion, covid-19 pandemic and exchange rate
are analyzed by using descriptive statics and correlation analysis.
1. Descriptive statics
Descriptive statistics are brief informative coefficients that describe a specific data
collection that can represent the whole population or only a portion of a population.
Measurement of central tendency and measurements of variability (spread) are two
types of descriptive statistics. The mean, median, and mode are examples of
measurements of central tendency, whereas standard deviation, variance, minimum
and maximum variables, kurtosis, and skewness are examples of measures of
variability (Hayes, 2023). The researcher used descriptive statistics for measuring the
central tendency of variables and their variability (spread) as shown the next chapter.
2. Correlation Analysis
Correlation analysis is a statistical tool used in research to determine the strength of
the relationship between variables and calculate the relationship between them. In
other word, correlation analysis measures the amount of change in one variable as a
result of a change in the other variable (Vivek Bhaskaran, 2018). As result of this
assumption, the relationship and the degree of change or influence between two
variables is computed using correlation analysis.

29
 3.7. Ethical Considerations
The researcher take into account ethical considerations while conducting the research
in the selected bank. The researcher explained the participants of the study about the
objectives of the study and had to consciously consider ethical issues in getting
consent, avoiding misdirection, maintaining confidentiality, respecting the privacy,
and securing the anonymity of all study participants. The researcher noted these
considerations because research ethics legislation prohibits conducting a study
without the consent of the respondents for the reasons stated above.

30
 CHAPTER FOUR

RESULTS AND DISCUSSION

This chapter focuses on the quantitative data observed in Chapter 3 and its analysis,
discussion, and presentation. The data were analyzed using SPSS version-28 software;
statistical methods such as correlation, linear regression, and ANOVA analysis were
applied. Furthermore, the average results of each explanatory variable in the answers
are analyzed using SPSS's "Transform" tool to compare the average results of the
independent variables, as well as to observe correlation and regression of explanatory
variable with explained variable. For a better presentation and to highlight the
outcome, appropriate interpretation of findings and tables are prepared.

4.1. Descriptive Analysis of Demographic, Independent Variables and

Dependent Variable
This section of the research paper presents brief descriptions of the statistics acquired
from primary data for each demographic, independent, and dependent variable. The
independent factors used in this research, such as location convenience, branch
expansion, interest rate, technology, covid-19, GDP, political stability, exchange
rate, number of employee and inflation have been studied, analyzed, and interpreted
to demonstrate their effect on Amhara Bank's deposit mobilization. The demography
and other variables analyzed using SPSS v28, and the results are interpreted in the
section below.
4.1.1. Interpretation of Frequency of Demographic Variables
Out of the total, 133 questionnaires shared to the employee of the bank only 122 staffs
respond. The other 11 employees not respond because of different situations like two
employees fired, others were on annual leave and they went to non-network area.
The overall frequency analysis of the respondent demography presented in the
following tables:

31
Table 4.1 Gender of the respondent

Valid Cumulative
Frequency Percent Percent Percent
Valid Female 69 56.6 56.6 56.6
Male 53 43.4 43.4 100.0
Total 122 100.0 100.0
According to table 4.1 it is observed that out of the 122 respondents 53(43.4%) of respondents
were males and the remaining 69 (56.6%) were females. This shows that majority of the
respondents were females. This might be due to smaller number of male employees in the bank,
compared to females.

Table 4.2 Age of the respondent

Cumulative
Frequency Percent Valid Percent Percent
Between 21 and 30 70 57.4 57.4 57.4

Between 31 and 40 47 38.5 38.5 95.9

Between 41 and 50 4 3.3 3.3 99.2

Less than 20 1 .8 .8 100.0

Total 122 100.0 100.0

From the table 4.2 70 (57.4%) are between the age 21 and 30years, 47(38.5%) are between
age 31-40, 4(3.3%) are between age 41-50 years and 1(0.8%) is below the age 20 years. This
helps to see the view of employees from different age categories on the deposit mobilization
process of the bank as employees’ age category has its own influence on the view they have
regarding the practice. The wider and diversified the age group, the wider and diversified are
the views of the employees on the issue under consideration. The bank is manipulated by
young workers so this fresh human energy helps the bank to grow its deposit and to increase
customer satisfaction.

32
Table 4.3 Education status of the respondent

Cumulative
Frequency Percent Valid Percent Percent
Valid Diploma 2 1.6 1.6 1.6
First degree 74 60.7 60.7 62.3
Masters 46 37.7 37.7 100.0
Total 122 100.0 100.0
According to table 4.3 2 (1.6%) are diploma holder, 74(60.7%) first degree holder and the
remaining 46 (37.7%) are masters. The fact that majority of respondents are having degree
and masters. Respond by more of degree and masters holder helps to the respondents easily
understood the questionnaire, to fill the questionnaires correctly and as a result of that the
research finding become viable.

Table 4.4 Job title of the respondent

Cumulative
Frequency Percent Valid Percent Percent
Valid Loan officer 5 4.1 4.1 4.1
Accountant 10 8.2 8.2 12.3
Ass. Branch Manager 5 4.1 4.1 16.4
Branch manager 5 4.1 4.1 20.5
Customer service officer 85 69.7 69.7 90.2
Financial Manger 5 4.1 4.1 94.3
Marketing officers 4 3.3 3.3 97.5
Messenger 3 2.5 2.5 100.0
Total 122 100.0 100.0

As presented in the table 4.4 loan officers, Ass. Branch manager, financial manager and branch
manager each are 5(4.1%), 3 (2.5%) of the respondents are messenger, 4(3.3%) are marketing
officer, 10 (8.2%) are accountant and 85 (69.7%) of the respondents are customer service
officer of the bank. From this, we can infer that most of the respondents working on front
service which is also important to customer satisfaction due to their service.

33
Table 4.5 Work experience of the respondent

Cumulative
Frequency Percent Valid Percent Percent
Valid Between 1-3 years 9 7.4 7.4 7.4
Between 3-5years 63 51.6 51.6 59.0
less than 1 year 6 4.9 4.9 63.9
More than 5 years 44 36.1 36.1 100.0
Total 122 100.0 100.0

From the above table 4.5 6(4.9%) are less than 1 year experience, 9(7.4%) are 1-3 years’
experience, 63 (51.6%) are 3-5 years and the remaining 44 (36.1%) are above 5 years’
experience. This indicates that the respondents are well experienced and able to contribute their
effort to the deposit mobilization process of the bank. Hence, data collected from them is
reliable. Those experienced workers have an importance to increase the deposit of the bank by
providing their knowledge on technology and service quality.

4.2. The Reliability of the Analysis

The qualities of measuring scales and the elements that form up the scales can be
studied using reliability analysis. The Reliability Analysis process computes a
variety of usually used measures of scale reliability and also offers information
about the correlations between particular factors on the scale (Dudovskiy, 2011).
Cronbach's alpha is a measurement of the internal consistency, or reliability, of a set
of questionnaire responses. The researcher apply this measurement to see if a set of
items consistently measures the same feature. Cronbach's alpha measures the level of
agreement on a defined 0 to 1 scale. Higher alpha values indicate better agreement
between items. High Cronbach's alpha levels indicate that response values for each
participant across a set of questions are consistent or reliable. When participants give
a high responses to one of the things, they are more likely to give a high response to
the other items. This agreement shows that the measurements are reliable, and the
items may measure the same trait or characteristics. Low values, on the other hand,
suggest that the group of items does not reliably measure the same item. High
responses to one question do not imply that participants believed the other items were
highly graded. As a result, because the measurements are unreliable, the questions are
unlikely to test the same attribute or property (Frost, 2019).

34
 4.2.1. Cronbach’s Alpha Interpretation
Cronbach's alpha has a value between 0 and 1.
The minimum acceptable value of Cronbach alpha is 0.70.
A value of zero implies that there is no association between the components in
question. They are completely self-sufficient. Knowing the value of one question's
response provides no information about the other questions' responses.
One means they are perfectly connected. Frost states that knowing the value of one
response offers comprehensive information about the other elements (Frost, 2019).
A. Branch expansion reliability analysis

Figure 4.1 Branch expansion reliability statistics

Source SPSS v28
As defined in the figure 4.1 Cronbach alpha value is 0.864 which is greater than 0.70,
it means that the response values for each participant across a set of questions are
consistent or reliable.
B. Number of employee reliability analysis

Figure 4.2 Number of employee’s reliability statistics

Source SPSS v28
In the figure 4.2 the value of Cronbach alpha is greater 0.880 which is
reliable.

35
 C. Interest rate reliability analysis

Figure 4.3 Interest rate reliability statistics

Source SPSS v28
As defined in the figure 4.3 Cronbach alpha value is 0.945 which is greater than 0.70,
it means that the response values for each participant across a set of questions are
consistent or reliable.
D. Inflation reliability analysis

Figure 4.4 Inflation reliability statistics

Source SPSS v28
As defined in the figure 4.4 Cronbach alpha value is 0.720 which is reliable.

E. GDP reliability analysis

Figure 4.5 GDP reliability statistics

Source SPSS v28
As defined in the figure 4.5 Cronbach alpha value is 0.874 which means that the
response values for each participant across a set of questions are consistent or reliable.

36
 F. Convenience location reliability analysis

Figure 4.6 Convenience location reliability statistics

Source SPSS v28
As defined in the figure 4.6 Cronbach alpha value is 0.906 which is the response
values for each participant across a set of questions are consistent or reliable.

G. Political stability reliability analysis

Figure 4.7 Political stability reliability statistics

Source SPSS v28
As defined in the figure 4.7 Cronbach alpha value is 0.844 which is greater than 0.70,
it means that the response values for each participant across a set of questions are
consistent or reliable.
H. Technology reliability analysis

Figure 4.8 Technology reliability statistics

Source SPSS v28
As defined in the figure 4.8 Cronbach alpha value is 0.868 that is the response values
for each participant across a set of questions are consistent and reliable.

37
 I. Exchange rate reliability analysis

Figure 4.9 Exchange rate reliability statistics

Source SPSS v28
As defined in the figure 4.9 Cronbach alpha value is 0.806 which is greater than 0.70,
it means that the response values for each participant across a set of questions are
consistent or reliable.

J. Covid-19 reliability analysis

Figure 4.10 Covid-19 reliability statistics

Source SPSS v28
As defined in the figure 4.10 Cronbach alpha value is 0.770 the response values for
each participant across a set of questions are consistent or reliable.
K. Deposit mobilization reliability analysis

Figure 4.11 Deposit mobilization reliability statistics

Source SPSS v28
As defined in the figure 4.11 Cronbach alpha value is 0.767 which is greater than 0.70,
it means that the response values for each participant across a set of questions are
consistent or reliable.

38
 4.3. Statistical Analysis of the Dependent and Independent
Variables
Table-4.6 summarizes the descriptive statistics of the dependent and explanatory
variables for Amhara bank. The table displays the mean, median, maximum,
minimum, and standard deviation values of Amhara bank's deposit (dependent
variable) and the independent variables technology, covid-19, inflation, exchange rate,
interest rate, branch expansion, number of employees, GDP, and convenience of
branch location for a total of 122 observations.
Table 4.6 descriptive statistics of dependent and independent variables

Descriptive Statistics
Std.
N Minimum Maximum Mean Deviation Variance
DEPM 122 1.00 5.00 4.0328 .86659 .751
COV 122 1.00 5.00 4.1721 .96160 .925
EXCR 122 1.00 5.00 2.4153 .98782 .976
TECH 122 1.00 5.00 4.1393 .71079 .505
PST 122 1.00 5.00 4.4057 .64629 .418
CONV 122 1.00 5.00 3.9721 .76464 .585
GDP 122 1.00 5.00 3.8497 .71467 .511
INF 122 1.00 5.00 1.9918 .93838 .881
INT 122 1.00 5.00 2.4795 1.24050 1.539
NEMP 122 2.00 5.00 4.1667 .69135 .478
BREXP 122 1.25 5.00 4.5123 .59687 .356
Valid N 122
Notice: PST (Political stability), INF(Inflation), GDP(Growth domestic product), COV(Covid-19),
EXCHR(Exchange rate), TECH(Technology), INTR(Interest rate), NEMP( Number of employee),
BREXP(Branch expansion), CONV(Office convenience), DEPM(Deposit mobilization).

The mean of deposit mobilization was 4.0328 with the standard deviation of 0.86659
(87%) it implies that the value of standard deviation not close to the mean value of
deposit mobilization of the Amhara bank which means that the data points are spread
out over a wider range of value. The mean value of covid-19 influence in the bank
4.1721 with the standard deviation 0.96160 from 122 number of sample indicates that
the data points are spread out over a wider range of value likewise other have high
value from the mean of each variable which indicates also the data are widely
distributed except inflation and interest rate. The mean value of interest rate is 2.4795

39
with the standard deviation of 1.24050 which is comparatively low variance from the
mean which indicates the data points are not widely spread.
The mean value of inflation 1.9918 with the standard deviation 0.93838 indicates that
the data points are not widely spread from the mean.

4.4. Testing for Correlation

Correlation Analysis is a statistical tool designed to investigate the degree of similarity
or dependency between two or more variables. When a change of one variable is
closely associated by the change of another variable, the variables are said to be
correlated. There are two kind of variables in a correlation analysis: dependent and
independent variables. The primary objective of such an analysis is to determine
whether or not a change in the independent variable results in a change in the
dependent variable. Once the closeness of variables is established, we can estimate
the value of an unknown variable given the value of another variable. This is
practicable with regression analysis. Positive and Negative Correlation: The direction
of change determines whether the correlation between the variables is positive or
negative. In other words, the value of r in correlation might range from -1 to 1. If both
variables move in the same direction, the correlation is positive. Values of r close to
1 indicate that there is a positive linear relationship among the data. As an independent
variable rises, the other dependent variable increases on average, and when one
independent variable falls, the other dependent variable falls. When both variables
move in the opposite direction, the correlation is considered to be negative, i.e. values
of r close to -1 indicate a negative linear relationship between the data points. When
one variable rises, the other falls, and vice versa. However, r values close to 0 indicate
that there is little to no linear relationship between the data. As a result, the Correlation
in this study is calculated between 10 independent factors and one dependent variable
called deposit mobilization. The researcher carefully examined these variables to
discover the correlation utilized to evaluate the extent to which the variables are
associated.

40
 Table 4.7 Correlation Test

Pearson Correlation
DEPM EXCR TECHM CONV GDP NEMP INFM INTR COV PSTM BREXP
M M
DEPM 1
EXCR -.177 1
TECH .664** -.183* 1
CON .031 .053 .133 1
V
GDP .009 .183* -.082 .110 1
NEMP .132 -.061 .098 .455** -.054 1
* *
INF -.204 .113 -.152 -.225 .003 -.208* 1
INTR -.092 .008 .103 .074 -.108 .104 -.128 1
COV -.117 -.054 .029 .046 .038 -.011 -.165 .105 1
PST .624** -.248** .486** -.030 -.152 .059 -.017 -.052 -.064 1
BREX .269** -.245** .481** .268** -.049 .236** -.086 .081 .060 .120 1
P 122 122 122 122 122 122 122 122 122 122 122
Notice: PST (Political stability), INF(Inflation), GDP(Growth domestic product), COV(Covid-19),
EXCHR(Exchange rate), TECH(Technology), INTR(Interest rate), NEMP( Number of employee),
BREXP(Branch expansion), CONV(Office convenience), DEPM(Deposit mobilization).

According to the table 4.7, explanatory variables such as branch expansion, employee
number, convenience of location, political stability, and technology and growth
domestic product have a positive correlation with deposit mobilization. That is, when
any of these independent variables grows better, the bank's deposit mobilization
performance increases as well. The opposite is also true.
The other explanatory (independent variables) such as Interest rate, Inflation, covid-
19 and exchange rate have a negative correlation with deposit mobilization. That
means any of these negatively correlated variables increases the bank deposit is
negatively affected and the growth of bank deposit is not positively correlated with
these variable.

4.5. Testing the Classical Linear Regression Model (CLRM)

Assumptions
4.5.1. Discussion of the Regression Analysis Result
Regression Analysis is a statistical tool used for estimating or determine a possible
change in one variable for a given amount of change in another.

41
It refers to that the undetermined variable's value can be determined with the known
value of another variable. It shows the variables' cause-and-effect relationship. The
degree to which the variables are connected to one another is determined by the
regression curve or line. The regression further demonstrates a correlation between
two or more variables. However, there are two significant differences between
correlation and regression. Such as: The correlation coefficient determines or
measure the "degree of relationship" between variables, whereas the regression
analysis investigates the "nature of relationship" between the variables (Andrew,
2017).
Multiple linear regression is formulated as follows:
Ŷ= βo + β1X1 + β2 X2 +…+ βpXp
Where X1 to Xp are p distinct independent or predictor variables, βo is the value of Y
when all of the independent variables (X1 to Xp) are equal to zero, and β1 through βp
are the estimated regression coefficients. Each regression coefficient shows the
change in Y as the result of a one unit change in the corresponding independent
variable. In multiple regression application β1is the change in Y relative to a one unit
change in X1, while keeping all other independent variables constant (i.e., when the
remaining independent variables are held constant or fixed). Again, statistical tests
can be used to determine whether each regression coefficient differs significantly from
zero.
The constant value determines the estimated regression coefficients for the value of
the dependent variable (deposits) in this research:
Deposit mobilization = βo + β1 (branch Expansion) +β2 (number of employee) +β3
(interest rate) + β4 (Technology) + β5 (inflation) + β6 (GDP) + β7 (Convenience) +
β9 (political stability) + β10 (exchange rate) + β11 (covid-19).
According to the coefficient table 4.10
(Deposit mobilization) = 1.107 + .018 (branch Expansion) +-0.095 (number of
employee) +0.030 (interest rate) + -0.111 (inflation) + 0.246(technology) + -
0.065(GDP) + 0.094(Convenience) + 0.135(political stability) + -0.083(exchange
rate) + 0.481(covid-19).
On the basis of the data from this research, the relationship between the independent
variables and dependent variable looked at in this section. The independent variables
measure how the dependent variable, deposit mobilization, is growing. The
independent variables that have an effect on those mentioned regression's outputs have
42
an impact on the dependent variable. The P-value shows at what precession level each
variable is significant. Because of this, P-value of< 0.05 indicates that there is a
relationship between the dependent variable (deposit) and the independent variables
(branch expansion, covid-19, GDP, political stability, inflation, employee count,
exchange rate, technology, interest rate, and location convenience).
How well the regression model measures actual variations in the dependent variable
is indicated by the R-squared value. R-squared values typically vary from 0% to 100%
and have a range from 0 to 1. An R-squared of 100% indicates that changes in the
independent variable completely reflect all changes in the dependent variable. When
the R-squared value is high (between 85% and 100%), it means that the performance
of the dependent variable followed the trend of the independent variable similarly
(Brooks, 2008).
According to Annex 4 results from the regression analysis model, the adjusted-R
squared statistics and R-squared statistics results are 61.2% and 57.3%, respectively.
So this indicates the variables are correlated and the bank's deposit performance looks
like to be moving somewhat in line with the independent variables, as indicated by the
adjusted R squared value of 57.3%. These variables serve as useful explanatory
variables to identify the causes of banks' deposit mobilization. The p-value of zero in
table 4.8 above and the regression's F-statistic of 15.763 show that the null hypothesis
that all of the coefficients are jointly zero should be rejected. This suggests that
variations in the dependent variable, deposit mobilization, explained by the
independent factors (See Appendix 4).
4.5.2. Test of Heteroscedasticity
Heteroscedasticity is an assumption related with regression, essentially states that the
error variance relating to the model which varies equally across every dimension of
the independent variable. In other words, heteroscedasticity occurs when the residuals
from a regression analysis are not equal (Atom, 2011).
ANOVA Testing
One-way ANOVA ("analysis of variance") examines the means of two or more
independent groups to see if there is statistical evidence that the related population
means differ significantly. The one-way ANOVA test is a descriptive test.
ANOVA is used to determine whether there are any differences in the variables
between the two sets of data. ANOVA is a powerful tool used by researchers

43
nowadays. The research design has a significant impact on how ANOVA is used. The
t-test can be used in research to compare the means of two samples, however ANOVA
is the optimum technique when comparing the means of multiple samples. ANOVA
examines the mean difference between groups that have been divided into more than
two components. The primary goal of more than one way ANOVA is to determine
whether there is any interaction between the more than one way independent variables
and the dependent variables. Branch expansion, COVID-19, GDP, political stability,
inflation, employee count, and exchange rate are analyzed as independent variables in
this study, whereas Deposit Mobilization is the dependent variable. It also tells us
whether the effect of one of the independent factors on the dependent variable or
deposits is identical for all other independent variable values. Variation between
independent variables exist due to the differences in the level of accuracy of the
independent variable because independent variables are able to fulfill the test and
preferences of customers. This disparity could also be the result of other factors that
are attributed to chance and beyond human control. This is referred to as "error."
Thus, variations or differences in deposit mobilization may be believed to be error. As
a result, estimates of the amount of variation attributable to assignable reasons (or
variance between samples) and random causes (or variance within samples) are
produced separately and compared using an F-test, and conclusions are reached using
the value of F (Dr., 2023).
The one-way analysis of variance (ANOVA) is used to assess whether there are any
statistically significant differences between the means of two or more independent
(unrelated) groups (though it is typically employed when there are at least three
groups, rather than two) (Lund, 2018).
Table 4.8 Linear regression ANOVA testing

ANOVAa
Model Sum of Squares Df Mean Square F Sig.
1 Regression 55.598 11 5.054 15.763 0.001
Residual 35.271 110 .321
Total 90.869 121
a. Dependent Variable: DEPM
b. Predictors: (Constant), BREXP, COV, GDP, PST, INF, NEMP, EXCR, TECH, INTR,
CONV

44
The entire significance on the research model is shown in table 4.8 above. According
to David (1996), significance is defined as a significance level of 0.05 or less, and any
value greater than this is classified as non-significant effects and if the p-value
associated with a heteroscedasticity test goes below an appropriate limit (0.05), we
can draw the conclusion that the data is significantly heteroscedastic.
As shown in the above table the p value is less than 0.05, therefore the data is
significantly heteroscedastic.

Furthermore, according to David (1996), the F value is a measurement of how divergent the
means are relative to variability within the variables. Table 4.8 shows that the F value for this
study model is 15.763. The table demonstrates that the significance value is 0.001, or p <0.05;
this indicates there is a relationship (significant variation) between the dependent variable
(deposit) and the independent variables (branch expansion, COVID-19, GDP, political
stability, inflation, employee number, exchange rate, technology, interest rate, and location
convenience). The test statistic suggests that the null hypothesis of all coefficients being jointly
zero should be rejected. As a result, we can conclude that branch expansion, COVID-19, GDP,
political stability, inflation, employee number, exchange rate, technology, interest rate, and
location convenience all have a variable relationship or have a variable significant effect on
deposit mobilization.

4.5.3. Tests of Normality

Histogram
Histogram is a graphical representation of data points arranged in to ranges that the
user specifies.
A normally distributed variable has a histogram (or "density function") that is bell-
shaped, has one peak, and is symmetric over the mean. Kurtosis ("peakedness" or
"heaviness of tails") and skewness (asymmetry toward the mean) are two concepts
that are commonly used to define deviations from normality ( (Susan M. Krebs-Smith,
1964)
As the picture of the histogram showed the variables or data are almost normally
distributed and the data’s are symmetric to the mean. There is no more skewness from
both in the left as well as the right. The graph has one peak and symmetric to the mean.
Therefore the variables are normally distributed (see Appendix 8).

45
 Normal Probability Plot
The normal probability plot is a graphical tool for determining whether or not the data
set is normally distributed. The data is shown against a theoretical normal distribution,
with the points forming an almost a straight line. The probability plot is a component
of the normal probability plot (Chambers et, 1983).

As the graph of normal probability plot showed the data normally distributed, the
points are plotted along the line and forms like a straight line, this indicates that the
variables are normally distributed (see Appendix 6).
4.5.4. Multicollinearity Test
Computing the variance inflation factor (VIF) for each independent variable is one
method for determining multicollinearity; a VIF value greater between 1 and 5 shows
moderate collinearity and VIF value greater than 5 high multicollinearity whereas
greater than 10 is not tolerable collinearity.
A variance inflation factor (VIF) in regression analysis is a measure of the level of
multicollinearity. Multicollinearity occurs when there is a correlation between
multiple independent variables in a multiple regression model. This can adversely
affect the regression outputs (Bhandari, 2020).
Based on the view of Bhandari the VIF value from the table below indicates all
variables are moderately correlated.
In the multicollinearity test of variance inflation factor (VIF) table; the value of VIF
for most of the variables is greater than 1 that shows the moderate multicollinearity of
the variables (See Appendix 8).

46
 4.6. Hypothesis Testing
Table 4.10 linear regression analysis coefficients

Coefficients
Unstandardized Standardized
Coefficients Coefficients
Model B Std. Error Beta t Sig.
EXCRM .011 .051 .013 .210 .834
TECHM .430 .071 .475 6.091 .001
CONVM -.175 .117 -.103 -1.493 .138
GDPM .182 .098 .113 1.865 .065
NEMPM .069 .053 .087 1.294 .198
INFM -.125 .047 -.167 -2.678 .009
INTRM -.078 .040 -.119 -1.979 .050
COVM -.107 .052 -.122 -2.041 .044
PSTM .325 .059 .387 5.487 .001
BREXPm .012 .069 .013 .174 .862
(Constant) 1.662 .718 2.314 .023
Dependent Variable: DM Regression is significant at the 0.05 level (95% confidence level), Source: SPSS v 28

Notice: PST (Political stability), INF(Inflation), GDP(Growth domestic product), COV(Covid-19),

EXCHR(Exchange rate), TECH(Technology), INTR(Interest rate), NEMP( Number of employee),
BREXP(Branch expansion), CONV(Office convenience), DEPM(Deposit mobilization).

If the P-value is less than (or equal to) alpha, the null hypothesis is rejected and the
alternative hypothesis is accepted. Furthermore, if the P-value exceeds alpha, the null
hypothesis is not rejected (Eberly, 2023).
The word significance level (alpha) refers to a predetermined probability, whereas the
term "P value" refers to a probability calculated after a particular investigation of the
research. Most writers define statistical significance as P = 0.05, and statistically very
significant as P 0.001 (less than one in a thousand chance of being incorrect). (David
A. Belsley, 12, 2013). The chance that the null hypothesis is correct is where the value
of p greater than 0.05. The probability that the alternative hypothesis is correct is 1
minus the P value. A statistically significant test result (P<= 0.05) indicates that the
test hypothesis is inaccurate or should be rejected. A P value larger than 0.05 indicates
that no effect was found (Ioannidis, 2016).

The beta coefficient is the amount that the result of a variable changes for every unit change in
the predictor variable. Following the examination of the F value and R2, the regression beta

47
 coefficients must be evaluated. The beta coefficients can be negative or positive, and each has
a t-value and significance of the t-value. If the beta coefficient is positive, it means that for
every unit rise in the predictor variable, the outcome variable increases by the beta coefficient
value. If the beta coefficient is negative, it means that for every one unit rise in the predictor
variable, the outcome variable decreases by the beta coefficient value (Harcourt, 2012). As
shown from the above linear regression analysis table five variables are significant.
1. Positively Significant variables
(1):- Technology have positive effect the deposit mobilization of Amhara bank.
According to the coefficients table 4.10 above statistically stated P-value of 0.001 with
corresponding Beta value of 0.473 which means the value p less than the value of
alpha (0.05) and the significant that is technology has significant as well as positive
effect for deposit growth as of the research (Lidet, 2021).; hence the null hypothesis
(H0) is rejected. The deposit mobilization of Amhara bank increased by a unit of 0.473
as following the technology rise by everyone unit amount of 0.473.
(2):- The political stability of a nation have positive effect on the banks deposit
increment.
In accordance with coefficients table 4.10 above, the statistically stated P-value of
0.001 with corresponding Beta value of 0.387 which means the value p less than the
value of alpha and the significant that political stability is significant as well as it has
positive effect for deposit growth. In this result of testing the null hypothesis rejected
rather the alternative hypothesis accepted. Because of the value of p less than the value
of alpha (0.05). The deposit mobilization of Amhara bank increased by a unit of 0.387
in each units of increment of political stability. Similarly, Political stability boosts
deposit mobilization significantly as of (Nesru & Mekonnen, 2022).
2. Negatively Significant variables
(3):- The inflation rate of the country has significant impact on the bank’s deposit
growth.
From the table 4.10 above statistically stated P-value of the independent variable
inflation is 0.009 with corresponding Beta value of -0.167 which means the value p
less than the value alpha and it is negatively significant and it has negative effect for
deposit growth. The null hypothesis (H0) is rejected and alternative hypothesis
became true. The deposit mobilization of Amhara bank decreased by amount of 0. 167
units as following the rise of ever one units of Inflation. With similar fashion inflation
has a significant negative effect on deposit mobilization (Nesru & Mekonnen, 2022).

48
 (4):- Covid-19 pandemic affect the deposit mobilization of Amhara bank.
From the coefficient table 4.10 above statistically stated P-value of the variable is
0.044 with corresponding Beta value of -0.122. The p value less than 0.05, which is
significant. In this case the null hypothesis has rejected. Since the beta value is
negative the deposit mobilization of Amhara bank decreased by a unit of 0.122 in
every unit of rise of or expansion of the pandemic. Likewise covid-19 has a negative
impact on private commercial banks' deposit mobilization (Boru, 2020).
(5):- Interest rate significant to the deposit mobilization of Amhara bank.
As a result of coefficients table 4.10 above, statistically stated P-value of 0.050 with
corresponding Beta value of -0.119 which means the value p equal to the value of
alpha, the significant that of the variable interest rate shows negative significance on
deposit mobilization of the bank; hence the null hypothesis (H0) is rejected. The result
indicates as the bank losses by amount of 0.119 in each units of rise or change of
interest rate. According to the research of (Hailesilase, 2021) offering higher interest
rate on saving positively affects the deposit of the bank. Saving account deposit earn
a higher savings interest rate grow at a faster pace. More deposits may qualify for a
higher savings rate. Contrarily, the finding of this research implies increasing the rate
of interest not increase the deposit of the bank because the amount of increasing rate
recorded by the bank not comparable with the retain amount from the customer.
Therefore the way to increase the deposit of the bank or the liquidity of the bank is by
maintaining or increasing the rate of interest rather decreasing or maintain the present
interest rate and focus to the other factors of deposit mobilization.
3. Not-Significant variables
(6):- Branch expansions have significant effect on the bank's deposit mobilization:
According to the coefficients table 4.10 above statistically stated P-value of the
variable branch expansion is 0.862, which is greater than the value of alpha. Which
means it is insignificant.
However branch expansion was positively significant in the research of (Lidet, 2021)
but in this research the statistical finding indicates branch expansion is insignificant
for deposit mobilization. In this regard the null hypothesis is acceptable.
(7):- Convenience of the branch location is significant to the deposit mobilization of
Amhara bank.
From the table 4.10 above statistically stated P-value of the variable branch location
convenience is 0.138, which is greater than the value of alpha. The result indicates
49
insignificant of the variable. Even though office convenience is positively affects the
bank deposit and it is significant (Baqui et al, 1987), but in this research the statistical
finding indicates office location convenience is insignificant for deposit mobilization
and the null hypothesis is acceptable.
(8):- Number of employee have significant effect on the deposit mobilization of
Amhara bank.
From the table 4.10 above statistically stated P-value of the variable number of
employee is 0.198, which is greater than the value of alpha. The result indicates
insignificant of the variable. The number of employee in the bank is positively affects
the bank deposit and it is significant (Girma, 2015), but in this research the statistical
finding indicates number of employee in the bank doesn’t determine the development
bank deposit and it is insignificant for deposit mobilization and the null hypothesis is
acceptable.
(9):- Exchange rate significant to the deposit mobilization of Amhara bank.
As defined from the table 4.10, P-value of the variable exchange rate is 0.834, which
is greater than the value of alpha. The result indicates the variable is insignificant.
Exchange rate has significance for deposit growth Gebreyohannes, 2016), but in this
research the statistical finding indicates exchange rate not determine the bank deposit
and it is insignificant for deposit mobilization and the null hypothesis is acceptable.
(10):- GDP is significant to the deposit mobilization of Amhara bank.
As stated from the table 4.10, P-value of the variable growth domestic product is
0.065, it is also greater than the value of alpha. Hence the result indicates the variable
is insignificant.
Growth domestic product is significance for deposit growth (Tamplin, 2023) but in
this research the statistical finding indicates growth domestic product not determine the
bank deposit and it is insignificant for deposit mobilization as well as the null hypothesis is
acceptable.

4.7. Discussion
In the discussion part of the research, the researcher interprets the meaning of the
results, puts them in context, and explains why they matter.
Technology: As of the research finding (Lidet, 2021) the empirical results from
regression analysis showed that technology affects deposit of the bank positively and
it is significant in financial transactions system. Likewise, technology is statistically

50
significant in this research because it determines the growth of customers and bank
deposit by facilitating and fasting the customer financial transaction activities.
ATM and mobile banking have positive effect for deposit growth. According the result
of the research finding in each unit of technology development, the deposit of Amhara
bank increased by a unit of 0.473.
Political stability: The country's economic, social, and political aspects may influence
depositors' willingness to invest funds in the banking system (Finger and Hesse).
Political stability stimulates investment and economic growth, which increases a
company's profitability. Conflicts and political instability, on the other hand, might
decrease bank deposits.
Conflicts harm the financial sector's performance and undermine banks' capacity to
maintain their role as financial intermediaries. Political unrest may enhance the
volatility of bank deposits. Political stability boosts deposit mobilization significantly
(Nesru & Mekonnen, 2022).
The research from Amhara bank indicates the political stability is significant and
positively affect deposit growth. As the political stability ensured, the freedom of
economy and business activities push the customer to be profitable. The deposit
mobilization of Amhara bank increased by a unit of 0.387 in each units of increase net
of political stability. In reverse instability negatively affect the deposit growth by
distracting the economy and wealth of the organizations and properties of individuals.
Inflation: According to the research of (Nesru & Mekonen, 2022) Inflation affects
bank deposits it reduces the purchasing power of money. Inflation has a significant
negative effect on deposit mobilization.
In this research also inflation has significant effect and negatively affect deposit
growth. In each rate of inflation the deposit growth decreased by of 0.167 units.
Inflation increases living costs and hyperinflation occurs, which is Cash or bank
savings purchasing power of money become so much less than the sudden and
excessive runaway price increases in the economy. Therefore, people chosen to
convert deposits and cash into storage commodities and they didn’t deposit money in
bank.
Interest rate: According to research, (Hailesilase, 2021) accounts that pay interest and
deposits in banks can have significant effects on savings rates. Paying higher savings
interest rates encourages clients to return to banks. Deposits in deposit accounts that
receive a higher savings interest rate grow faster. Savings rates might also vary
51
depending on account balance. More deposits could subject you to a greater savings
rate. In the contrary the deposit mobilization of Amhara bank decreased by a unit of
0.119 in each units of change of interest rate. As the bank increase the interest rate on
the account of customers, the bank loses its deposit by the amount of 0.119 in each
rate of unit.
Covid-19: The Corona Virus Diseases (Covid-19) epidemic that shrinks the financial
organizations like banking sectors. The national and global economy affected and the
performance of the firm decreased due to covid-19 this leads the decline of bank
deposit including Islamic banks. Because the customer organizations affected and they
cannot profitable (Sutrisno, 2020).
According to the conclusions of (Boru, 2020), the pandemic has an influence on both
the balance sheet and earnings report of banks. According to the analysis, private
banks require approximately Birr 17 billion in immediate cash in order to easily meet
the NBE's financial assets demand. Lower resource mobilization and loan collection
of Birr 10 billion every quarter limit the deposit of the bank.
According to this study, the covid-19 has a detrimental impact on the deposit
mobilization of private commercial banks.
In case of this research the bank deposit decreased by 0.122 units following the
expansion of covid-19 diseases. The customer not freely invest and engaged on their
business as a result of this their profitability become decreased and not have deposit
on the bank. By developing the strategy of pandemic prevention and controlling
mechanisms the bank can also solve the problem of the bank. The bank delayed from
its emerging time and it loosed time value because of covid-19. Even if the result
Exchange rate: Even though the exchange rate is significant in the research of
(GEBREYOHANNES, 2016), it is insignificant from this research.
Branch expansion: Based on the result of the research (Lidet, 2021) Branch expansion
is a positively significant but it is insignificant from this research finding.
Number of employee: Due to the research (Girma, 2015) number of employee is
significant. But it is insignificant in the research of deposit mobilization factor in the
case of Amhara bank.
Office convenience: The branch convenience location is positively significant as a
result of the research (Baqui et al, 1987). In the case of this research office
convenience is not significant.

52
 CHAPTER FIVE

SUMMARY, CONCLUSION AND RECOMMENDATION

This is the final chapter of the research and the most unique of the others. Because the
previous chapters can be simply created by keeping to a pattern with specific standards
for each part. The researcher's purpose in this final chapter is to tell the reader about
the results and what they mean. The researcher describes how the findings can benefit
people in the real world as well as future study in this area. This chapter's goal is to
update the reader of the previous chapters' findings, clarify interpretations, and show
how the research impact the current knowledge of the topic and how it can be applied
in practice. This chapter is critical for concluding up the untied ends and bringing
together the research findings. The chapter divided into three components. The first
section is a simple summary, the second is the study's findings, and the third is the
researcher's potential recommendation based on the findings.

5.1. Summary of Findings

The research showed that deposit mobilization is the primary objective for financial
organization like banks. Nevertheless, getting deposit has become an increasingly
difficult task for the banks consistent with the increasing demand of borrowing.
Deposit mobilization gets an essential element of achievement for Amhara bank due
to the country's growing need for capital from new and existing businesses, as well as
the banks' desire to profit from those capitals.
In this section of a research the research questions and hypothesis clearly identified
and explained why they are interesting.
The researcher briefly describe the methods (design, participants, materials,
procedure, independent variables and dependent variables.
The main objective of this study was determining the factors affecting deposit growth
of Amhara bank. A casual or explanatory research design was adopted to determine
the casual relationships between the dependent variable (DEP) and independent
variables (political stability, branch expansion, covid-19, interest rate, exchange rate,
technology, GDP, number of employee and convenience of the office). The total
populations were employees of Amhara bank who works in Harar and Diredawa
branches. These branches of a bank selected by using convenience sampling method

53
and the respondents of the research question were selected by using purposive
sampling and proportionality sampling methods. All primary data’s collected from
the employees who were selected purposively and proportionally from each branches
which are also selected by convenience sampling. As linear regression model showed
political stability and technology are positively significant variables whereas interest
rate, covid-19 and inflation have a negative significant effect on the deposit of Amhara
bank. The other factors are insignificant for the deposit mobilization of the Amhara
bank, such as number of employee, branch expansion, convenience office, growth
domestic product and exchange rate.

5.2. Conclusion of the Study

Private banking institutions are important for the growth and development of any
country's economy. By a means of deposit mobilization, institutions form a vital
component of the financial system by transferring limited capital from an excess
financial entities to the lower economic segments. The increase of bank deposits is
typically expressed as a function of many variables. The primary objective of this
study is to identify the variables influencing Amhara Bank's deposit growth. The study
used mixed approach such as qualitative and quantitative methods of research to
accomplish this extensive objectives. Data were gathered by choosing the employees
using purposive and proportionality sampling method and the researcher used
convenience sampling method to select the research areas like Sabian, Ashewa, and
Kezira branches from Diredawa and Shewa and Harar branch from Harari region.
Ten independent variables have included or chosen by the researcher as factors
determining the deposits of Amhara Bank such as Political stability, branch
expansion, covid-19, interest rate, exchange rate, technology, GDP, number of
employees, and office convenience were the independent variables that the researcher
used for investigation. The dependent variable was the improvement of bank deposits.
A regression model used for the data analysis with SPSS version 28. The researcher
tests the data validity and variability using different testing mechanisms or tools like
heteroskedacity, autocorrelation, multicollinearity, and normality. According to the
regression outcomes; political stability and technology have positive significance on
the deposit mobilization of the bank and inflation, interest rate and covid-19 pandemic
also have negative significance on the growth of the bank whereas branch expansion,

54
convenience branch location, exchange rate, GDP and number of employee have no
any effect on the deposit of the bank.

5.3. Recommendations
According to the result of the research, the following useful recommendations have
been forwarded to Amhara Bank in helping in deposit improvement:
Deposits are Amhara Bank's primary asset or resources, the bank ought to place a
higher value on deposits and make an effort to boost the amount of deposit by focusing
on modern banking services include new products such as core banking solutions, Net
Banking/ E-Banking, Mobile banking or mobile deposit, debit card/ credit cards;
Automated Teller Machines (ATM). To have more depositors and to attract the new
customers the bank should go one step forward from the competitors by technology.
Improve and keep secured the electronic devices and software systems in order to be
confidential for the depositors and for the bank itself.
To attract international depositors and to satisfy modern communities, online account
opening system is better to increase bank deposit.
As the result of this research interest rate is negatively significant for deposit growth
of the bank i.e. the increment of interest rate negatively affects the bank deposit, so to
avoid this problem the bank should increase the amount of interest rate when
borrowing for customers and make a balance on the customer’s account interest. The
bank should also offer competitive deposit interest rates decide on sustainable deposits
while maintaining a reasonable profit margin. A fair interest rate payment choose
deposit-on-demand clients could also be considered and the bank should increase its
interest rate when it lend for customers, or the bank should follow other mechanisms
that compensate this deficits of the bank coming by the case of interest rate.
Inflation has negative effect on the bank so, the bank should involve on the market
management in order to make stable economy in the country.
The bank should issue or borrow high investment capitals to investors and motivate
these investors to be more productive on their business. This type of mechanism helps
to make stable market or economy as a result of market stability the bank deposit can
be increased because of the growth of individual’s capital due to the market stability.
Pandemic diseases are the major threats of the financial system, as shown from the
research so the bank should follow preventive mechanism for such type of unexpected

55
pandemic diseases rather than controlling i.e. give more emphasis for preventive
mechanism more than controlling.
The researcher recommend to the bank to have readiness for all type transmitting
diseases by office setup, service type, device access, building structure and
technology.
The last of the researcher recommendation is the bank should perform a research on
the other factors that determine the deposit of the Amhara bank including these
insignificant factors which investigated in this research.
This research used for as a reference of other researches, therefore the researchers can
conduct further investigation on Amhara bank deposit mobilization based on this
research finding.

56
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 APPENDICES

Appendix 1

St. Mary University

Department Of Masters in Business Administration
(School Of Graduate Studies)
Questionnaire on Factors Affecting Deposit Mobilization: The Case of Amhara
Bank

Dear Respondents:
This questionnaire prepared for the research paper in the partial fulfillment of
requirements for masters of business administration from Saint Mary's University.
The research title is "Factors affecting deposit mobilization in the case of Amhara
bank" The information from the bank is regarded as critical input for the effective
completion of the study. The researcher respectfully requested to the respondents to
complete the questions correctly and return timely.
I sincerely appreciate your cooperation in advance.
Any information you provide is kept confidential; the reliability of the information
obtained from you determines the study's success.

Prepared by: Alebachew Baye Melesse

St. Marry University, School of Graduate Studies
Department of MBA

Addis Ababa, Ethiopia

April/2023

60
 Part I. Background of the respondent
1. Sex: Male ☐Female ☐

2. Age: Below 25 ☐26-35 ☐36-45 ☐ 46 and above ☐

3. Educational status: Diploma ☐1st degree ☐Masters and above ☐

4. Your job title……………………………………………………………
5. Work experience: less than 1 year ☐ between 1-3 years ☐ between 3-6 years ☐

more than 6 years ☐

Part II: Factors affecting deposit mobilization (Independent Variables)
Instruction: Please put x mark for your level of agreement or disagreement.
1; strongly disagree; 2- Disagree; 3- Neutral; 4- Agree; 5- Strongly Agree
Section 1: Branch expansion
1. Branch expansion has positive effect on deposit mobilization of Amhara bank.
1. Strongly disagree ☐
2. Dis agree ☐

3. Neutral ☐
4. Agree ☐

5. Strongly agree ☐
2. Branch expansion has a significant effect on deposit mobilization
1. Strongly disagree ☐
2. Dis agree ☐

3. Neutral ☐
4. Agree ☐

5. Strongly agree ☐
3. Opening new branches benefit the bank in terms of market share as well as deposit
mobilization.
1. Strongly disagree ☐

2. Dis agree ☐
3. Neutral ☐
4. Agree ☐
5. Strongly agree ☐

61
4. Branch expansion in order to mobilize deposit is cost effective.
1. Strongly disagree ☐

2. Dis agree ☐

3. Neutral ☐
4. Agree ☐

5. Strongly agree ☐
5. In your own word, how do you express the effect of saving interest rate on the mobilization of
deposit of Amhara bank? ----------------------------------------------------------------------------------
---------------------------------- -------------------------------------------------------
Section Two: Number of Employee
6. Does number of employee has positive effect on deposit mobilization
1. Strongly disagree ☐
2. Disagree ☐
3. Neutral ☐

4. Agree ☐

5. Strongly agree ☐
7. Number of employee has a significant effect on deposit mobilization
1. Strongly disagree ☐
2. Disagree ☐

3. Neutral ☐
4. Agree ☐

5. Strongly agree ☐
8. Does increasing number of employees increase customer satisfaction quality of product and
that the bank offers.
1. Strongly disagree ☐

2. Disagree ☐
3. Neutral ☐

4. Agree ☐
5. Strongly agree ☐

62
9. In your own word, how do you express the effect of number of employees on the mobilization
of deposit of Amhara bank? -------------------------------------------------------------------------------
------------------------------------- ---------------------------------------------------------------------------
-------------------------
Section Three: Interest rate
10. Does number of interest rate has positive effect on deposit mobilization
1. Strongly disagree ☐
2. Disagree ☐

3. Neutral ☐
4. Agree ☐

5. Strongly agree ☐
11. Interest rate has a significant effect on deposit mobilization
1. Strongly disagree ☐
2. Disagree ☐

3. Neutral ☐
4. Agree ☐

5. Strongly agree ☐
12. In order to attract high deposits from customers the interest rate provided by private banks
should be comparable to influence.
1. Strongly disagree ☐

2. Disagree ☐

3. Neutral ☐
4. Agree ☐

5. Strongly agree ☐
13. In your own word, how do you express the effect of saving interest rate on the mobilization of
deposit of Amhara bank? ----------------------------------------------------------------------------------
---------------------------------- ------------------------------------------------------------------------------
----------------------
Section four: Inflation
14. Does inflation has positive effect on deposit mobilization
1. Strongly disagree ☐

63
 2. Disagree ☐

3. Neutral ☐
4. Agree ☐

5. Strongly agree ☐
15. Inflation has a significant effect on deposit mobilization
1. Strongly disagree ☐
2. Disagree ☐

3. Neutral ☐
4. Agree ☐

5. Strongly agree ☐
16. The rate of inflation increases the customer drown there deposit and shifted to physical assets.
1. Strongly disagree ☐
2. Disagree ☐

3. Neutral ☐
4. Agree ☐

5. Strongly agree ☐
17. In your own word, how do you express the effect of inflation rate on the mobilization of deposit
of Amhara bank? -------------------------------------------------------------------------------------------
------------------------- ---------------------------------------------------------------------------
Section five: Growth Domestic product (GDP)
18. Does GDP has positive effect on deposit mobilization
1. Strongly disagree ☐
2. Disagree ☐

3. Neutral ☐
4. Agree ☐

5. Strongly agree ☐

19. GDP has a significant effect on deposit mobilization

1. Strongly disagree ☐
2. Disagree ☐

64
 3. Neutral ☐

4. Agree ☐
5. Strongly agree ☐
20. Increasing the GDP leads to shift the depositor’s transaction by decreasing the price of goods.
1. Strongly disagree ☐

2. Disagree ☐
3. Neutral ☐

4. Agree ☐
5. Strongly agree ☐
21. In your own word, how do you express the effect of Growth Domestic Product on the
mobilization of deposit of Amhara bank? ---------------------------------------------------------------
----------------------------------------------------- --------------------------------------------
Section six: Exchange rate
22. Exchange rate has positive effect on deposit mobilization
1. Strongly disagree ☐

2. Disagree ☐
3. Neutral ☐

4. Agree ☐
5. Strongly agree ☐
23. Exchange rate has a significant effect on deposit mobilization
1. Strongly disagree ☐

2. Disagree ☐
3. Neutral ☐

4. Agree ☐
5. Strongly agree ☐

24. The exchange rate of birr per USD growth leads depositors to deplete in the process of
importing good and services.
1. Strongly disagree ☐
2. Disagree ☐

65
 3. Neutral ☐

4. Agree ☐
5. Strongly agree ☐
25. In your own word, how do you express the effect of exchange rate on the mobilization of
deposit of Amhara bank? ----------------------------------------------------------------------------------
---------------------------------- -----------------------------------------------------
Section seven: Branch office convenience
26. ATM machines are located in convenient locations near Amhara Bank branches.
1. Strongly disagree ☐
2. Disagree ☐

3. Neutral ☐
4. Agree ☐

5. Strongly agree ☐
27. Amhara Bank does well at serving customers with distinctive demands such as the disabled,
the elderly, pregnant mothers, and other vulnerable.
1. Strongly disagree ☐

2. Disagree ☐

3. Neutral ☐
4. Agree ☐

5. Strongly agree ☐
28. Amhara Bank is great in putting directive symbols and indicators where customers can get the
services they seek.
1. Strongly disagree ☐

2. Disagree ☐
3. Neutral ☐

4. Agree ☐
5. Strongly agree ☐

29. Amhara bank have convenient parking area.

1. Strongly disagree ☐

66
 2. Disagree ☐

3. Neutral ☐
4. Agree ☐

5. Strongly agree ☐
30. Location of Amhara bank is suitable to have transportation service to and from the bank.
1. Strongly disagree ☐
2. Disagree ☐

3. Neutral ☐
4. Agree ☐

5. Strongly agree ☐
31. In your own word, how do you express the effect of convenience on the mobilization of deposit
mobilization of Amhara bank? ---------------------------------------------------------------------------
----------------------------------------- -----------------------------------------------------------------------
----------------------------
Section eight: political stability
32. Political stability has positive consequences on Amhara bank deposit mobilization.
1. Strongly disagree ☐

2. Disagree ☐
3. Neutral ☐

4. Agree ☐
5. Strongly agree ☐
33. Political stability stimulates investment and economic growth and it improve the bank's
profitability.
1. Strongly disagree ☐
2. Disagree ☐

3. Neutral ☐
4. Agree ☐

5. Strongly agree ☐
34. Political stability in democratic states has a positive relationship to metrics of economic
freedom because greater economic freedom encourage investment and economic growth.

67
 1. Strongly disagree ☐

2. Disagree ☐
3. Neutral ☐

4. Agree ☐
5. Strongly agree ☐
35. Political stability affects deposit mobilization significantly.
1. Strongly disagree ☐

2. Disagree ☐
3. Neutral ☐

4. Agree ☐
5. Strongly agree ☐
36. In your own word, how do you express the effect of politics on the mobilization of deposit
mobilization of Amhara bank? ---------------------------------------------------------------------------
----------------------------------------- -----------------------------------------------------------------------
----------------------------
Part 12, Deposit mobilization
37. The deposit of Amhara bank requires more promotive activities and other arrangements.
1. Strongly disagree ☐
2. Disagree ☐

3. Neutral ☐
4. Agree ☐

5. Strongly agree ☐
38. Deposit of the bank mainly affected by technology, Covid-19, current political situation,
branch location, GDP, interest rate and by current market inflation.
1. Strongly disagree ☐

2. Disagree ☐
3. Neutral ☐

4. Agree ☐
5. Strongly agree ☐

68
39. Amhara bank have highest deposits and depositors due to its mobilization technique during
its emerging stage.
1. Strongly disagree ☐
2. Disagree ☐

3. Neutral ☐

4. Agree ☐
5. Strongly agree ☐
40. In 2022 the bank deposited 237 million birr profit with its 11 day mobilization
1. Strongly disagree ☐
2. Disagree ☐

3. Neutral ☐
4. Agree ☐

5. Strongly agree ☐
41. The number of customers and their total deposits reached 550,000 and 8.7
Billion Birr respectively till 2023.
1. Strongly disagree ☐
2. Disagree ☐

3. Neutral ☐
4. Agree ☐
5. Strongly agree ☐

69
 Appendix 2

Work Schedule
December January February March April May June
Identify research Area
Formulate research
Questions
Formulate research strategy,
research design and
selection methods
Write research proposal
Proposal submission date
Literature review
Data collection
Data analysis
Write first draft
Write second draft
Write final draft
Printing and documentation
Research Due

Appendix 3
Budget Plan
Units Quantity Unit Amount(ETB)
Description
cost(ETB)
1 Stationaries
Paper Pack 4 700 2800
print and Photo copy Pcs 550 5 2750
Flash Disk (16 GB) pcs 1 450 450
Hard disk 1 TB Pcs 1 3500 3500
Laptop(Toshiba ) Pcs 1 36000 36000
Blank CDs Pcs 2 80 160
Transportation Pcs 1 10000 10000
2
Others service …. 12000 12000
3
67660
Total

70
 Appendix 4

Model Summaryb
Std. Change Statistics
Error of
R Adjuste the R F
Squa dR Estimat Square Chan Sig. F
Model R re Square e Change ge df1 df2 Change
1 a
.782 .612 .573 .56626 .612 15.7 11 110 <.001
63
a. Predictors: (Constant), BREXP, COV, GDP, PST, INF, NEMP, EXCR, TECH, INTR, CONV
b. Dependent Variable: DEPM

Appendix 5

Histogram

71
 Appendix 6

Normal Probability plot

Appendix 7

ANOVA

Model Summary
Change Statistics
Std. Error F
Adjusted of the R Square Chang Sig. F
Model R R Square R Square Estimate Change e df1 df2 Change
1 .782 .612 .573 .56626 .612 15.763 11 110 0.001
a

a. Predictors: (Constant), BREXP, COV, GDP, PST, INF, NEMP, EXCR, TECH, INTR, CONV
Dependent variable DEPM

72
 Appendix 8
Multicollinearity test of variance inflation factor (VIF)

Coefficients
Unstandardized Standardized Collinearity
Coefficients Coefficients Statistics
Model B Std. Error Beta t Sig. Tolerance VIF
1 (Constant) 1.662 .718 2.314 .023
EXCR .011 .051 .013 .210 .834 .841 1.19
0
TECH .430 .071 .475 6.091 .001 .557 1.79
6
CONV -.175 .117 -.103 -1.493 .138 .719 1.39
1
GDP .182 .098 .113 1.865 .065 .921 1.08
6
NEMP .069 .053 .087 1.294 .198 .753 1.32
8
INF -.125 .047 -.167 -2.678 .009 .868 1.15
3
INTR -.078 .040 -.119 -1.979 .050 .937 1.06
8
COV -.107 .052 -.122 -2.041 .044 .950 1.05
2
PST .325 .059 .387 5.487 .001 .681 1.46
8
BREXP .012 .069 .013 .174 .862 .652 1.53
3
a. Dependent Variable: DEPM
Notice: PST (Political stability), INF(Inflation), GDP(Growth domestic product), COV(Covid-19),
EXCHR(Exchange rate), TECH(Technology), INTR(Interest rate), NEMP( Number of employee),
BREXP(Branch expansion), CONV(Office convenience), DEPM(Deposit mobilization).

73