Determinants of Commercial Banks Deposit Mobilization

Abstract

Deposit mobilization is the major services of commercial banks. However, managing deposits is not possible without knowing and controlling the factors affecting it. The objective of this study was to identify the determinants of commercial banks deposit mobilization by considering six independent variables namely PLS , general inflation rate, the number of branches of banks, per capita income, deposit (interest) rate, exchange rate to USD. This study had shown that prize-linked savings , branch expansion, real per capita income and general inflation are the most significant factors of deposit volume. The deposit volumes of commercial banks are found to be impacted by the schemes of PLS. From the questionnaires a small number of employees agreed that customers come to banks solely due to the existence of PLS. This show there are also other reasons like the number of branches of banks (accessibility) and quality service by which customers stimulated to work with banks. Some employees specified that PLS influenced customers to minimize frequent withdrawal from their accounts. Employees believe prize-linked saving programs positively affect customers’ attitude towards saving which in turn affects the level of deposits mobilized by the bank.