Admas Univesity

School of Post- Graduate Studies

MBA program

Challenges of Deposit Mobilization Performance of Dashen Bank In

The Case of Addis Ababa

Submitted in Partial Fulfillment of the Requirements for the Degree of MBA

By: Abalech Alemayehu Ambessie

Advisor: Hailemichael

Addis Ababa

June, 2020
 Admas Univesity

School of Post- Graduate Studies

MBA program

Challenges of Deposit Mobilization Performance of Dashen Bank In

The Case of Addis Ababa

Submitted in Partial Fulfillment of the Requirements for the Degree of MBA

By: Abalech Alemayehu Ambessie

Advisor: Hailemichael

Addis Ababa

June, 2020
 Approval Sheet

Admas University Megenagna Campus Graduate Studies of Business

Administration Program

Challenges of Deposit Mobilization Performance of Dashen Bank In The Case of

Addis Ababa

By: Abalech Alemayehu Ambessie

Approved by Board of Examiners

Advisor Signature Date

_________________ ______________ _________________

Internal Examiner Signature Date

__________________ _______________ ______________

External Examiner Signature Date

________________ ________________ _______________

Table of Contents

Acronyms....................................................................................................................................................2
List of Tables...............................................................................................................................................6
CHAPTER ONE..........................................................................................................................................9
INTRODUCTION.........................................................................................Error! Bookmark not defined.
1.1. Background of the Study...........................................................................................................10
1.2. Statement of the Problem...........................................................................................................11
1.3. Research Questions....................................................................................................................12
1.4. Objective of the study................................................................................................................12
1.4.1. General Objective..............................................................................................................12
1.4.2. Specific Objectives............................................................................................................12
1.5. Significance of the study............................................................................................................13
1.6. Scope of the Study.....................................................................................................................13
1.7. Limitation of the study...............................................................................................................14
1.8. Operational Definition...............................................................................................................14
1.9. Organization of the study...........................................................................................................14
CHAPTER TWO.......................................................................................................................................15
THEORETICAL LITERATURE REVIEW..............................................................................................15
2.1.1. Introduction.................................................................................................................................15
2.1.2. The Role of financial sector for Economic Development of a country........................................15
2.1.3. Types of Deposits........................................................................................................................17
2.1.4. Importance of Deposit mobilization.............................................................................................18
2.2. The Effects of Poor Deposit Mobilization......................................................................................19
2.3. Factors affecting deposit Mobilization............................................................................................19
2.4. Empirical Literature........................................................................................................................25
CHAPTER THREE............................................................................................Error! Bookmark not defined.
RESEARCH METHODOLOGY................................................................................................................1
3.1. Research Design.............................................................................................................................27
3.2. Research Methodology and Approach............................................................................................29
3.3. Target Population...........................................................................................................................31
 3.4. Sampling Methods..........................................................................................................................31
3.5. Data Type and Source.....................................................................................................................32
3.6. Reliability, Validity and Ethical Considerations.............................................................................32
3.6.1. Reliability................................................................................................................................32
3.6.2. Validity....................................................................................................................................33
3.7. Data Analysis..................................................................................................................................34
3.8. Ethical Considerations....................................................................................................................34
CHAPTER FOUR.........................................................................................Error! Bookmark not defined.
ANALYSIS AND DISCUSSION.................................................................Error! Bookmark not defined.
4.1. Demographic Profile of Respondents.................................................Error! Bookmark not defined.
4.2. Challenges of Deposit Mobilization...................................................Error! Bookmark not defined.
4.3. Correlation Analysis...........................................................................Error! Bookmark not defined.
4.4. Regression Analysis...........................................................................Error! Bookmark not defined.
4.5. Discussion..........................................................................................Error! Bookmark not defined.
CHAPTER FIVE.......................................................................................................................................60
SUMMARY, CONCLUSION AND RECOMMENDATION...................................................................60
5.1. Summary........................................................................................................................................60
5.2. Conclusion..........................................................................................Error! Bookmark not defined.
5.3. Recommendations..............................................................................Error! Bookmark not defined.
References.................................................................................................................................................60
APPENDIX...................................................................................................Error! Bookmark not defined.
List of Tables

Table 3.1: Reliability Analysis of the Variables……………………………….23

Table 4.1: Demographic Profile of Respondents……………………………... 26

Table 4.2: Service Factor Analysis……………………………………………..27

Table 4.3: Information Technology Analysis…………………………………. 28

Table 4.4: Competition Analysis……………………………………………… 30

Table 4.5: Interest Rate Analysis……………………………………………… 31

Table 4.6: Branch Expansion Analysis…………………………………………32

Table 4.7: Macro-economic Analysis…………………………………………..34

Table 4.8: Summary for Challenges of Deposit Mobilization………………….35

Table 4.9: Correlation Analysis………………………………………………...36

Table 4.10: Regression Model Summary……………………………………… 38

Table 4.11: Regression Analysis of Deposit Factors…………………………...38

Table 4.12: Summary of the Overall Outcome of the Research Hypotheses …..40

List of Figure

6
 Acronyms

DB Dashen Bank

ATM Automated Teller Machine

POS Point of Sales

7
 Acknowledgement

First and foremost I would like to express my deepest gratitude to the almighty God for his
blessing and for making me accomplish this huge achievement.

Secondly, I am greatly indebted to my thesis advisor HaileMichael (PHD) for his unreserved
attention and support in advising me for the better improvement of this thesis.

Thirdly, I am very grateful for my family who has been supporting me in every step of my life. I
am very blessed to have you in my life. All my friends, you have played a great role in
accomplishing this thesis, I have no words to express my heartfelt thanks.

Finally and most importantly, I would like to acknowledge all the participants of this study who
gave their time and provided their valuable information. Moreover, my heartfelt thanks go to
everyone that has contributed to this thesis directly or indirectly.

THANK YOU ALL

8
 Abstract
The study aims to examine the Challenges of deposit mobilization performance of Dashen bank in
case of Addis Ababa city, by using ( service quality, Information Technology, branch expansion,
interest rate, competition and macroeconomic factors ) as a conceptual framework of deposit
mobilization performance. The study employed a deductive Quantitative, Descriptive and
explanatory research in the form of cross sectional design. Analysis was conducted through
Descriptive statistics using frequency, percentage, mean &SD and inferential statistics by using
Pearson correlation matrix and multiple regression model to investigate the causal relationships
between the Challenges of deposit mobilization performance by means of SPSS Version 23.0. Data
were collected from the sample of 80 branch supervisors in Addis Ababa City using convenience
sampling technique through questionnaire. The study concludes that all the Challenges of deposit
mobilization performance have statistically a positive significance effect on deposit mobilization
performance of Dashen bank and the dependent variable is explained by all the independent
variables by 83.7%.. Practical Implications for Dashen bank executives are discussed. Executives
should strategically plan to improve on their competition status of thee bank , giving preference and
priority in improving to the more influencing challenges of deposit mobilization performance and
that can help for building strong bank .

Keywords;, deposit mobilization performance, service quality, Information Technology, branch

expansion, interest rate, competition and macroeconomic factors , Dashen bank.

9
 Chapter One

Introduction
1.1. Background of the Study
Banks play a key role in improving economic efficiency by channeling funds from
resource surplus units to those with better productive investment opportunities. They also play
role in trade and payment system by significantly reducing transaction costs and increasing
convenience (NCA, 2006). In less monetized countries, like Ethiopia, whilst financial sector is
dominated by banking industry, effective and efficient functioning of the latter has significant
role in accelerating economic growth. To enhance the role of banks in an economy, competition
is an important driving force; without competition, it is improbable to bring about efficiency and
foster financial sector development. In other words, insufficient banking services may result in
substantial social losses on account of higher price, higher transaction cost, lower credit
supply, lack of innovation and poor service quality. (Zerayehu, 2013)

Banks use deposits are a major source of funding. Deposit mobilization is among of the corner
stone of the banking business. Banks and financial institutions are striving to mobilize
deposits as a fundamental objective and basis of its operations. Without enough deposits
banks and financial institutions might fail on achieving their business targets. Deposit
mobilization in Ethiopia are increasingly becoming agenda in banking industry, the agenda is
worth noting at times when the number of banks and financial institutions are increasing both
chasing for deposit for their survival. Deposit for banks is savings from the public, people
deposit funds for emergence cases, source of capital investments and to balance future
consumptions. (TAGEL TEGENU 2015)

10
Mobilizing deposits is one of the essential issues in developing countries as domestic funds
provide cheap and reliable source of funds for development, which is of great value to these
countries, especially when the economy has difficulty raising capital from international
donors, financiers and markets. Yet, in many developing countries, there is a considerable
amount of savings that are not intermediated through the formal sector particularly there exist
significant savings potential in the rural (and/or semi-urban) sector of many developing
countries. (Giragn Garo 2015)

Therefore, banks will be better off if they are mobilizing more deposits. However, as (N.
Desinga, 1975) indicates deposit mobilization is a very difficult task. The cost of intermediation
for mobilizing deposits is also very important part of overall intermediation cost of the banking
system as (E.A. Shaw 1995) indicates. In spite of the difficulties, deposits play an important role
not only to the banking sector but also the overall economy.

Since commercial banks depend on depositor’s money as a source of funds, they introduce
alternative banking services to attract more customers. To site some; customer attraction through
various deposits accounts, application of core banking system, facilitation of alternative payment
systems like ATM and POS machines, Internet and Mobile Banking, Agent banking and on line
payment systems. (Fekadu Yoseph 2019)

1.2. Statement of the Problem

According to the NBE Annual Report 2018/9, there are eighteen commercial banks operating in
the Ethiopia competing to strengthen their deposit base which is critical for business continuity
and sustainable growth of the country. The Ethiopian Gross Domestic Saving as a percentage of
GDP is 24.4% in 2018 according to World Bank report. Banks as financial intermediaries are
expected to provide a venue for people to save incomes not expended on consumption. It is from
the savings they accumulate that they are expected to extend credit facilities to entrepreneurs and
other industrialists. This function enables banks mobilize deposits which otherwise would have
remained idle and unproductive in the hands of the surplus economic unit. The fund mobilized
is then made available to the deficit unit for economically and socially desirable purposes.
(Samuel,2015)

The financial performance of most of the commercial banks in one way or the other is related to
the deposit they manage to mobilize. Deposits are limits to the working capital of the bank and

11
the higher the deposit, the higher will be the funds at the disposal of a bank to lend and earn
profits (N. Desinga, 1975). Therefore, to maximize its profit the bank should increase its
deposit. (Mahendra, 2005) had also mentioned deposits as a foundation up on which banks thrive
and grow and deposit is unique items on a bank’s balance sheet that distinguish them from other
type of business organizations.

Though the demand for loans and advances is increasing corresponding to the growth of
investment in the country, banks in Ethiopia are having difficulty providing adequate quantity of
funds for those investments. To fill the gap in credit demands, banks are offering expensive rates
for deposits, undertaking costly marketing campaigns such as offering lottery prizes such as
residential buildings and other capital assets, trying to increase branch network, investing in the
state of the art technology platforms and enhancing service qualities including door to door
services etc. Albeit those efforts, they still suffer from liquidity problems and the competition for
resource has become stiff.

Therefore, the purpose of this study is, to identify the challenges of deposit mobilization and
recommend ways to mitigate the challenges and therefore enhance performance of deposit
mobilization with particular emphasis to Dashen Bank S.c.

1.3. Research Questions

This study deals with the following research questions:

 Which significant variables contribute for the increase of the Dashen bank’s deposit
performance?
 What is the effect of service quality, Information Technology, branch expansion, interest
rate, competition and macroeconomic factors total deposit
 What are the factors that affected the deposit mobilization of the bank?

1.4. Objective of the study

1.4.1. General Objective

The major objective of the research is to identify challenges which affect deposit mobilization
performance of Dashen bank on the case of Addis Ababa

12
1.4.2 Specific Objectives

 To identify significant variables contribute for the increase of the Dashen bank’s
deposit performance
 To examine the effect of service quality, Information Technology, branch expansion,
interest rate, competition and macroeconomic factors on total deposit performance of
Dashen Bank
 To explain Dashen bank to which key challenges of deposit performance factors should
focus on improving

1.5. Significance of the study

Banks plays an important role in economic development by mobilizing deposit. Recently one of
the major challenges of all banks is attracting deposit/funds. In order to solve the problem, the
banks focus on developing various alternative strategies to attract sufficient deposits in order to
provide loans to their customers and hence make sustainable profits.

Therefore, it is important that banks focus on effective deposit mobilization activities. This
research study would help the researcher to gain skill, knowledge and experience on the topic.
The banks management uses the research to identify the challenges of deposit mobilization and
recommend strategies by which the bank may enhance its deposit bases.

In addition to that the study would benefit to other practitioner as the documented study in this
area.

1.6. Scope of the Study

This study is focused on the challenges of deposit mobilization for private commercial banks.
There are around 18 private commercial banks in Ethiopia, but, this study is conducted using
Dashen Bank S.C. as a base. Dashen bank has 420 branches both in Addis Ababa and
outside Addis Ababa as at June 30,2019 (audited annual report of Dashen bank, 2018/2019.the
study is limited above Grade II branches of Addis Ababa. Regarding subject delimitation, this
study is limited to respondents from Branch managers, Senior Customer Service Officers and
front line staffs of Addis Ababa and the total deposit performance trend of Dashen Bank.

13
 1.7. Limitation of the study
As there are only few studies on the challenges of deposit mobilization in Ethiopia the study uses
the literatures of other countries. Besides, due to resource constraints the research is limited to
one private Banks Dashen Bank S.Co.

1.8. Operational Definition

Deposit: A sum of money paid in to a bank for saving until future use.

Deposit Mobilization Performance: All activities of the bank related to acquiring

of customers to collect deposit.

Dashen Bank: A private bank licensed to provide banking services in Ethiopia

since 1994.

1.9. Organization of the study

The organization of this study has five chapters.

Chapter One: This chapter is introductory chapter and is focused on background of the study,
statement of the Problem, objective of the study, research questions and significance of the
study, scope of the Study and limitation of the study and operational definition.
Chapter two: is literature review focused on the review of related literature. Theoretical and
empirical literature related to challenges of deposit mobilization performance is presented
Chapter Three: is research methodology that focuses on, research design, sampling design,
source of data, and type of data, data collection instrument, method of data analysis, research
validity and reliability, ethical consideration.
Chapter Four: Analysis and Interpretation which include demographic analysis, hypothesis
testing, and Results of individual hypotheses tests was discussed to provide meaningful insights
and test the research hypotheses.

Chapter Five: Summary of Findings, conclusions, recommendations, and both practical and
theoretical findings and recommendations have been suggested and insight for future research
direction were provided

14
 Chapter Two

Theoretical Literature Review

2.1.1. Introduction
This chapter emphasized on theoretical and empirical aspects. On this chapter the researchers has
reviewed related literature regarding the major role of financial sector including elaboration of
deposits and source of deposits. The researcher also discussed about deposit mobilization and its
challenges mentioned by other researchers.

2.1.2. The Role of financial sector for Economic Development of a country

There are many factors that can be treated as economic growth determinants. One of these
factors is the financial system. The institutional framework of the financial system as well as its
performance is no doubt important determinants of output growth and development of the
country. (Mariusz et al, 2016) Financial sector attracts deposits and provide loans from surplus to
deficit side. The overall impact of financial sector in economy is to ensure sustainable growth. It
helps to mobilize savings and direct funds into production sectors. As results, it facilitates
efficient allocation of resources and increases overall productivity. It also facilitates delivery of
products and services, management of risks, easier payments. In addition, it ensures the
availability of different instruments, such as insurance packages, and information that facilitates
trade activities. Financial development promotes growth via increasing capital accumulation
efficiency together and improving marginal productivity consequential from it. (Journal of
Economics, 2018)

According to (Madura, 2011) Financial sector mainly constitute financial markets and financial
institutions. A financial market is a market in which financial assets (securities) such as stocks

15
and bonds can be purchased or sold. Financial markets, thus, facilitate the flow of funds and
thereby allow financing and investing by households, firms and government agencies. Examples
include commodity markets, money markets and capital markets. Financial institutions
(intermediaries) are institutions that provide financial services for their customers. They play an
important role in the economy because they provide liquidity services, promote risk sharing and
also solve information problems thereby allowing small savers and borrowers to benefit from the
existence of financial markets.

Financial institutions can be divided into two Depository institutions (e.g. commercial banks,
savings institutions, credit unions) that obtain funds mainly through deposits from the public; and
Non-depository institutions (e.g. finance companies, mutual funds, securities firms, insurance
companies, pension funds) that finance their investment activities from the sale of securities or
insurance

Historically banks have been viewed as playing role in financial markets for two reasons. The
first one is that they perform a critical role in facilitating payments and the other one is by
developing expertise as well as diversifying across many borrowers, banks reduce the cost of
supplying credit. Thus in their role as lenders, banks are often not merely buying someone’s
debt, rather they are providing significant financial services associated with extending credit to
their customers directly. The main providers of additional financing are domestic commercial
banks (Andinet, 2016).

The main function of a bank is “accepting deposits and granting loans’ (Kazi, 2012).
Commercial banks support economic wellbeing through making initial investment (initial
capital) followed by mobilizing surplus funds from the public at large to deploy same to other
economic sectors that are in need of financing. Financing mobilized deposits to economic sectors
in return bring income to banks The purpose of bank deposit in the eyes of depositors is one or
more of future use, or safety of their money from theft, or to earn interest on idle fund or to be
protected from unexpected future shock. Commercial banks on the other hand, attract more
customers and mobilize deposits through providing alternative means such as attractive interest
rates on deposits, providing service quality, designing lucrative market strategy, crating product
differentiation, adopt appropriate technology, and open branches to different locations for
proximity to customers. Deposits for commercial banks are a source of their income in the form
of loan to customers.(Fikadu, 2019)
16
2.1.3The basic functions of Banks

According to (Deborah, 2014) There are three essential bank functions satisfy the legal definition
of banking these are deposit, payment and credit functions. As the main focusing of this paper is
on deposit function of banks, it shows as follows:

Deposit function is one of the important functions of the Bank as a firm is to accept deposits
from the public for the purpose of lending. It is clear depositors are the major stakeholder of the
Banking system. It is an input into the production of loans. So, this function, hundreds of
billions of dollars are deposited in and withdrawn from the commercial banks each year. The
depositors believe that the bank is responsible for safeguarding their deposits at all times while
making them available for withdrawal at some future date. If a bank robber or embezzlement
should take place, the depositor is protected against loss. Banks always conscious of this need for
safety protect and use depositors’ funds prudently for loans and investments. A bank should
never be unable to honor a legitimate request for payment against an account.

2.1.4. Types of Deposits

Deposit account is a current account, savings account, or other type of bank account, at a
banking institution that allows money to be deposited and withdrawn by the account holder.
These transactions are recorded on the bank's books, and the resulting balance is recorded as a
liability for the bank, and represents the amount owed by the bank to the customer.

According to (Islam & Ghosh, 2014) the Major types of deposits are:-

Checking accounts: - A deposit account held at a bank or other financial institution, for the
purpose of securely and quickly providing frequent access to funds on demand, through a variety
of different Channels. Because money is available on demand these accounts are also referred to
as demand accounts or demand deposit accounts.

Savings accounts: - Accounts maintained by retail banks that pay interest but cannot be used
directly as money (for example, by writing a cheque). Although not as convenient to use as
checking accounts, these accounts let customers keep liquid assets while still earning a monetary
return.

17
Term deposit: - A money deposit at a banking institution that cannot be withdrawn for a present
fixed 'term' or period of time. When the term is over it can be withdrawn or it can be rolled over
for another term. The longer the term, the better yield the money.

2.1.5. Importance of Deposit mobilization

I. A source of investment

According to (Ongore & Kusa, 2013), intermediation function of banks plays vital roles in the
efficient allocation of resources of countries by mobilizing resources for productive activities.
They transfer funds from those who don't have productive use of it to those with productive
venture. (Nwanko, Ewuim, & Asoya, 2013) States that, savings are resources which one decides
to put aside for investment purposes and not for luxury. What people save, avoiding consuming
all their income, is called "personal savings". These savings can remain on the bank accounts for
future use or be actively invested in houses, real estate, bonds, shares and other financial
instruments.

II. Low cost

According (Shettar & Sheshgiri, 2014) the success of the banking greatly lies on the deposit
mobilization. Performances of the bank depend on deposits, as the deposits are normally
considered as a cost effective source of working fund.

III. A source of profit

(Tuyishime, Memba, & Mbera, 2015) affirmed that, Deposits are an indispensable tool
commercial banks use to enhance its profitability through advancing deposits mobilized to its
customers in form of loans which make in return interest to commercial banks.

IV. Economic Growth and Development

According to (Ongore & Kusa, 2013), In addition to resource allocation good bank performance
rewards the shareholders with sufficient return for their investment. When there is return there
shall be an investment which, in turn, brings about economic growth. On the other hand, poor
banking performance has a negative repercussion on the economic growth and development.
Poor performance can lead to runs, failures and crises. Banking crisis could entail financial crisis
which in turn brings the economic meltdown.

18
2.2. The Effects of Poor Deposit Mobilization
According to (Khalayi, Ondiek, & Musiega, 2014) there are a number of effects that are brought
about as a result of the poor deposit mobilization. These Include, Inability to disburse loans to
qualifying members on demand, Inability to meet operation costs, Inability to service debts,
unstable board of directors due to frequent reshuffle as disgruntled members vote officials out,
quitting of members to competitors, Falsification of financial reports. These can cause the voting
out of elected officials on accusations of fraud, financial mismanagement practices. In addition,
dissatisfied members can quit in large numbers to join alternative and emerging financial
institutions for fear of losing their savings if the situation deteriorates.

2.3. Factors affecting deposit Mobilization

We may classify factors influencing deposit mobilization in to inside and outside of an
organization. Others classify same into internal and external factors. For the time being the
study focuses on internal Factors. Internal factors are generally divided into service factors,
financial, human and communicative factors organizational dependence and fidelity factors and
consultative factors. (Aftabi.H.2013).

a. Service factors
Quality services are services that can fulfill the needs and demands of customers. In banks and
financial institutions on a variety of factors affect the quality of banking services,
including interest rates, regulatory and complaints systems, accurate information to
customers quickly and accurately service, politeness and courtesy in dealing with
employees, customers, and privacy being confidants to the customer information, all employees
are attracting more funds.

Employees are the most important asset of any organization. The staffs are the bridge between
the organization and the customer. Banks and financial institutions are also required funds with
the tools that most employees are getting from customers. There is a bank's survival depends on
the customer's bank. If customers do not exist, no bank will be. But what is important is the
impact of these characteristics on bank customers increasingly effective in attracting customers
to the Bank. Individual characteristics such as appearance, good fit and tidy; According to
customer reviews. Integrity, honesty, confidentiality, respect and humility are to be considered
employees. In a summary of the most influential factors that were mentioned, including human
resources, diversity of services, quality of service, satisfaction of customers, employees,
19
subsidiaries and indoor seating equipment finance branches, Branches success to attract
financing and bank financing is very important and effective role, so that each bank to
give important factors In mobilization of resources the more successful the bank will be less due
to the above factors (Delaware, 1387: 35)

b. Information Technology
In the banking sector innovations such as electronic money transfer terminals, Automatic
Payment, Virtual Banking, Internet Banking moment, a great development in this sector have
created and improve performance, efficiency, speed, communication, and reduce operating
costs for banks, so banks to gain competitive advantage in the field of financial markets to raise
new funds should make use of electronic banking and related technologies.

New technology is an essential feature of international banking systems, and yet there is a range
of social, political and economic factors that can constrain the uptake and use of
advanced technology in developing countries like Ethiopia.

According to (Alipour, 2014) in recent years, Advances in information technology in the banking
industry have radically changed the banking practices and customers can do their banking
activities as 24 hours. Internet banking allows customers through bank website have
internet banking transactions as extensive and faster and less cost than traditional
branches without restrictions of time and space. The speed of development of informatics
industry causing major changes in the form of money and resources transaction systems in the
areas of banking and new concept of banking has emerged as electronic banking. According to
(Zillur Rahman, 2015), Information technology (IT) and the internet have emerged as a dynamic
medium for channeling transactions between customers and firms in virtual market places. Due
to this, bank customers access their bank accounts, transfer funds, review transaction details, pay
their bills online, and conduct transactions electronically virtually anytime and anywhere.
Additionally, there are several other advantages of this, such as cost savings for banks and
convenience for customers by 24/7 access to their account. In many cases however, both
service employees and customers were averse to adopting new technology.

As (Al-Ajam& Nor, 2015), stated that Internet banking provides many benefits not only
for banks, but also for customers. Customers can conduct financial activities from anywhere at
any time. Ease of transactions and avoidance of queues and restrictive branch operating hours

20
and internet banking is cheaper than traditional banking. At the same time, banks could
provide lower cost financial services, and enhance customer satisfaction.

According to (Shereif Mahdi & Dawson, 2007) Worldwide, banks continue to invest heavily in
IT, for example in telecommunications networks and SWIFT or Bank‘s Automatic
Clearing House (ACH). They also link overseas branches with their headquarters in order to
enable banks to communicate business effectively across the globe regardless of time and
distance.

According to (Pramod, Li, &Gao, 2012), ITcreates new opportunities for banks in the way they
organize product development, delivery and marketing. Although IT has been used to improve
regular banking activities such as speed transactions and database management, the threat of IT
being used for illegal activities especially money laundering becomes both a practical issue and a
research focus.

According to (Nelson, 1999) Technological innovations reduced both geographic and economic
barriers to competition, and created an added dimension of uncertainty with in the
industry Automated Teller Machines (ATMs) significantly reduced geographic barriers and
helped banks better serve their customers.

According to (Malhotra & Singh, 2007) Bank deposits (Deposits) may influence the probability
to adopt Internet banking. Banks that are less reliant on traditional sources funding may pursue a
more aggressive overall business strategy, including the adoption of Internet banking. However,
a positive relation between the deposits base and the decision to adopt electronic
banking. A bank can generate Internet transactions if it has sizeable customer base. Banks
oriented on client base (i.e. deposits of the bank) respond more actively to adoption of
electronic banking and adopt new products quicker than the banks with a small number of
deposits ceteris paribus.

Banks with relatively high expenses for premises and fixed assets (Expenses) may view adoption
of Internet banking as a way to reduce expenditures devoted to maintaining a branch network.
The adoption of Internet banking should appear more attractive to the banks experiencing higher
fixed expenses. Thus, the expected sign for Expenses is positive.

21
 c. Competition among Banks
Banks play a key role in improving economic efficiency by channeling funds from
resource surplus unit to those with better productive investment opportunities. According to
(Zewdu, 2014) the entry of the private sector in the financial sector has created better
opportunities for enhanced access to financial services in the country directly through their
operations and indirectly through the spillover effect on public financial institutions. The
emergence of private banks with the spirit of competition and emphasis on profitability has led to
major shift in the focus of public banks towards a more profit oriented approach. The
Government has restructured these banks granting full operational autonomy, recapitalizing them
18 and cleaning their balance sheets from bad debts accumulated in the previous socialist
directed credit delivery system.

According To (Eshetu, Tesome, & Abebe, 2013), to enhance the role of banks in an economy,
competition is an important driving force; without competition, it is improbable to bring about
efficiency and foster financial sector development. In other words, insufficient competition may
result in substantial social losses on account of higher price, higher transaction cost, lower credit
supply, lack of innovation and poor service quality. Although competition has a positive effect
on efficiency and economic growth, there are certain characteristics Intensive competition may
lead to excessive risk taking by banks, which would result in deterioration of the quality
of banks‘ lending portfolio and balance sheets. If banks suffer deterioration in their balance
sheets and so have a substantial contraction in their capital, they will have fewer
resources to lend, hence a decline in investment spending, and slower economic activity.
If the deterioration in bank balance sheets is severe enough, banks will start to fail, and fear can
spread from one bank to another. Depositors, fearing for the safety of their deposits and not
knowing the quality of banks‘ loan portfolios, withdraw their deposits to the point that
multiple bank failures occur, whose ultimate consequence would be severe contraction in
economic activity. This suggests the need for some degree of market power in achieving stability
and efficient allocation of resources in banking industry. According to (Rakesh, Arun ,&Varun,
2015) Competition is particularly important in banking sector as it invests the savings of a
society. Banking competition is expected to remove cost inefficiencies and thus provide
welfare gains and help in economic growth. Regulators are particularly interested in
banking competition and central banks take measures to alter competitive levels for the

22
greater good of the economy. Heightened competition should encourage banks to reduce
operating costs and hence eliminate inefficiencies in the banking industry.

d. Interest rate Paid to depositor

According to (Tareq, 2015) Interest rate on deposit has a profound impact on the
savings mobilization. People deposit with the banks with the expectation of getting some
return. Low interest rates discourage savings. In this model average interest rate has been taken.
Interest rate for both urban and rural has been assumed to be the same. 19 According to (Khalai,
Ondiek, &Musiega, 2014) Low rates of interest on deposits have always been an obstacle to
savings mobilization. The classical theory of interest otherwise called the demand and
supply theory of interest, maintains that the rate of interest is determined by the demand
for and the supply of funds by businessmen and households respectively. The supply of funds is
governed by the time preference and the demand for capital by the expected productivity of
capital. The common peculiarity of monetary theories of interest is that the interest is a
monetary phenomenon. And monetary theorists believed that interest rate varies inversely with
supply of money and positively with the purchasing power (value) of money. The defenders of
the monetary theories of interest argued that when supply of money increases, purchasing power
(value) of money falls and, hence the rate of interest also come down.

(Mashamba, Magweva, & Gumbo, 2014) Stated that to encourage private savings, the real
interest rates should be positive. Furthermore, innovative saving schemes and investment bonds
should be introduced to mobilize resources. These savings are ultimately channelled to the
productive sectors of the economy and this promotes economic growth. In light of this countries
with repressed financial system find it hard to raise deposits as interest rates on deposits
are controlled by the government, hence the need for financial liberalization. They
showed that financial liberalization led to higher interest rates which equated the demand
and supply of savings. The authors expressed their view that higher interest rates lead to
increased savings and financial intermediation in improving the efficiency of savings and
investment. The higher real interest rates increase the extent of financial intermediation
which in turn raises the rate of economic growth in developing countries. The growth of
any economy depends on capital accumulation, and this requires investment and an equal
amount of saving to match it.

23
 e. Branch expansion (Accessibility)
Place of banks and financial institutions are an important incentive in attracting customers. So
banks to establish branches require careful scientific evaluation and feasibility of a bank's
branches are located in distance of time and place, establishment of bank branches in key areas
such as industrial estates, residential and commercial buildings and the establishment of
branches in nearby public car parks are among the parameters that influence Depository bank
customers. It concerns the new banking executives and senior managers of the bank. Banks and
financial resources attract more customers to the appropriate workplace environment that
includes indicators of physical, psychological and social, as well (Delaware, 1387: 34).

The increase in the number of bank branches will have an effect on getting many customers
particularly those in far remote areas who are unbanked society. According to the article on
NBE’s magazine (Birritu No.113, February 2012), Ethiopia has low geographic and
demographic penetration of bank branches. Although the expansion of banks in terms of
branching since 1994 is significant, most rural people have to travel very long distance to access
bank branches. Many of the bank branches in Ethiopia are concentrated in the capital
city. The number of bank branches went up from 215 in 1995 to 970 as at June 30, 2011 and as
at December 31, 2011, grew to 1129. As a result the ratio of bank branch to total population
stood at 82,474. This compares with 63000 and 26000 for Kenya and Egypt, respectively. Out of
the total of branches, 36% are located in Addis Ababa, making mainstream branches hardly
accessible to the rural area.

f. Macro-economic factors
Macroeconomic conditions like unemployment, inflation, uneven income distribution etc…
affect banks’ performance in a number of ways. Firstly, there will be a higher demand for bank
credit in times of economic boom than in times of recession.the real economic growth of the
country makes commercial banks to be more profitable. A high aggregate growth rate may
strengthen the debt servicing capacity of domestic borrowers, and therefore, contribute to less
credit risk. (Tilahun, 2011)Alternatively, adverse macroeconomic conditions like Covid-19 hurt
banks by increasing the amount of non-performing loans. Thus, it is expected that an
improvement in economic growth enhance banks’ performance.

24
2.4. Empirical Literature
As per the researcher understanding, there has been little literature done in Ethiopian context.
Therefore, the study tries its best to review the available amount of literature as much as
possible.

According to Helani Udara et al 2018 in Sri Lanka, There is a significant and positive
relationship between deposit mobilization and deposit interest rate, security, branch expansion,
services, technology and awareness. And deposit mobilization is the key focus of many banks.
However, finding deposit is becoming a challenging role for the banks in Sri Lanka compatible
with the growing need of loans. Owing to the growing need for finances from new and existing
businesses of the country coupled the banks own desire to make profits from those finances,
deposit mobilization is becoming the critical success factor for banks. The fast-increasing
number of branches, the service modernization activities and the growing competition among
banks all justify this fact.

Narayana et al 2015, States that Deposit mobilization is an integral part of banking activity.
Mobilization of savings through intensive deposit collection has been regarded as the major task
of banking in India. Acceptance of deposits is the primary function of commercial banks. As
such, deposit mobilization is one of the basic innovations in current Indian banking activity

Ketema 2017, recommended that Government should decrease the broad Money Supply to the
economy since it had a negative significant effect on deposit mobilization. Since the depositor
confidence will increase if the commercial banks are profitable and have adequate asset return so
commercial banks should sustain their profitability to increase their amount of deposit.
Commercial Banks should also decrease their outstanding loan and advance to reduce their credit
risk and decreases their liquidity by mobilizing more fixed time deposit instead of individual and
demand deposit since credit risk had a positive and significant effect on bank deposit.

The number of bank branches, deposit interest rate, net interest margin and GDP were
significantly and positively correlated with the explained variable. Lagged value of bank deposit
was significantly and negatively correlated with total deposit. However, liquid asset to deposit
ratio and inflation rate were insignificantly negatively correlated with bank deposit. Finally the
study had recommended what should be done to mobilize more deposits. (Andinet, 2016)

25
 According to the study done by Kibebe, 2016 recommended that, Government should increase
investment so as to promote economic growth to mobilize deposits since there exists a positive
relationship between Deposit and Investment. And private banks ought to increase number of
branches to mobilize more resources.

Samuel 2019 states that, private banks are operating in a dynamic and highly competitive
environment and there is high possibility of catch-up and by-pass among these banks. Also,
private commercial banks should prepare for the inevitable stiff competition that will arise from
local and with the eminent future entrant of foreign banks. By doing so, they can solve the
paradox of the liquidity problem and the unbanked resources.

2.5 Conceptual frame wok of the study

Fig 2.1 Conceptual frame wok

Source: Researcher Own Computation

Serice Quality

Deposit mobilization
Performance of Dashen bank

Branch Expansion

Interest rate

Macroeconomic
factos Information Technology

Competition

26
 Chapter Three

Research Methodology

This chapter presented a detailed discussion of the research methodology employed in the study.
Hence, topics related to research design, data type and source, target population, sampling
technique and sample size, data collection procedure and method of data analysis are covered.
Explanation about the reliability and validity of the study is also included in this chapter.

3.1. Research Design

A research design is a plan or process for the research (Kotler et al., 2009). It provides a structure
or framework in solving the purpose and objectives of a study (Yin, 2006), which is based on the
research problem (Kotler et al., 2009). Research designs consist of different methods and
procedure when conducting and analyzing the data. It is important to choose the right research
design because it will influence the research activities (Bryman & Bell, 2005). There are three
different types of research design available for researchers, 1) Exploratory research 2)
Descriptive research and 3) Causal research.

27
Exploratory research observes what is already exists (Phopalia, 2010) and is used when the
researcher lacks knowledge within a specific area, which makes it possible to collect a large
amount of data regarding the research problem (Bryman & Bell, 2005). The purpose of this kind
of research is to create a new hypothesis (Arbnor & Bjerke, 1994) however, it is a time
consuming design to be conducted successfully (Bryman & Bell, 2005).

Causal research design answers why questions (Blumberg et al., 2008) and examines whether
one variable causes or determines the value of another variable (Bryman & Bell, 2005; Eliasson,
2010). The goal of this kind of research is to develop a theory. When selecting which research
design for a study, factors needs to be considers such as the research design must relate to the
objective and purpose of the study. Also what sources available, extent of previous research and
the amount of control the researcher (Bryman & Bell, 2005).

Descriptive research design aims at answering questions of who, what, when, where and how
(Yin, 2006). The objective is to describe something (Kotler et al., 2009). This kind of approach is
most appropriate when the research problem is clearly defined and the researcher has knowledge
within the area. The objective of this kind of study is to develop patterns stated in hypotheses. A
useful design when time and means are limited (Yin, 2006). Descriptive research design also
consists of two different approaches, longitudinal or cross-sectional studies.

Longitudinal studies is used when the sample is fixed and when the aim is to measure the
elements in different points in time to see if any changes appear (Bryman & Bell, 2005;
Malhotra, 2010). Cross-sectional research measures one element, one time (Bryman & Bell,
2005). Multiple cross- sectional design use two or more samples at a specific point in time, while
a single- cross sectional design only use one sample at a specific point in time (Malhotra, 2010).

Since this thesis is based on previous studies regarding the challenges of deposit mobilization a
descriptive research design was used. It was also used because of the suitability for quantitative
studies. There was also limited time for conducting this study, which prohibits longitudinal
research. Longitudinal research could be used but that kind of study would not contribute with
different information from one month to another. Therefore it was chosen to a cross-sectional
design. Since one sample is investigated, one point in time a single cross-sectional design is
used.

28
In general, with reference to the above theoretical argument, this study employed both
descriptive and explanatory research design. Because the study expected to describe about
demographic information of the respondents, On the other hand researcher tried to seek the
correlation between the challenges of deposit mobilization of the subject matter under study and
the objective of the study was testing the research hypothesis.

Taking this into account, this research type would be a descriptive (describing and summarizing
the characteristics of respondents and to interpret findings of the questioner) and explanatory
research type (testing the causal relationships that exist between the challenges of deposit
mobilization (service quality, technology, interest rate, branch expansion, competition and
macro-economic factors) and deposit mobilization performance. Basically it is to investigate
factors that challenge deposit mobilization of Dashen bank an explanatory research design in
nature applied in the study.

3.2. Research Approach

In order to collect relevant empirical data for academic research, an appropriate approaches
needs to be considered (Bryman & Bell, 2005; Blumberg et al., 2008). First off, an inductive or
deductive research approach needs to be decided. Thereafter it must be decided to go along with
qualitative or quantitative research, or a mixture of both.

3.2.1 Deductive versus Inductive Research

A deductive method is based on already existing theories or models, which is tested in reality
(Hyde, 2000). An inductive research on the other hand, is based on collected data that later on
establish new theories (Bryman & Bell, 2005). Therefore, this approach is not suitable for this
thesis. For a deductive research, the existing theories and models is the foundation for further
investigation and from that the researcher can state hypotheses and collect empirical data. After
collecting data, the result will reveal information that will decide if the hypotheses will be
rejected or not. Based on the result, the existing theory can be revised or not (Arbnor & Bjerke,
1994; Hyde, 2000; Bryman & Bell, 2005). Inductive research on the other hand is based on
empirical data from observations to be able to establish a new theory from that. The researcher
should be able to generalize the collected data and make inferences based on the information
(Bryman & Bell, 2005)

29
After a literature review was performed a research gap was established. To be able to fulfill the
research gap the stated hypotheses were made more general to fit the purpose of the study. The
main article used as a foundation was the above studies made this research deductive since the
purpose is to use existing theories and investigate a research gap.

3.2.2 Quantitative versus Qualitative Research

There are two different ways of collecting empirical data, either through quantitative or
qualitative research. The most common way of collecting data is through one of the methods, but
could also be used as a complement to each other. The main difference between the approaches
is the perception of how to investigate theory and reality; there are also differences in view of
knowledge and point of view (Bryman & Bell, 2005). A qualitative study is investigating few
respondents, with many different variables. Therefore, this kind of research is more focused on
finding a more complex and in-depth picture of the investigation than what a quantitative
research is. The complex picture is regarding finding pattern in how individuals interpret and
perceive their social reality (Bryman & Bell, 2005). This is also about the underlying reason
behind a person’s perception, beliefs and attitudes. This is more of an interpreting study of the
result (Hyde, 2000).

Quantitative research is about collecting a large amount of data from many respondents, with
few variables. This kind of research emphasize on examination of existing models or theories.
Therefore, it is important that a quantitative research is reliability, replicable and valid (Bryman
& Bell, 2005). The quantitative research approach makes it possible to transform the result into
statistics, which is analyzed (Patel & Davidson, 2008). It is important because of the fact that the
research should generate inferences and conclusions (Hyde, 2000; Bryman & Bell, 2005).

This thesis is mainly based on previous studies. The aim of this study is also to gather data about
the general public opinion and thoughts within the study area about the subject. Meaning that as
many responses as possible are preferable and this is most likely to be achieved by distributing
questionnaires. This makes a quantitative research approach most appropriate for this study.
When an existing theory is used, a deductive approach is used and therefore it has now been
clarified that this research is based on a deductive and quantitative approach. In addition to this,
since the researcher used systematic collection and measurement of data as well as application of
statistical tools to analyze and obtain the findings so as to address the raised objectives and to

30
test the formulated hypotheses, it is a quantitative research approach and in terms of the method
of data collection, the research approach of this study would have been typically a survey that
employ a questionnaire to get the views of the respondents that was formed on the basis of the
primary’ data needed for the study.

3.3. Target Population

The research assumes clerical employees of the 413 branches, responsible for deposit
mobilization activity for Dashen Bank S.C, as the total population that is managed and
supervised under 12 districts located throughout the country (Annual Report of Dashen Bank
2018/19). As reaching these all employees is neither economical nor time taking, the researcher
further reduces the target population to 2,250 clerical employees serving only in Addis Ababa
branches. The Addis Ababa branches are only taken as they constitute the major deposit source
of most commercial banks in Ethiopia and 54% of branches of commercial banks in Ethiopia
reside in Addis Ababa (NBE Annual Report 2018/19).

3.4. Sampling Methods

The research aims to identify the challenges of deposit mobilization in the case of Dashen bank.
Accordingly, this study employed purposive sampling technique to select the required sample of
80 clerical employees (of only 16 branches in Addis Ababa branches-branches from each of four
Districts) of Dashen Bank SC due to shortage of time and funds available for the study. As
noted by (Kothari, 2004) good sample design must be viable in the context of time and funds
available for the research study. This sampling method is a form of non-probability sampling
in which decision concerning the individual source of data to be included in the sample is
taken by the researcher, based upon a variety of criteria. The major limitation of purposive
sampling is making description rather than generalization (Dawson 2002).

Sample Size

The sample size of supervisor employees of 40 branches will be considered as optimum by the
researcher. The researcher considers two supervisor’s employees of each of the 40 Addis Ababa
branches which are 80 questionnaires would be sufficient to make sound conclusion about the
population as far as it is fair representation of employees from all Districts in Addis Ababa city
branches. To make the information more accurate, the research will use non- probabilistic

31
sampling technique i.e. clerical staffs as they directly engage in extensive deposit generating
activities of the Bank.

3.5. Data Type and Source

Both primary and secondary sources of data employed in the study. Primary data was collected
by the administered questionnaires that will be distributed to the respondents while the
Secondary data was collected from publications including books, researches, journals and
various materials that have relevance to this study.

Data Collection Techniques

Since the questionnaire is one of the most important research instruments for collecting primary
data, Structured close ended questionnaires were distributed to the respondents. The choice of
using pre-coded close ended questionnaire was based on Fisher’s view on structured
questionnaire. According to Fisher (2007) if the researcher wants to quantify the research
material, then it is best to use a structured approach. He further noted that in order to compare the
views and experiences of a great many people it is easier if pre-coded approach is used.

The questionnaire designed in a way that was clear, brief and understandable to the respondents
as well as covers the relevant aspects of the model used. According to Fisher (2007), it is
recommended to keep the questionnaire as short as possible and give it a logical and sequential
structure so that the respondent can easily see what the questionnaire is about and can follow its
themes as they go through them. Hence, the questionnaire was composed of two parts. The first
part of the questionnaire consisted of general information of respondents'. While the second part
concentrated on questions relating to variables that measured the factors that are considered to
make up deposit mobilization. The most important part of the questionnaire which was part two
was composed of six variables that reflected the challenges of deposit mobilization in the case of
Dashen Bank S.c

3.6. Reliability, Validity and Ethical Considerations

3.6.1. Reliability
Reliability of data is related to its consistency and it refers to the extent to which the data is the
same irrespective of their source. That is, the data for the study is specifically taken from the
annual reports of the banks and were found in agreement with some of the data found on

32
publications of National Bank of Ethiopia and therefore were reliable. (Giragn Garo,2015). For
this study Cronbach’s alpha was used to assess the internal consistency of variables in the
research instrument. Cronbach’s alpha is a coefficient of reliability used to measure the internal
consistency of the scale; it represented as a number between 0 and 1. According to Zikmund et
al., (2010) scales with coefficient alpha between 0.6 and 0.7 indicate fair reliability. Thus, for
this study, a Cronbach’s alpha score of .70 or higher is considered adequate to determine
reliability.

The result of the Cronbach’s alpha for this study’s instrument was found to be in the acceptance
range i.e. >0.7. Thus showing as indication of acceptability of the scale for further analysis since
all the six items of deposit mobilization challenges (service quality, Information Technology,
branch expansion, interest rate competition and macroeconomic among banks were above 0.7.
The Cronbach’s alpha coefficient of the challenges of deposit mobilization is shown in table 3.1
below.

Table 3.1: Reliability Analysis of the Variables

Variables Cronbach’s alpha coefficient Number of items

service quality .709 6

Information Technology .726 4

branch expansion .722 5

interest rate .709 5

competition among banks .714 5

Macro-economic factors .704 4

Source: Survey data (2020)

3.6.2. Validity
Validity, often called construct validity, refers to the extent to which a measure adequately
represents the underlying construct that it is supposed to measure (Anol, 2012). In relation to the
study two validity measurements will be used. The first one is Content validity which is the
extent to which a measuring instrument provides adequate coverage of the topic under study. The
33
second one is Statistical conclusion validity which examines the extent to which conclusions
derived using a statistical procedure is valid. The right statistical tools will be used in order to
test the hypothesis and also to conclude the study.

3.7. Data Analysis

Before the analysis of the primary data that was collected through close ended questionnaires,
analysis of the variables’ reliability and validity of the constructs was verified. To ensure
reliability of this research, the questionnaire was designed to measure the concepts in the
theoretical model in a consistent manner. This implies that the research study can be conducted
by other researchers to arrive at the same findings. The validity of the research is concerned with
the measurement of the data collection process implemented regarding the quality of the study. It
outlines the evaluation of the quality of both the primary and secondary data used in the research.
To ensure that validity of this study, each question in the questionnaire was designed to represent
the concepts that were used in the conceptual framework of the study.

The data collected using the questionnaire was coded and processed. The findings of the study
were then analyzed by using the Statistical Package for Social Sciences (SPSS version 23)
program. This was done using descriptive data analysis tools to measure frequencies,
percentages, means, standard deviation and graphic representation that helped present the data as
accurately as possible. In addition, Pearson correlation coefficient was used to show the
interdependence between the independent and dependent variables. Multi-collinearity between
variables was tested. The hypothesis presented was also tested using regression analysis.

3.8. Ethical Considerations

The study considers ethical issues when collecting questionnaires from staffs, their permission
will be asked to fill the questionnaires and also permission will be asked from respective branch
managers for conducting the research. Name of the respondents will not require when filling the
questionnaire in order to increase the confidentiality of the information they give. And the
questionnaires describe that the purpose of research is for academic purpose and finally the
respondents will get included based on their willingness.

34
 Chapter Four

Data Presentation and Analysis of Results

The primary aim of this study was to find out the challenges of deposit mobilization of Dashen
bank a case study on Addis Ababa. In this research, Statistical Package for social Science
programs (SPSS) 23.0 was used for data analysis. The method used in the data analysis includes
descriptive analysis, correlation analysis and multiple regression analysis. Descriptive analysis
was used to summarize the general profile of the respondents while correlation and multiple
regression analysis were applied to determine whether the proposed independent variables
(service quality, Information Technology, branch expansion, interest rate competition and
macroeconomic) have effect on the dependent variable (deposit mobilization performance).

4.1 Descriptive Analysis

The study has six independent variables: service quality, Information Technology, branch
expansion, interest rate, competition and macroeconomic factors; deposit mobilization
performance as a dependent variable.

The questionnaire for all independent and dependent variables were developed in five scales
ranging from one (1) strongly disagree to five (5) strongly agree, using likert scale. Where 1
represent strongly disagree, 2 disagree, 3 neutral, 4 agree and 5 strongly agree. All questionnaires
were filled conveniently. The descriptive statistics were analyzed through frequency, percentage,
mean and standard deviation as follows.

4.1.1 Demographic Profile of the respondents

The first part of the questionnaire consists of the demographic characteristics of respondents.
This part of the questionnaire requested a limited amount of information related to personal and
demographic status of the respondents. Accordingly, the following variables about the
35
respondents were summarized and described in the subsequent table. These variables include;
gender and age of the respondents.

From the total respondents, the male respondents constituted the highest percentage (57.5%)
while their female counterparts constituted (42.5%) of the total respondents. This implies that the
majority Branch supervisor in Addis Ababa are male.

As per table 4.1, 41.3% of the respondents were from the age group of 26-35 constituting the
largest percentage. This group was being closely followed up by the age group of 36-50 years
that had 33.8% representation from the total number of respondents. The other age groups 22-25
and above 50 years old only accounted for 13.8% and 11.3% respectively. This shows that the
majority of soft drink consumers are in the young age.

Table 4.1 the demographic profile of the respondents below

Frequency Percent

Male 46 57.5

Gender female 34 42.5

Total 80 100

22-25 11 13.8

Age 26-35 33 41.3

36-50 27 33.8

above 50 9 11.3

Total 80 100.0

Source: survey (SPSS) result, 2020

4.1.2 Descriptive analysis for the challenges deposit mobilization performance

As Challenges of deposit mobilization performance, the below tables present the items from
service quality, Information Technology, branch expansion, interest rate, competition and

36
macroeconomic factors: All parts of the determinants were processed analyzed and interpreted in
order to achieve the desired result as follows.

Accordingly, in this study the researcher applies mean and standard deviation as the best
measure of descriptive analysis based on the mean range developed by Al-sayaad et al. (2006).
Therefore, the researcher used the mean range value as a rule of thumb to describe the study
variables.

Table 4.2 Mean range table (Rule of thumb)

No Mean Range Response option

1 [1.00 -1.80] Strongly Disagree

2 [1.90 -2.60] Disagree

3 [2.70 -3.40] Neutral

4 [3.50 -4.20] Agree

5 [4.30 -5.00] Strongly Agree

Source: (Al- sayaad et al. 2006)

In order to analyze the respondents deposit mobilization of Dashen bank, a total of 29 questions
were grouped into the six challenges of deposit mobilization which are: service quality,
Information Technology, branch expansion, interest rate, competition and macroeconomic
factors. In order to compare the respondents view descriptive statistics of mean and standard
deviation is used. The mean indicates to what extent the sample group averagely agrees or
disagrees with the different statements. The higher the mean the more the respondents agree with
the statement while the lower the mean the more the respondents disagree with the statement. In
addition, standard deviation shows the variability of an observed response.

Below the results are discussed on by one.

37
4.1.2.1 Service quality

Table 4.3 service quality analysis

Variable Mean Standard

deviation

Among the dimensions of service quality i.e. reliability, 3.64 .830

responsiveness, assurance, empathy, and tangibles, the short
fall on RESPONSIVENESS has significant negative impact
on the resource mobilization

I believe if Dashen Bank uses all the service quality 3.83 .868
dimensions, it can increases customer attraction and deposit
mobilization

The amount of deposits mobilized as a result of application 3.64 .830

of service quality meets the bank’s target

Dashen Bank do not facilitate & train to all concerned 3.50 1.067
employees about the advantage of service quality and
closely follows its implementation

I believe that Dashen bank’s service quality is sufficient 3.70 1.216

enough for its customers

In general, application of service quality increases deposit 3.64 .767

mobilization performance of the bank

Service quality 3.658 0.929

Source: survey (SPSS) result, 2020

As per table 4.3, the list of items comprising of Service quality, the mean score for the item “I
believe if Dashen Bank uses all the service quality dimensions, it can increases customer
attraction and deposit mobilization” Scored the highest with a mean score of 3.83 While the item
" Dashen Bank do not facilitate & train to all concerned employees about the advantage of
38
service quality and closely follows its implementation " scored the lowest with a mean score of
3.5. The overall mean score for the Service quality dimension is 3.658 which indicate that the
supervisors have a fair attitude about the service quality of Dashen bank offering to its
customers.

4.1.2.2 Branch expansion

Table 4.4 branch expansion Analysis

Variables Mean Std. Devia

Dashen Bank recently works hard on branch expansion 3.81 .765

and it contributed significant deposits mobilization

Although branch expansion has good contribution to 3.79 .937

deposit mobilization, the practice of new branches
somewhat erode customer base as well as deposit
mobilization performance of old branches like grade II,
III, & IV

Branch expansion support existing branches resource 3.38 1.118

mobilization effort through facilitating high branch
network that enable customers’ access their account from
elsewhere using the core banking technology

Branch opening at rural areas benefit the bank in terms 3.50 1.067
of increasing market share as well as deposit
mobilization

In general, branch expansions greatly contribute the 3.00 .811

deposit mobilization performance of Dashen Bank

branch expansion 3.496 .9396

Source: survey (SPSS) result, 2020

Table 4.4 shows that " Dashen Bank recently works hard on branch expansion and it contributed
significant deposits mobilization " scored the highest among the list of items related to branch
39
expansion with a mean score of 3.81 while the respondents gave the least score of 3.00to the
item " In general, branch expansions greatly contribute the deposit mobilization performance of
Dashen Bank”. This clearly explains that most of the supervisors don’t believe branch expansion
has a contribution for deposit mobilization of Dashen bank.

4.1.2.3 Interest rate analysis

Table 4.5 Interest rate Analysis

Variables Mean Std. devia

Provision of high interest rate on deposit might attract more 2.85 .887
deposits but not advisable as it affect banks profitability

In order to attract high deposits from customers the interest rate 3.34 1.147
provided by Dashen Bank should be comparable to inflation rate
of the country.

Without provision of attractive deposits interest rate, only good 2.90 .949
customer service attracts more customers & deposits

Dashen Bank has no alternative as well as attractive deposits 2.94 .801

interest rates when compared with all commercial banks in
Ethiopia

Dashen Bank can mobilized high deposit if it provide attractive 3.59 .852
interest rate

Interest rate 3.124 4.636

Source: survey (SPSS) result, 2020

Table 4.5 shows that " Dashen Bank can mobilized high deposit if it provide attractive interest
rate " scored the highest among the list of items related to Interest rate with a mean score of 3.59
while the respondents gave the least score of 2.85to the item " Provision of high interest rate on
deposit might attract more deposits but not advisable as it affect banks profitability”. Having a

40
lower mean value indicates that most of Dashen bank Addis Ababa’s supervisor’s think that
customers are less responsive for the amount of interest rate that Dashen bank provide for them.

4.1.2.4 Information Technology analysis

Table 4.5: Information Technology analysis

Variables Mean Std.deviation

AMOLE (Mobile and internet banking) is more 4.41 .706

convenient to customers bill payments, purchase of
commodities from supermarket, online book purchase,
online music purchase, money transfer service
like( account to account, account to wallet, wallet to
account, and wallet to wallet) also useful for air time
purchase etc . This technology contributes to the banks
customer attraction and deposit mobilization performance.

Among the different technologies Dashen Bank is using, 3.69 .789

excellent core banking system which enable the banks
customers use their account either from any branch of
Addis Ababa or outside Addis Ababa supports to attract
more customer and high deposits.

Although Dashen Bank introduced latest Omni-channel 3.68 .792

(AMOLE) technology which could attract new customer
and retain the existing ones, the bank couldn’t make use
of its technology advantage due to inappropriate
advertisement and weak initiation of most of its staff.

Dashen bank is pioneer in introducing ATM and POS 3.64 .830

machines. It took the first mover advantage in attracting
more customers from the market also in mobilizing good
size of hard currency than other commercial banks

Information Technology 3.855 0.779

41
Source: survey (SPSS) result, 2020

Table 4.5 shows that the respondents scored the highest for the item " AMOLE (Mobile and
internet banking) is more convenient to customers bill payments, purchase of commodities from
supermarket, online book purchase, online music purchase, money transfer service like( account
to account, account to wallet, wallet to account, and wallet to wallet) also useful for air time
purchase etc . This technology contributes to the banks customer attraction and deposit
mobilization performance” while the lowest went to the item which states” Dashen bank is
pioneer in introducing ATM and POS machines. It took the first mover advantage in attracting
more customers from the market also in mobilizing good size of hard currency than other
commercial banks". This implies that most of the respondents have a positive attitude towards
the type of technology that Dashen bank is operating.

4.1.2.5 Competition analysis

Table 4.6 competition Analysis

Variables Mean Std.devia

There are potential banks who mobilize more deposits 3.13 .786
than your branch

Dashen bank can be regarded as the most innovative 3.75 1.175

than among its competitors

Dashen bank has a distinctive competence over other 3.59 8.52

private banks

Dashen bank has been innovating different kinds of 3.35 .748

service

existing and new private banks can be taken as the 3.79 1.198
competitors of dashen bank

Competition 3.522 2.4854

42
Source: survey (SPSS) result, 2020

Table 4.6 shows that " existing and new private banks can be taken as the competitors of dashen
bank " scored the highest among the list of items related to competition with a mean score of
3.79 while the respondents gave the least score of 3.13 to the item " There are potential banks
who mobilize more deposits than your branch”. Having a lower mean value indicates that most
the supervisor’s think that their bank is mobilizing sufficient amount of deposit than competitors.

4.1.2.6 Macro-economic factor analysis

Table 4.7: Macro-economic factor Analysis

Variables Mean Std.devia

Tax payment seasons affect deposit mobilization ( fiscal 2.48 .826

Policy)
The economic slowdown of the country due to COVID 3.57 1.067
19 has hugely impacted deposit mobilization( Business
cycle)
Per capita Income of the citizen is not increasing so that 2.81 .858
saving in banks decrease ( income distribution)
Inflation weakness the deposit mobilization activity 3.35 1.115

Macro-economic factors 3.0525 .9665

Source: survey (SPSS) result, 2020

Table 4.7 above shows that “Tax payment seasons affect deposit mobilization” scored the lowest
among the list of items related to Macro-economic factor with a mean score of 2.48. While the
respondents gave the least score of 3.57 to the item “The economic slowdown of the country due
to COVID 19 has hugely impacted deposit mobilization “. This can be understood that the latest
pandemic COVID 19 is affecting the deposit mobilization of Dashen bank.

43
Table 4.8 summarizes the results of all the six challenges of deposit mobilization
performance

Table 4.8: Summary of the six challenges of deposit mobilization performance

Dimensions Mean Std. dev

Service quality 3.658 0.929

branch expansion 3.496 0.9396

Interest rate 3.124 0.4636

Information Technology 3.855 0.779

Competition 3.522 0.2485

Macro-economic factors 3.0525 .9665

Source: survey (SPSS) result, 2020

4.2 Correlation Analysis

The Correlation Analysis is the statistical tool used to study the closeness of the relationship
between two or more variables. The correlation analysis is the most widely used method. The
variables are said to be correlated when the movement of one variable is accompanied by the
movement of another variable. In the correlation analysis, there are two types of variables-
Dependent and Independent. The purpose of such analysis is to find out if any change in the
independent variable results in the change in the dependent variable or not. Once the closeness of
variables is determined, we can estimate the value of unknown variable provided the value of
another variable is given. This can be done using the regression analysis.

44
Positive and Negative Correlation: Whether the correlation between the variables is positive or
negative depends on its direction of change. i.e. The value of r ranges between any real number
in correlation are from -1 to 1. The correlation is positive if both the variables move in the same
direction, i.e. Values of r close to 1 implies that there is a positive linear relationship between the
data. When one independent variable increases the other dependent variable on average also
increases and if one independent variable decreases the other dependent variable also decreases.
The correlation is said to be negative when both the variables move in the opposite direction, i.e.
Values of r close to -1 implies that there is a negative linear relationship between the data. When
one variable increases the other decreases and vice versa. But if the Values of r close to 0 imply
that there is little to no linear relationship between the data. Hence, in this study the Correlation
is measured between five independent variables and one dependent variable.

Pearson correlation coefficient

Pearson correlation coefficient (r) is a measure of the strength of the association between the two
variables. Theoretically, there could be a perfect positive correlation between variables which is
represented by 1.0(plus1), or a perfect negative correlation which would -1.0(minus 1). The
correlation coefficient is a measure of strength of the relationship (among different variables)
that lies between -1 and 1 (Wegner, 2012). A correlation test therefore shows either a negative or
positive relationship, which can either be weak or strong , depending on the range of value of the
coefficient:0.3-weak,0.5-moderate, 0.7-strong (cooper,2010).

Table 4.9: Rule of thumb for correlation coefficient.

Range of coefficient Description of strength Value

± 0.01 to ± 0.29 Weak

± 0.30 to ± 0.49 Moderate

± 0.50 to ± 1 Strong

Source: survey (SPSS) result, 2020

Therefore, the researcher was conducted correlation analysis to ascertain if any relationships
existed between the measured variables (service quality, Information Technology, branch
45
 expansion, interest rate, competition and macroeconomic factors), the extent of such
relationships. These values were then used to evaluate the existence of any relationships between
the measured variables. Table 4.10 below presents the correlation of all variables.

Table 4.10 below presents the correlation of all variables.

**. Correlation is significant at the 0.01 level (2-tailed); Sample size =80.

Servic branch Interes Informatio Competitio Macro- Deposit

e expansio t rate n n economi mobilization
quality n Technology c factors performanc
e

Service 1
quality

branch .390** 1
expansion

Interest rate .343** .154 1

Information .382** .030 .384** 1

Technology

Competition .599** .156 .170 .100 1

Macro- .494** .625** .388** .075 .343** 1

economic
factors

Deposit .778** .523** .504** .439** .634** .668** 1

mobilization
performanc
e

Source: survey (SPSS) result, 2020

46
As per table 4.10 above, the coefficients show that the six challenges of deposit mobilization
performance were all positively related with Deposit mobilization performance within
themselves the range of 0.030 to 0.778, some were significant at p<0.01 level but the overall
correlation is significant p<0.01.see Appendix

One independent variable Information Technology show a relative small positive relation
(p=.439**) while the other five independent variables service quality, branch expansion, interest
rate, competition and macroeconomic factors has the highest correlation result of .778**
.523** .504** .439** .634** and .668**respectively with deposit mobilization
performance of Dashen bank.

Table 4.10 also shows the correlation of the independent variables within themselves. It can be
noted that all variables are positively correlated with each other where the strongest correlation
goes to the one between Macro-economic factors and branch expansion (p=625**) while the
correlation is very small between branch expansion and Information Technology (p= 0.030).

4.3 Test of Normality and multi-collnearity Assumption

4.3.1 Normal probability plot Test

According to Field,A.(2009) the regression analysis to establish significance of the relation

should be accepted. Multiple linear regression models assume that there is a linear relationship
between the independent variables and the dependent variable. It refers to the degree to which
the change in the independent variable is related to the change in the dependent variable i.e.
Deposit mobilization performance and the independent variables. I.e. X1(service quality), X2
(branch expansion), X3 (competition),X4 (Information Technology), X5 (competition) and X6
(macroeconomic factors) is normal plots of the regression residuals through SPSS software were
used.

As presented in the scatter diagram in figure 4.1 below, the line of best of fit indicates an
estimate line that is increasing positively upwards. This shows that there is a positive linear
relationship between independent variables, the dependent variable and residuals of the model
are approximately linearly distributed. Because a straight line seems to fit the data reasonably
well.

Fig 4.1 Normal probability plot Test

47
Source: survey (SPSS) result, 2020

4.3.2 Multi collnearity Test Assumption

In regression, multi collnearity occurs when independent variables in the regression model are
more highly correlated with each other than dependent variable when the independent variables
the regression model is highly correlated with each other; they are basically measuring the same
thing. In other words, when two variables are highly correlated, they both communicate
essentially similar information. One way to assess multi collinearity is to examine correlations
among the independent variables. If a correlation matrix demonstrates correlation of 0.90 or
higher among the independent variables, they may be a problem with variables. If a correlation
matrix demonstrates correlation of 0.90 or higher among the independent variables, they may be
a problem with multi collinearity. Hair et al, (2006) argued that correlation coefficient below
0.90 may not cause serious multi collinearity problem, cited by Muhammed (2012). Multi-
collinearity can also be detected using tolerance value and variance inflator factor (VIF) value.
An insignificant tolerance value point to the variable under discussion is almost a perfect liner

48
combination of the independent variables already in the equation and that it should be dropped
out from to the equation.

Multi collinearity does not exist among all the independent variables provided that the tolerance
value of all the independent variables was greater than 0.1 and the VIF values of all the
independent variables are also less than 10. As you can see from table 4.11 below all the
independent variables are greater than 0.1 and the VIF value of all the independent variables are
also less than 10.

Table 4.11 Multi collinearity

Model Collinearity Statistics

Tolerance VIF

Service quality .425 2.353

branch expansion .563 1.775

Interest rate .708 1.412

Information Technology .718 1.393

Competition .598 1.674

Macro-economic factors .461 2.168

Dependent Variable: Deposit mobilization performance

Source: survey (SPSS) result, 2020

As it can be seen from the above table the tolerance value of all independent variables is above
0.1 and also their VIF value is below 10 which indicate that there is small degree of multi-
collinearity among variables.

4.4 Regression Analysis

As shown in the table 4.12, above the tolerance values of all the independent variables were
greater than 0.1 and the VIF values of all the independent variables were less than 10. This
indicates that model I was free from multi-collinearity. Hence, there was no problem of multi-

49
collinearity between the independent variables in the model. Therefore regression analysis was
conducted.

This regression analysis was conducted to know by how much the independent variable (service
quality, Information Technology, branch expansion, interest rate, competition and
macroeconomic factors) explains the dependent variable that is Deposit mobilization
performance. The results of the regression analysis are the following.

4.4.1Coefficient of Multiple Determinations (R2)

Coefficient of determination measures how well the regression model explains about the
variation of dependent variable (Ghozali,2013). The closer R2 value to 1, the better the
independent variables can predict the dependent variables.

The coefficient of multiple determinations R2 is the percent of the total variation explained by
the regression look at the model summary table(4.12),the six independent variables service
quality, Information Technology, branch expansion, interest rate, competition and
macroeconomic factors that constitute the of coefficient of determination R2 is 0. .837,which
implies that there is quite significant explanatory power and also 83.7% variation on dependent
variable is caused by independent variables and the remaining 16.3% is determined by other
unknown variables.

Table 4.12 Model Summary

Model R R-square Adjusted R Square Std.Error of the

Estimate
1 .915a .837 .823 .1935594

Source: survey (SPSS) result, 2020

From the model summary in table 4.12, the value (R=.915 a) is the multiple correlation coefficient
between independent variables: service quality, Information Technology, branch expansion,
interest rate, competition and macroeconomic factors and the dependent variable namely deposit
mobilization performance. Table 4, 12 shows how well the regression model explains about the
variation of dependent variables. The higher the value of R2, the better the independent variables
in explaining the dependent variable. Based on table, it can be seen that the R2 is. 837. This
indicate that 83.7% of the deposit mobilization performance variance in can be explained by the
50
variance of the challenges of deposit mobilization (service quality, Information Technology,
branch expansion, interest rate, competition and macroeconomic factors) taking in to account the
sample size and independent variables.

Besides, this also indicates that there are 16.3% other factors (exogenous variables) that can’t be
explained in this research but have significant effect towards deposit mobilization performance
of dashen bank. Positivity and significance of all values shows the model summary is also
significant and therefore gives logical support to this model.

The value of adjusted R square i.e. .823 give some idea of how well the model generalizes and
ideally one would like its value to be the same or very close to the value of R square. The
standard error of the estimate is a measure of the variability of the multiple correlations.
Therefore, as shown in the model summary for the regression analysis table above the standard
error estimate of this model summary is 0.1935594. This implies that the variability of the
multiple correlations is much as this numerical. Positive and significance of all values shows
that, the model summary is also significant and therefore gives logical support to this study
model. The model is statistically significant or the p-value for the model is less than (0.01).This
means the fitness of the model in deposit mobilization performance is influenced by the
independent variables considered.

4.4.2Analysis of Variance (ANOVA)

The analysis of variance tells us whether the model overall results in a significantly good degree
of prediction of the outcome variable. Performing ANOVA is to see whether any difference
exists between the groups on variables. Today researchers are using ANOVA in many ways. The
usage of ANOVA totally depends on the research design. Research can use t-test to compare the
means of two samples but when there are more than two samples to be compared then ANOVA
is the best method to be used.

ANOVA compares the mean difference between groups that have been split in more than two
factors. The main objective of more than one way ANOVA is to find out if there is any
interaction between the more than one way independent variables on the dependent variables.

The regression Sum of squares is the difference between Total Sum of Squares and Residual sum
of squares. Each sum squares (i.e., Regression, residual and Total under the source column) has a

51
corresponding degrees of freedom (df) associated with it. The residual sum of squares (residual
for left over)is sometimes known in the literatures as Error Sum of Squares is that part still
cannot be accounted for after the regression model is fitted. The mean squares are the sum of
squares divided by the corresponding degrees of freedom.

F-ratio is a measure of how much the model has improved the prediction of the dependent
variable) compared to the level of in accuracy of the model (Field, 2009). F-ratio is calculated as
mean square regression divided by mean square residual. In general in the table below the
ANOVA table shows a strong relationship between the dependent and independent variables of
the study with F-statistic or F- ratio for the overall analysis. The significant level in ANOVA
table shows that the combination of the variables significantly predicts the dependent variable.

Table 4. 13: analysis of variance (ANOVA) of Regression Analysis

Model Sum of Mean - F

squaes square
df Sig.

1 Regression 14.030 6 2.338 62.415 .000b

Residual 2.735 73 .037

Total 16.765 79

a. Dependent Variable: deposit mobilization performance

b. Predictors: (constant):service quality, Information Technology, branch expansion, interest
rate, competition and macroeconomic factors

Source: survey (SPSS) result, 2020

In the above ANOVA table, the column labeled “sum of squares” describes the variability in the
deposit mobilization performance value of the regression. Analysis of variance (ANOVA) of
regression analysis between independent variables considered and dependent variable of deposit
mobilization performance were examined.

The analysis of variance tells us whether the model overall results in a significantly good degree
of prediction of the outcome variable.
52
The regression Sum of squares is the difference between Total Sum of Squares and Residual
Sum squares (TSS-RSS==16.765-2.735).Here, each sum squares (i.e., Regression, residual and
Total under the source column) has a corresponding degrees of freedom (df) associated with it.
Total degree of freedom is n-1 (df= 80-1=292), one less than the number of observations. The
regression degree of freedom for the above table is six (6), which is the number of independent
variables (service quality, Information Technology, branch expansion, interest rate, competition
and macroeconomic factors). The residual sum of squares (residual for left over) is sometimes
known in the literatures as Error Sum of Squares is that part still cannot be accounted for after
the regression model is fitted. It has 73 degrees of freedom (=79-6) for this research paper. The
mean squares are the sum of squares divided by the corresponding degrees of freedom. The
regression model has a mean square of 2.338 (14.030/5) and the residuals mean square is .037
(=2.735/73)

F-ratio is a measure of how much the model has improved the prediction of the dependent
variable (deposit mobilization performance) compared to the level of in accuracy of the model
(Field, 2009). F-ratio which is calculated as mean square regression divided by mean square
residual. The value of F-statistics is 62.415 (2.338/.037). In general the above ANOVA table
shows a strong relationship between the dependent and independent variables of the study with
F-statistic or F- ratio for the overall analysis, and is worth-mentioning that the F- value is highly
significant (as p=.000<.01). The significant level in ANOVA table shows that the combination of
the variables significantly predicts the dependent variable.

4.4.3 Test of Significance

Coefficient table shows which variables are individually significant predictors of the dependent
variable standardized Beta coefficient show the contribution of an individual variables. The Beta
Weight is the average amount the dependent variable increases when the independent variable
increase by one standard deviation (all other independent variables are being held constant).

The beta value tells what degree each independent variable affects the outcome if the effects of
all other predictors are held constant. Each of the beta values has an associated standard error
indicating to what extent these values would vary across different samples, and these standard
errors are used to determine whether or not beta value differ significantly from zero.

53
The t-test associated with b-value is significance (p or sig value is less than 0.05) then the
predictor is making significant contribution to the model. The smaller the value of the sign
means the larger the value of t which indicates the greater the contribution of that predictor.

Standard deviation or standard error under this study is taken as a measure of the similarity of
beta-values across the sampled customers. If the standard error is very small, then it means that
most samples are likely to have a beta-value similar to the one in our sample because of there is
little variation across sampled customers. When the standard error is small even a small
deviation from zero can reflect a meaningful difference because beta is representative of the
majority of possible samples

Table 4.14 coefficient analysis

Source: survey (SPSS) result, 2020

Beta coefficient

Beta coefficients are determined in both un-standardize and standardize coefficient. Standardized
coefficients means the values for each of the different variables have been converted to the same
scales that you can compare them. To compare the different variables, it is important that to look
at the standardize coefficient.

Un-Standardized Beta coefficient

54
Un-standardized coefficients beta (β1 up to β6) customers overall are the coefficients of the
estimated regression model. Hence, the equation of deposit mobilization performance can be
written including term (ε), in this form.

Y=βo+β1X1+β2X2+β3X3+β4X4 +β5X5 +β6X6+ε

Where, Y= Dependent Variable (deposit mobilization performance).

β1= un- standardized regression coefficient of service quality

β2= un- standardized regression coefficient of branch expansion

β3= un- standardized regression coefficient of interest rate

β4= un- standardized regression coefficient of Information Technology

β5= un- standardized regression coefficient of Competition

β6= un- standardized regression coefficient of macroeconomic factors

ε=error term

The regression equation for the study was as follows:

Y= -. 813+ .238X1 +.184X2+.139X3 + .199X4 + .270 X5 +.209X6+.246

Table 4.14, indicated detail model parameters (the beta value) and the significance of values “a”
was the Y intercept and this value for the constant. So, from the above table, a is -.813 and this
can be interpreted as meaning that if all the factors that can enhance the deposit mobilization of
dashen bank were to be zero, the model predicts that Dashen bank had - 81.3% deposit
mobilization, means the bank is very dependent on this factors and has to work on capitalizing
them. The value of b1 represents 0.238, the gradient of the regression line. Even if this value is
the slope of the regression line, it is more use full to think of this value as representing the
change in the outcome associated with a unit change in the predictor. Therefore, keeping other
all, variables constant, if the predictor variable is increased by one unit (if service quality is
increased by 1) the model predicts 24.8% extra deposit mobilization . The same is true forb2, b3,
b4, b5 and b6. If branch expansion increases by 1) the model predicts 18.4% increase for deposit
mobilization performance. For which an increase in one unit of interest rate, Information

55
Technology, Competition and macroeconomic factors can result in an increase in deposit
mobilization performance of Dashen bank by 13.9%, 19.9%, 27% and 20.9% respectively.

The model of deposit mobilization performance can be written in the following form by
incorporating error term (ε)

Deposit mobilization performance =-. 813+.238 service quality +.184branch expansion +.139
interest rate +.199 Information Technology +.270 Competition +.209 macroeconomic
factors+.246 error term

4.4.4 Hypothesis Testing

Hypothesis testing is the method of weather claims or hypothesis regarding a population are
likely to be true. The goal of hypothesis testing is to determine the likelihood that a population
parameter, such as the mean, is to be true. Here there are two hypotheses: null (Ho) and
alternative (Ha). The null is a statement about a population parameter, such as the population
mean, that is assumed to be true. The null hypothesis is a starting point .The researcher tests
whether the value stated in the null hypothesis is likely to be true. The only reason of testing the
null hypothesis is because the researcher thinks that it is wrong. An alternative hypothesis (Ha) is
a statement that directly contradicts a null hypothesis by stating that the actual value of a
population parameter is less than, greater than, or not equal to the value stated in the null
hypothesis.

The significance (sig.) values express a value to accept or to reject the (null) hypothesis. It is also
called the p-value. The p-value is the probability that the correlation is one just by chance.
Therefore, the smaller the p-value, the better will be. The general rule is to accept p<0.05 and to
reject Ho >0.05(pallant.2016).

In this part of the study, proof of the null hypothesis is made based on Table 4.14 below for the
variables either to accept or reject. it is possible to find out if the independent variables are
significant predictors of the dependent variables. For these service quality, Information
Technology, branch expansion, interest rate, competition and macroeconomic factors test of
relationships and that way our hypothesis, the multiple linear regression analysis was applied for
this study.

56
Table 4.15: Hypothesis Testing

Hypothesis Result Reason

Ho: service quality is not a challenge for deposit Ho: Rejected

mobilization of Dashen bank
β= 0.001, p<0.05
H1: service quality is a challenge for deposit mobilization
H1: Accepted
of Dashen bank

Ho: Branch expansion is not a challenge for deposit Ho: Rejected

mobilization of Dashen bank
β =0.002, p<0.05
H1: Branch expansion is a challenge for deposit
H1: Accepted
mobilization of Dashen bank

Ho: Interest rate is not a challenge for deposit Ho: Rejected

mobilization of Dashen bank
β = 0.007, p<0.05
H1: Interest rate is a challenge for deposit mobilization of
H1: Accepted
Dashen bank

Ho: Information Technology is not a challenge for Ho: Rejected

deposit mobilization of Dashen bank
β = 0.000, p<0.05
H1: Information Technology is a challenge for deposit
H1: Accepted
mobilization of Dashen bank

Ho: competition is not a challenge for deposit Ho: Rejected

mobilization of Dashen bank
β = 0.000, p<0.05
H1:competition is a challenge for deposit mobilization of
H1: Accepted
Dashen bank

Ho: Macroeconomic factors are not a challenge for Ho: Rejected β = 0.001, p<0.05
deposit mobilization of Dashen bank

57
H1: Macroeconomic factors are a challenge for deposit
mobilization of Dashen bank
H1: Accepted

Source: survey result, 2020

4.5 Results &Discussion

The aim of this study was to investigate challenges of deposit mobilization of Dashen bank a
case of Addis Ababa city. This finding was a synthesized discussion which links the findings of
the empirical research as presented in literature part with the objectives of the study.

The personal characteristics of the selected respondents were presented in Table 4.1 that there is
a slight difference among the two genders of the respondents, which were male constitute 57.5%
while their female counterparts constituted 42.5%. This implies that Dashen bank has almost
equal distribution of Gender supervisors in Addis Ababa.

As per table 4.1, 41.3% of the respondents were from the age group of 26-35 constituting the
largest percentage. This group was being closely followed up by the age group of 36-50 years
that had 33.8% representation from the total number of respondents. The other age groups 22-25
and above 50 years old only accounted for 13.8% and 11.3% respectively. This shows that the
majority of soft drink consumers are in the young age.

According to the descriptive mean result the highest mean value was scored by information
technology with a mean value of 3.855, Service quality3.658, Competition 3.522, branch
expansion3.496, Interest rate 3.124and Macro-economic factors3.0525respectively, This
revealed that the response given to the challenges of deposit mobilization performance were
agreed and the respondents hold similar opinion in relation to these variable items.

The finding from the correlation result indicates that, the coefficients show that the six factors
measuring challenges of deposit mobilization performance of Dashen bank were all positively
related with the deposit mobilization performance within the range of .439 to .778, all were
significant at. p<0.01 level.

Findings from multiple regressions indicate that, all the challenges have statistically significant
effect on the deposit mobilization performance of Dashen bank.

58
This shows that R-square value is 0.837 which is significant at 5% level. P-value of this model is
0.00 (p<0.05).This explains that 83.7% of the variation in the deposit mobilization performance
of Dashen bank is explained by the independent variables namely (service quality, Information
Technology, branch expansion, interest rate, competition and macroeconomic factors). Adjusted
R- square of 0.823 reveals that model has accounted for 82.3% of the variance in the dependent
variable (criterion variable) if the study include the whole population. VIF values are less than
ten (10) and therefore, there is no serious multi -co-linearity problem.

Further, researchers test the adequacy of multiple regression fitted model and the model adheres
to the normality assumption. In order to test the model fitted with multiple regression, Normal
Probability Plot is also tested. NPP is approximately a straight line and it can be said that
variable of study is normally distributed. The adequacy of the model also tested using histogram
which adheres to the normality assumption (Mean =3.4875, Std. Dev. =.4607, N=80).

Further, all the null hypotheses which were developed based on challenges were rejected as the
relationship between those variables were highly significant. Since statements had a significance
level below 0.05. Over all, this justified that the listed challenges have statistically a significant
effect deposit mobilization of Dashen bank. Competition from other banks is important source of
challenge as compared to other listed explanatory variables.

59
 Chapte Five

Summary, Conclusion and Recommendation

5.1. Introduction
This chapter presents a synthesized summary of findings which was derived from the discussion
of the findings supported by the empirical research as presented above and in literature part with
the objectives of the study.

Conclusions drawn from the discussion and interpretation of the study findings of the study
would also be presented followed by implications for marketers. The chapter ends by
highlighting limitations of the study followed by recommendations for future research direction

5.2. Summary
The aim of this study was to investigate the challenges of deposit mobilization performance of
Dashen bank S.C. In order to achieve the objectives of this study, The six challenges of deposit
mobilization service quality, Information Technology, branch expansion, interest rate,
competition and macroeconomic factors were used. Hence, this study has attempted to
investigate whether challenges have statistically a significance effect and identify which
challenge has the highest influence on the challenges of deposit mobilization performance of
Dashen bank S.C in Addis Ababa city. Based on the conceptual framework and objectives of the
study 34 items were provided in a five point likert scale to the respondents (supervisors). To
collect the data a convenience sampling technique was used .The gathered data was analyzed by
using Statistical package Social Science 23.0.The methods used in data analysis includes
descriptive statistics(frequency, percentage, mean and standard deviation) and inferential
statistics(Pearson correlation, regression analysis assumptions of normality, multi-collinerarity
test and fitness of the model using ANOVA.

The findings of descriptive analysis indicate that majority of the supevisos of Dashen bank in
Addis Ababa are males and they are on the age group of 26-35. The results of descriptive
analysis showed, the grand mean value of all challenges range between is 3.124 -3.855 and SD
range is 0.2485-0.9396. This revealed that the response given to the challenges of deposit
60
mobilization performance were agreed and the respondents hold similar opinion in relation to
these variable items.

In the inferential statistics part the following results were achieved. According to the correlation
analysis result, challenges of deposit mobilization performance (service quality, Information
Technology, branch expansion, interest rate, competition and macroeconomic factor) considered
in this study have a positive relationship with the overall brand equity in the study area. The
result also identified, there is a positive inter-correlation’s among the six challenges of deposit
mobilization performance.

Among the deposit mobilization performance challenges considered in this study, the
competition ability of the bank demonstrates the strong contribution to deposit mobilization
performance followed by service quality, Macroeconomic factors and accessibility respectively.

The first hypothesis that states service quality is not a significant challenge on deposit
mobilization performance of Dashen bank was rejected because of sig=0.002, P<0.05.

The second hypothesis that branch expansion (accessibility) is not a significant challenge on
deposit mobilization performance of Dashen bank was rejected because of sig=0.007, P<0.05.

The third hypothesis was also rejected which claims that Interest rate is not a significant
challenge on deposit mobilization performance of Dashen bank was rejected because of since
Due to sig=0.000, P<0.05.

The fourth hypothesis was also rejected in the same manner that claims Information Technology
is not a significant challenge on deposit mobilization performance of Dashen bank was rejected
because of. Since sig=0.000, P<0.05.

The fifth hypothesis was also rejected in the same manner that claims competition is not a
significant challenge on deposit mobilization performance of Dashen bank was rejected because
of. Since sig=0.000, P<0.05.

The sixth hypothesis that states macroeconomic factors is not a significant challenge on deposit
mobilization performance of Dashen bank was rejected because of. Since sig=0.002, P<0.05.

61
Finally, deposit mobilization performance was found to be positively explained by the sum of six
independent variables by 83.7% and the reaming 26% of the deposit mobilization performance
was explained by exogenous variables.
5.3 Conclusions
The aim of this study was to investigate the challenges deposit mobilization performance of
Dashen bank a case of Addis Ababa city. The researcher select six variables as factor to affect
customer based brand equity.
Based on the analysis made, the following conclusions were drawn:
According to the grand mean value supervisors expressed their agreement towards the challenges
deposit mobilization performance.
With regard to the objective of the study analyzed result show that “competition” has statistically
significant and positive challenge on deposit mobilization performance of Dashen bank. The
second one is “service quality” analyzed result indicates that it has statistically significant and
positive challenge on deposit mobilization performance of Dashen bank. The third objective
“Macroeconomic factors” is also found to have statistically positive and significant challenge on
deposit mobilization performance of Dashen bank. The fourth objective “Information
technology” is also found to have statistically positive and significant challenge on deposit
mobilization performance of Dashen bank. The fifth objective “ branch expansion” is also found
to have statistically positive and significant challenge on deposit mobilization performance of
Dashen bank and the last objective ”Interest rate ” analyzed result indicate that it has statistically
significant and positive challenge on deposit mobilization performance of Dashen bank. This
manifesting that all challenges have influential effect for the deposit mobilization performance of
Dashen bank S.C the case of Addis Ababa.

The independent variables in this study have positive correlation with deposit mobilization
performance which revealed that the independent variables have positive relationship with the
dependent variable. There was an inter relationship between the independent variables which
implies that one independent variable may affect the deposit mobilization performance by
influencing other independent variables.

Among the deposit mobilization challenges considered in this study, competition demonstrates
the strong contribution to the deposit mobilization performance followed by service quality,
macroeconomic factors, technology, branch expansion and interest rate respectively which
62
implies that attention should be given primarily to this challenges to mobilize deposit in different
ways and prior order in the study area. From this we can deduce that, there should be a priority
among the challenges considering in this study while needing to implement mobilizing strategy
for deposit.
Furthermore ,Fitness of the model or the power of the independent variables in explaining
deposit mobilization performance of the Dashen bank ,Addis Ababa city has found that the
dependent variable was positively explained by the six challenges namely; competition, service
quality, macroeconomic factors, technology, branch expansion and interest rate.

5.4 Recommendation
The main objective of this project is by taking the case of Dashen Bank s.c, to identify the
challenges in deposit mobilization and go through with a descriptive analysis. As a result of the
analysis made, the following are the summary of the findings.

The six factors: Service factors, Information Technology, Competition among Banks, Interest
rate Paid to depositor, macroeconomic factors and Branch expansion (Accessibility) positively
influence deposit mobilization. Competition among Banks and service quality are the main
reasons why Dashen bank is challenged to mobilize its deposit. As long as DB is competent
enough with other banks, its profitability would be inevitable avail perfect and timely
information and building a rapport while providing service will definitely pull more funds
capitalizing the number of technologies like Amole will contribute immensely for deposit
mobilization. Measures to stabilize the macroeconomic status of the through different
mechanisms are a good strategy for DB to improve its deposit mobilization ability. Improving
the amount of interest rate by national bank will be advantageous for dashen bank. the macro
economic variables, which are, inflation, unemployment, income distribution, tax and business
cycle have a direct positive impact on deposit mobilization Mobilizing deposit is becoming very
challenging due to high competition among banks. Most of the respondents believe that failing to
expand the branch offices led the bank to face challenges to mobilize its funds.
Based on the findings and conclusions made, the following are recommended for DB in
order to achieve its target of mobilizing deposit and inclusion of unbanked resources.
Regarding branch expansion services:
- In an effort to boost their deposit base, banks have to give greater focus on increasing
their number of branches and believe in quality and efficient services.
63
 - Since branch expansion has positive and significant challenges on total deposit of
commercial banks, DB should also strengthen on branch expansion work in order to
increase their deposit.
Regarding banking services:
- DB should go with strengthen it procedure of standard service delivery time to
facilitate delivery of fast and quality services to its customers.
- DB should work in promoting newly introduced various types of special deposit
accounts services.
 In evaluating branches for their performance, DB should consider deposit mobilization as
the major criteria for evaluation thereby instilling better competition among branches.
 DB should go beyond the expectation of its customers by strengthen technology based
state of the art services. Services such smooth and clear internet banking, mobile banking
and other similar services should be adopted in order to catch up with banks who already
adopted it.
 DB should also go after the customers’ preference and compete with other commercial
banks to attract more depositors.

Since high interest rate has a positive challenge in attracting deposit though the rate of influence
is weak, DB should consider increasing the deposit rate on fixed time deposit.
5.5 Suggestion of areas for further studies

This study centered on examining factors challenging deposits mobilization Performance of

Dashen bank S.C in the case of Addis Ababa by using 40 branches through distributing two
questioners in each branch. This sample was very small to make a strong conclusion based on the
results obtained. Studies that cover the entire country with a very large representation are
strongly suggested. The study also discussed only six factors that challenge deposits
mobilization. The stated variables explains 83 % deposit mobilization challenges Therefore,
there is a room for around 27% exogenous variables to be included.

64
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 APPENDICES

Appendix A: questioner

Admas University

Business Administration
Master of Business Administration

This questionnaire is prepared to gather data from the employees of Dashen Bank S.Co.to be used as an
input for the accomplishment of Master’s Thesis on the title ‘Challenges of Deposit Mobilization
Performance in the Case of Dashen Bank’ . The aim of the thesis paper is to investigate what significant
challenges are there in the deposit mobilization performance and corresponding factors having influence
on deposits with particular emphasis to Dashen Bank Sc. the study assumes that adequate information
will be gathered if supervisors are asked since they have a direct access to deposit mobilization. Your
genuine responses to this questionnaire will greatly help to support the study in achieving the objectives
set and determine the importance of this study for the concerned stakeholders. Please take note that any
information provided filling this questionnaire will only be used for academic purpose and will be kept
70
 confidential. I would like to thank you for your willingness to fill the questionnaire, for the time you
devote and for returning it timely.

If you would like further information about this study, or have problem in completing this questionnaire
please contact Abalech Alemayehu Ambessie via Phone no: +251911836057 or [email protected]

Instruction: Dear employee Please use tick mark (√) or mark (X) in the boxes provided to choose
from the

Part I: Respondent’s Profile

1. Gender: Male  Female 

2. Age: 22- 25  26-35  36-50  above 50

Part two II. Likert scale questions

No Description Point
. Strongl Disagree Neutra Agree Strongly
y (2) l(3) d(4) Agreed(5
Disagre )
e(1)
Service quality
1 Among the dimensions of service quality
i.e. reliability, responsiveness, assurance,
empathy, and tangibles, the short fall on
RESPONSIVENESS has significant
negative impact on the resource
mobilization
2 I believe if Dashen Bank uses all the
service quality dimensions, it can
increases customer attraction and deposit
mobilization
3 The amount of deposits mobilized as a
result of application of service quality

71
 meets the bank’s target
4 Dashen Bank do not facilitate & train to
all concerned employees about the
advantage of service quality and closely
follows its implementation
5 I believe that Dashen bank’s service
quality is sufficient enough for its
customers
6 In general, application of service quality
increases deposit mobilization
performance of the bank
Branch Expansion
7 Dashen Bank recently works hard on
branch expansion and it contributed
significant deposits mobilization
8 Although branch expansion has good
contribution to deposit mobilization, the
practice of new branches somewhat
erode customer base as well as deposit
mobilization performance of old
branches like grade II, III, & IV.
9 Branch expansion support existing
branches resource mobilization effort
through facilitating high branch network
that enable customers’ access their
account from elsewhere using the core
banking technology
10 Branch opening at rural areas benefit the
bank in terms of increasing market share
as well as deposit mobilization
11 In general, branch expansions greatly
contribute the deposit mobilization

72
 performance of Dashen Bank
Interest rate
12 Provision of high interest rate on deposit
might attract more deposits but not
advisable as it affect banks profitability
13 In order to attract high deposits from
customers the interest rate provided by
Dashen Bank should be comparable to
inflation rate of the country.
14 Without provision of attractive deposits
interest rate, only good customer service
attracts more customers & deposits
15 Dashen Bank has no alternative as well
as attractive deposits interest rates when
compared with all commercial banks in
Ethiopia
16 Dashen Bank can mobilized high deposit
if it provide attractive interest rate
Information Technology
17 AMOLE (Mobile and internet banking)
is more convenient to customers bill
payments, purchase of commodities from
supermarket, online book purchase,
online music purchase, money transfer
service like( account to account, account
to wallet, wallet to account, and wallet to
wallet) also useful for air time purchase
etc . This technology contributes to the
banks customer attraction and deposit
mobilization performance.
Among the different technologies Dashen
18 Bank is using, excellent core banking

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 system which enable the banks customers
use their account either from any branch
of Addis Ababa or outside Addis Ababa
supports to attract more customer and
high deposits.
19 Although Dashen Bank introduced latest
Omni-channel (AMOLE) technology
which could attract new customer and
retain the existing ones, the bank
couldn’t make use of its technology
advantage due to inappropriate
advertisement and weak initiation of
most of its staff.
20 Dashen bank is pioneer in introducing
ATM and POS machines. It took the first
mover advantage in attracting more
customers from the market also in
mobilizing good size of hard currency
than other commercial banks
competition among banks
21 There are potential banks who mobilize
more deposits than your branch
22 Dashen bank can be regarded as the
most innovative than among its
competitors
23 Dashen bank has a distinctive
competence over other private banks
24 Dashen bank has been innovating
different kinds of service
25 existing and new private banks can be
taken as the competitors of dashen bank
Macroeconomic factors

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26 Tax payment seasons affect deposit
mobilization ( fiscal Policy)
27 The economic slowdown of the country
due to COVID 19 has hugely impacted
deposit mobilization( Business cycle)
28 Per capita Income of the citizen is not
increasing so that saving in banks
decrease ( income distribution)
29 Inflation weakness the deposit
mobilization activity
Deposits (Dependent Variable)
30 Mobilizing substantial level of deposits is
a pillar for Dashen Bank’s existen
31
Dashen Bank is highly benefited by
mobilizing deposit and using it for loan
disbursement
32 Deposit for DB is fundamental to ensure
high profitability through deployment of
credit as well as use for liquidity
management
33 Dashen Bank needs substantial deposit
mobilization to meet the current demand
of loan disbursement.
34 Deposit in general is crucial for Dashen
Bank to increase revenue & for liquidity
management.

Thank you so much for your response

75
Appendix B Reliability analysis

Reliability analysis of service quality

Reliability analysis of technology

Reliability analysis of branch expansion

Reliability analysis of Interest rate

Reliability analysis of competition

76
 Reliability analysis of macroeconomic factors

Appendix C Descriptive analyses

77
 Mean and standard deviation of service quality

Mean and standard deviation of branch expansion

78
 Mean and standard deviation of Interest rate

Mean and standard deviation of Information Technology

79
 Mean and standard deviation of competition

Mean and standard deviation of macroeconomic factors

80
Appendix D Correlation analysis

Appendix E Normality plot test

81
Appendix F: multi-collinearity

82
Appendix G: Coefficient of Multiple Determinations (R2)

Appendix H: ANOVA analysis

83
Appendix H: Test of Significance

84