ST.

MARRY’S UNIVERSITY

SCHOOL OF GRADUATE STUDIES

MBA PROGRAM

CHALLENGES OF DEPOSIT MOBILIZATION IN BUNNA INTERNATIONAL

BANK S.C CASESTUDY IN ADDIS ABABA BRANCHES

By: DEMEKE TILAHUN ZELALEM

ADVISOR: MOHAMMED SEID( ASS.PROF)

JUNE, 2019 G.C

ADDIS ABABA, ETHIOPIA
CHALLENGES OF DEPOSIT MOBILIZATION IN BUNNA INTRNATIONAL
BANK S.C CASE STUDY IN ADDIS ABABA BRANCHES

BY: DEMEKE TILAHUN ZELALEM

A THESIS SUBMITTEDTO ST. MARY UNIVERSITY, SCHOOLOF GRADUATE

STUDIES IN PARTIAL FULFILLMENT OF THE REQUIREMENTS FOR THE
DEGREE OF MASTER OF BUSINESS ADMINISTRATION IN GENERAL
MANAGEMENT

JUNE, 2019 G.C

ADDIS ABABA, ETHIOPIA
 ST.MARRY’S UNIVERSITY
SCHOOL OF GRADUATE STUDIES
MBA PROGRAM

CHALLENGES OF DEPOSIT MOBILIZATION IN BUNNA INTERNATIONAL

BANK S.C CASE STUDY IN ADDIS ABABBA BRANCHES

BY

DEMEKE TILAHUN ZELALEM

APPROVED BY BOARD OF EXAMINERS

Dean, Graduate Studies Signature

Advisor Signature

External Examiner Signature

Internal Examiner Signature

DECLARATION

I the undersigned, declare that this thesis is my original work which was prepared under the
guidance of Mohammed seid (Ass.prof). All sources of materials used for the thesis have been
duly acknowledged. I further confirm that the thesis has not been submitted either in part or in
full to any other higher learning institution for the purpose of earning any degree.

Demeke Tilahun Zelalem

ENDORSEMENT

This thesis has been submitted to St. Mary’s University, School of Graduate Studies for
examination with my approval as a university advisor.

Advisor Signature
ACKNOWLEDGEMENTS

The completion of this study endeavor would not have been possible without the assistance of so
many. The Almighty God, I do not know how I can state for all; I am heartily indebted to him
with his mother Saint Marry, for his bright gifts throughout my life from the beginning wherever
I go. I am genuinely thankful for my thesis advisor Mohammed Seid(Ass.prof) for his support,
guidance, encouragement, and enduring patience.

Next, no lexis can suffice to express my deepest gratitude for my families for their help and
encouragement in every possible way throughout my life. It is your prayer, love and good
exemplary role that have shaped my past, present and future life journey. Very special thanks to
my beloved friends Dinberu Mekuriaw and Mekonnen Belay who insistently supported me in my
all endeavors with genuinely. My overwhelming thanks go to the employees of Bunna
International bank staffs and share holders especially Ato Teshale Alebachew who have really
helped me with full understanding in my education from beginning. Furthermore, my heartfelt
gratitude goes to the respondents of the study who were unreservedly cooperative staffs and
shareholders to the researcher.

Lastly, I am pleased to express my sincere thanks to everyone who has contributed for the
accomplishment of this study.

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ACKNOWLEDGEMENTS.............................................................................................................................i

List of Tables................................................................................................................................................v

List of Acronyms...........................................................................................................................................vi

ABSTRACT....................................................................................................................................................vii

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

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

1.1 Background of the study......................................................................................................................1

1.2. Statement of the Problem........................................................................................................................3

1.3. Objectives of the Study...........................................................................................................................5

1.3.1. General Objective.............................................................................................................................5

1.3.2. Specific objectives of the study.......................................................................................................5

1.4 Significance of the Study.........................................................................................................................5

1.5 Scope of the Study...................................................................................................................................6

1.6 limitation of the study..............................................................................................................................6

1.7 . Organization of the study.......................................................................................................................6

CHAPTER TWO...........................................................................................................................................7

2. Literature Review.......................................................................................................................................7

2.1 Theoretical Review..............................................................................................................................7

2.1.1 Definition of terms........................................................................................................................7

2.1.2 Major types of Deposit products...................................................................................................8

2.1.3. Importance of deposit mobilization..............................................................................................9

2.2 Challenges of Commercial Banks Deposits.......................................................................................10

2.2.1Saving Interest Rate.....................................................................................................................10

2.2.2Security.........................................................................................................................................10

2.2.3 Branch Expansion........................................................................................................................11

2.2.4 Bank Image.................................................................................................................................12

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 2.2.5 Promotion....................................................................................................................................13

2.2.6Service quality..............................................................................................................................13

2.2.7Society awareness........................................................................................................................15

2.2. 8. Working hours...........................................................................................................................16

2.2.9 Inflation rate................................................................................................................................17

2.2.10 Exchange Rate...........................................................................................................................17

2.2.11 Technology................................................................................................................................18

2.2.12 Consumption...........................................................................................................................19

2.2.13 Management Administration.....................................................................................................19

2.2.14 Banking Ethics..........................................................................................................................21

2.3 Empirical Literature Review..............................................................................................................22

2.4 Research Gap.....................................................................................................................................24

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

3. RESEARCH METHODOLOGY............................................................................................................25

3.1 Research methods and approaches.....................................................................................................25

3.2 Sources of data...................................................................................................................................26

3.2.1 Methods of data collection..........................................................................................................26

3.2.1.1 Questionnaire.............................................................................................................................26

3.2.1.2 Interview methods....................................................................................................................27

3.2.1.3 Document source......................................................................................................................27

3.3 Target Population...............................................................................................................................28

3.4 Sampling technique and procedure....................................................................................................29

3.5 Sample Size Determination................................................................................................................30

3.6 Validity and reliability of the tools....................................................................................................31

3.7 Methods of data analysis....................................................................................................................33

CHAPTER FOUR........................................................................................................................................34

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4. DATA PRESENTATION AND ANALYSIS..........................................................................................34

4.1 Background information of respondents............................................................................................34

4.2 Deposit mobilization performance of BIB.........................................................................................34

4.3 Challenges of deposit mobilization....................................................................................................38

4.3.1 Challenges related to deposit mobilization activities performed by the bank.................................38

4.3.2 Challenges related to bank management administration for deposit mobilization.....................41

4.3.3 Challenges related to adapting of Technology for deposit mobilization.....................................43

4.3.4 Challenges related to legal framework for deposit mobilization...............................................44

4.3.5 Challenges related to customer attitude and beliefs towards private bank.................................46

4.3.6 Challenges related to service quality standard by the bank........................................................47

4.5 Compressions deposit mobilization challenges......................................................................................49

CHAPTER FIVE..........................................................................................................................................51

5. Summary, conclusion and recommendation.............................................................................................51

5.1 Summary............................................................................................................................................51

5.2 Conclusions........................................................................................................................................51

5.3 Recommendations..............................................................................................................................53

Bibliography.................................................................................................................................................55

APPENDIX I........................................................................................................................................60

Appendix II..........................................................................................................................................65

Appendix III............................................................................................................................................................ 66

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List of Tables
Table3. 1Number of senior staff in different grade level in city branch in BIB..........................................31
Table3. 2Cronbach’s Alpha result...............................................................................................................32
Table4. 1Respondent Information Background...........................................................................................34
Table4.2 Deposit performance of Bunna International bank s.c.................................................................36
Figure 4.1 Growth rate of demand, saving and fixed deposit of BIB..........................................................37
Table 4.3 Challenges related to deposit mobilization activities performed by the bank.............................38
Table4.4 Challenges related to bank management administration for deposit mobilization.......................41
Table4.5 Challenges related to adapting of technology for deposit mobilization........................................43
Table4.6Challenges related to legal framework for deposit mobilization.................................................45
Table4.7 Challenges related to customer attitude and beliefs towards BIB................................................46
Table4.8 Challenges related to service quality standard by the BIB...........................................................48
Table4.9 descriptivestatics output................................................................................................................49

v
List of Acronyms
ATM Automated Teller Machine
BIB Bunna International Bank
BIB Brehan International bank
CBE Commercial bank of Ethiopia
NBE National bank of Ethiopia
OIB Oromia International bank

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ABSTRACT
The focus of this research is assessing challenges of deposit mobilization in Bunna international
bank s,c in Addis Ababa Branches. 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 Ethiopia. This paper was assessed the performance, challenges and activities of
deposit mobilization in Bunna International bank s.c. Most of the challenges for deposit
mobilization in BIB challenges of political unrest with in the country, challenges of bank
management administration, challenges of promotion, challenges of banking ethics, challenges
of working hour, challenges on increment of consumption, challenges of employees experience
sharing, challenges of attitude and beliefs of customer, challenges of bank service standard and
challenges of adapting new technology. The method of the study used descriptive analysis
method with probable and none probable sampling techniques. This study data collection
depended on city branch managers; employee and shareholder. The findings of the study show
that BIB, poor management administration for branch location and luck of product
announcement, inaugurating working hours is not enough, low service quality, ATM and POSS
machine services charge is higher and not easily adopted by customer, there is no incentive
program for new depositor, there is no implementation of interest free banking. Finally BIB were
recommended to extend evening hours to provide excellent customer service, evaluate the
existing products and develop new product with aggressive promotion for different types of
product which customized to the needs of different target groups, to make efforts and awareness
creation campaigns to have well informed society, increase its branch number with convenience
location to create new technology that is easily adopted by customer with less cost service
charge, to arrange and apply incentive program for new depositor and apply interest free
banking.

Key words. Deposit Mobilization, Bank, Challenges,

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 CHAPTER ONE
1. Introduction
1.1 Background of the study
Deposit mobilization is the fundamental activity in bank industry in developed and under
developed countries over the word (Mavrotas, 2017). Deposit mobilization is the collection of
cash or funds by a financial institution from the public through its current, savings and fixed
amounts and other specialized schemes (Banson, 2012). Normally deposits are considered as the
cost effective working funds that can increase the sustainability and profitability of the deposit
taking institutions (Garo.G, 2015). Commercial banks are those institutions, which deals in
accepting of deposit mobilization from public and individual and giving loans to those organs
(Mashamba, 1980-2000).

Banking system is the backbone of financial intermediation through the mobilization

and channeling of financial resources to the economy (Bello, 2005) .Performances of the
bank depend on deposits, as the deposits are normally considered as a cost effective source of
working fund. Deposits constitute of a vital source of funds required for banking business, the
success of the banking related to deposit greatly lies on the deposit mobilization and its
management(Slavaraj & Kumar, 2015).Financial resources are naturally provided from people’s
deposit. Therefore, deposits are the most important resource of commercial banks. Thus the
amount of deposit a commercial banks should have at hand should be enough to make the bank
involve in the market and to satisfy the financial needs of its customers. Given this general facts,
therefore, the bank is expected to mobilize its deposit. Managing deposits is not possible without
knowing and controlling the challenges facing during deposit mobilization activities
(Mohammed, 2010)

In the sub-Saharan Africa standards, Ethiopia‘s rate of domestic saving has been very low. From
1997 to 2010, the average saving rate in low-income countries of the region was about 9 per
cent, while it was about 19 percent for middle-income countries. In the same period, the average
saving rate of fragile sub-Saharan African states was 11.5 percent, up to now significantly higher
than Ethiopia‘s rate of 4 per cent(Abay, 2010).

In Ethiopia, during the pre-1975 imperial era, there had few banks (dominated by foreign
ownership) and the absorptive capacity of the economy was too low even to accommodate

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moderate competition. In the Derg regime (1975-1991), private banks were fully nationalized
and left no room for competition. After the down fall of the Derg regime in 1991, private banks
were again allowed to operate in consistent with the ideology of market oriented economic
policy under the proclamation of licensing and supervision of Banking Business proclamation
No.84/1994. Accordingly, new private banks were established and their role and position in the
industry have been flourished from time to time. Ethiopia appears unique compared to most
African countries and many other developed countries because it has not yet opened its banking
sector to foreign participation (Alemayehu, 2006)

When look at this situation in Bunna international bank s.c which is the first largest shareholder
private bank in Ethiopia that was joined the bank industry by obtained license from National
Bank of Ethiopia (NBE) on June 25,2009 in accordance with ‘’Licensing and supervision of
Banking Business Proclamation No 592/2008” and the 1960’s commercial code of Ethiopia. The
bank officially commenced its operation on October 10, 2010 with subscribed and paid up
capital of birr 308 million and 156 million respectively. Deposit mobilization performance of
Bunna international bank s.c 7.55 billion in 2016/17 and 9.15 billion in 2017/18 by increase of
22.24% within the budget years with employee number of 1349 in 2017/18.

In this study the assessment of challenges on deposit mobilization in Bunna international bank
s.c were studied empirically and the relationship between different challenges and total deposit
of BIB is identified. Issue of banks deposits and it’s assess is crucial to the financial sector of
developing country like Ethiopia. This study enables the bank and regulators to keep control to
the issue of deposit which is very important to the security of their operation as well as the
economy as a whole in the country. Therefore, this paper aimed to assess and identifies those
challenges affecting deposit of Bunna international bank s.c.

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1.2. Statement of the Problem
Deposit mobilization is one of major integeral part of bank business and primary function of
banks for source of fund to facilitate the uses of funds (Shemsu, 2015). The higher the deposits
amount leads to the bigger the lending and investments portfolio can be maintained by the banks
to sustain its expansion and future growth to get more acceptance on customers (Mordi, 2004).
The banks must have adequate deposits to meet the lending volume required by the public and
private at the same time maintain extra cash for withdrawals by depositors when it is required by
the public and private customer(Sharma, 2009). The inability to get sufficient deposits could
result in shortage of funds situation with in the banks. The level of deposit growth also indicates
the bank's performance in relation to customers' satisfaction on interest payout and services
rendered to the customer satisfaction also increase(Sharma, 2009)

Most of the poor population in sub Saharan Africa have very limited access to deposit facilities
and others financial services provided by the formal institutions, for example in Ghana and
Tanzania only about 5 – 6% of population has access to banking sector(Basu .Blavy, 2004)

Ethiopian banking industry is still in its growth stage. Deposit generated by the county economy
not yet been mobilized as much as expected. National Bank of Ethiopia indicates that the deposit
growth rate of Ethiopian commercial banks is 29.8% in 2016/17NBE(NBE, National Bank
Annual Report , 2016/2017)and 23.6% in 2017/18 (NBE, National Bank of Ethiopia Annual
Report, 2017/2018). Deposit mobilization performance of Bunna international bank s.c during
the year of 2016/17 are 7.55 billion and 2017/18 are 9.15 billion end of June 2018 with
significant growth of 22.24% BIB, annual report (BIB, 2017/2018), while the peer bank Brehan
international bank s.c deposit mobilization performance are 7.6 billion 2016/17 and 11 billion
June 2018 BIB annual report, 2017/18 with significant growth of 42% (BIB., 2017/2018).

Many researches were conducted in the area of deposit mobilization such as(Sisay, 2013)
(Ketema, 2017), (Abera, 2017),(Mansur, 2012), (Oduro, 2015), (Shemisu, 2015)and (Brenda,
2017) . Most of them focusing on the determinant and factors affecting deposit mobilization in
commercial banks. But from these (Abera, 2017), (Sisay, 2013), (Oduro, 2015), and (Mansur,
2012are related to this study.
(Abera, 2017)assessed the current deposit mobilization practice of bank of Abyssinia. The result
of the study shows that bank of Abyssinia's deposit mobilization strategy is successful and the

3
bank mobilizes its deposit in different strategies. Such as, give incentive to branch managers,
attracting depositors by visit customers in their office and contacting customers to reactivate
their inactive account.

(Oduro, 2015)studied the challenges of deposit mobilization of agricultural development bank in

Ghana in branches of Kumasi metropolitan area. The result of the study identified interest rate,
inflation, exchange rate and the cumbersome account opening requirement and processes were a
major casual factor of mobilization of agricultural development bank.

(Sisay, 2013)examined the factors that affect deposit mobilization in private commercial banks
in case of awash international bank s.c. The result of the study shows the main factors that affect
the deposit mobilization process of Awash International bank are the here and their
reconstruction of Addis Ababa roads, the direct and indirect government intervention or control
on private banks activities that can hinder the growth of the deposit balances of the bank.

(Mansur, 2012),identified the assessment of the factors that influence deposit mobilization in
Tanzania the case study of commercial banks, Dar Es salaam, Tanzania. The result of the study
shows factors such internet banking facilities, location of the bank, interest rate, and marketing
strategies of the bank are applied in mobilizing deposits on commercial banks in Dar es Salaam -
Tanzania.

The previous researchers such as(Abera, 2017), (Sisay, 2013), (Oduro, 2015 and(Mansur, 2012)
doesn't address challenges of deposit mobilization with regard to challenges of political unrest
with in the country, challenges of bank management administration, challenges of promotion,
challenges of banking ethics, challenges of working hour, challenges on increment of
consumption, challenges of employees experience sharing, challenges of attitude and beliefs of
customer, challenges of bank service standard and challenges of adapting new technology.
Therefore, the researcher aimed to assess challenges of deposit mobilization in Bunna
international bank s.c.

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1.3. Objectives of the Study
1.3.1. General Objective
 The general objective of the study is challenges of deposit mobilization in Bunna
international bank s.c in Addis Ababa branches.
1.3.2. Specific objectives of the study
In line with the general objective of the study the following specific objectives
Were identified
 To assess the existing performance of deposit mobilization in BIB
 To assess the challenges that affect total deposit mobilization of BIB
 To assess the activities of deposit mobilization in BIB

1.4 Significance of the Study

The study helps to assess the existing challenges and deposit mobilization activities expected to
indicate the strategic intervention areas that might improve the banking practice, and to show
those areas that need corrective measures to improve the deposit mobilization activities with
Bunna International bank s.c deposit mobilization performance. These study help for clear
understanding and awareness of deposit mobilization practices and the activities for bank
management. The study increase deposit level of Bunna international bank s.c in order to gain
more deposit as well as record deposit sustainability of the bank deposit amount. It helps assess
to addressing the challenges of deposit mobilization and helps the branches to know challenges
and their role in the deposit activities by branches. Moreover, it may serve as a source of
reference and give some highlights for others who would like to know more about the issue and
interested in undertaking further and detail studies in challenges of deposit mobilization as a
research title and on the other branches and other banks as well.

In addition the study to provide information related with deposit practice and its challenges for
different stakeholders such as bank shareholders.

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1.5 Scope of the Study
The study coverage is focuses on assessing the challenges and activities of deposit mobilization
in Bunna international bank s.c in Addis Ababa branches. The data was collected from city
branches managers, employees and shareholders of Bunna international bank S.C. The secondary
data was collected from different document and it helps the researcher to manage the data. As a
result recent five consecutive years (2013/14-2017/18) data was collected related to deposit
collection from Bunna international bank about deposit mobilization practices.

1.6 limitation of the study

The main limitations of the study used of descriptive analysis. The study limited on BIB deposit
level performance, deposit challenges and deposit activities. This Study doesn't consider all the
other related forces that influence the deposit mobilization efforts of in BIB in city and outline
branches. However, necessary precautions made so that these limitations may not affect the
findings of the study through taking appropriate sample size by using probable and none
probable sampling in triangulating different data collection methods.

1.7 . Organization of the study

Chapter one does present the background to the study, the research problem, the research

objectives, the research significance, the research scope and the research limitation. Chapter two

presents the literature that discuss issues pertaining to the factors that influencing the deposit

mobilization in Bunna international bank s.c with empirical studies discussion and experiences.

The methodology to be used for this research is discussed in chapter three, whereas chapter four

will cover centre on the research findings data analysis. The final chapter present the

conclusions and recommendations for the study.

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 CHAPTER TWO
2. Literature Review
2.1 Theoretical Review
2.1.1 Definition of terms

Banks are one of the oldest professions in human history, it also flourished with civilizations.
Since humans started, using money bank services were in use throughout history. Modern
banking as we know it today was established in Italy and Greece in the 15 th century. Today,
banks are one of the most important institutions for modern economy to work in any
country(Gedey, 1990). Different historical sources states that the first foundation of the banking
service in the world were put by goldsmiths and silversmiths. They have a safe box to put and
they were the most trusted. They used to receive gold, silver and various jewelries to put with
them. Therefore an individual or a merchant puts his wealth under their custody, for their service
they charge a small amount of money and give the customer a receipt to guarantee their
acceptance. Then they started using money paying instrument what we now call this document as
‘check’. However as time goes by the goldsmiths and silversmiths observed that their customers
wouldn’t take their jewelry soon, and those clients, whenever they face the shortage of money,
they started lending to this people and started to get profit from their service. They encouraged
depositing and lending and rather than making the customers to pay a charge for depositing, they
started to pay them interest and introduced the public to work with money. It is believed that,
ancient Assyrians, Babylonians, Athenians, Romans and Abyssinians also used the banking
service (Gedey, 1990)

Some authorities, relying upon a broad definition of banking that equates it with any sort of
intermediation activity, trace early banking as far back as ancient Mesopotamia, where temples,
royal palaces, and some private houses served as storage facilities for valuable commodities such
as grain, the ownership of which could be transferred by means of written receipts. There are
records of loans by the temples of Babylon as early as 2000 BC. Temples were considered
especially safe depositories because as they were sacred places watched over by gods, their
contents were believed to be protected from theft. Companies of traders in ancient times
provided banking services that were connected with the buying and selling of goods (Britannica,
2010). A broad definition of banks is any financial institution that receives, collects, transfers,
pays, exchanges, lends, invests or safeguards money for its customers. This broad definition
includes many other financial institutions that are not usually thought of as banks but which

7
nevertheless provide one or more of these broadly defined banking services. These institutions
include finance companies, investment banks, mortgage companies, and real estate investment
trust (Encarta, 2009)

Deposit' means the amount of money accepted or mobilized on various accounts from the people.
A deposit is a financial term that has multiple definitions. Deposits' Money placed into a banking
institution for safekeeping. Bank deposits are made to deposit accounts at a banking institution,
such as savings accounts, checking accounts and money market accounts. The account holder
has the right to withdraw any deposited funds, as set forth in the terms and conditions of the
account. The "deposit" itself is a liability owed by the bank to the depositor. Deposits are
considered liabilities because the depositor could pull the money out at any time. The deposits
are really a "loan" to the bank that the bank will have to pay out some day. Deposit banking
definition is - banking in which bank credit is in the form of deposits instead of the issue of
notes. A deposit is a financial term that has multiple definitions. The first definition is a
transaction involving a transfer of funds to another party for safekeeping(Gedey, 1990)

2.1.2 Major types of Deposit products

Deposit account is a savings account, current account or any other type of bank account 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. Some banks may charge a fee for this
service (in developed countries), while others may pay the customer interest on the funds
deposited. The account holder has the right to withdraw any deposited funds, as set forth in the
terms and conditions of the account. The following are most common type of bank deposit.

Demand Deposit: it consists of funds held in an account from which deposited funds can be
withdrawn at any time without any advance notice to the depository institution. Demand deposits
can be "demanded" by an account holder at any time. Many checking accounts today are demand
deposits and are accessible by the account holder through a variety of banking options, including
teller, ATM and online banking.
Savings Account: is a deposit account held at a bank or other financial institution that provides
principal security and a modest interest rate. Depending on the specific type of savings account,

8
the account holder may not be able to write checks from the account (without incurring extra fees
or expenses) and the account is likely to have a limited number of free transfers/transactions.

Time Deposit: time deposit or certificate of deposit (CD) held for a fixed-term, with the
understanding that the depositor can make a withdrawal only by giving notice. A time deposit is
an interest-bearing bank deposit that has a specified date of maturity. Generally speaking, the
longer the term the better the yield on the money (Dereje, 2017)

2.1.3. Importance of deposit mobilization

A. source of investment
(Orgore, 2013)the Intermediation function of banks play vital roles in the efficient allocation of
resources of countries by mobilize of resources for productive activities. They transfer funds
from those who don't have productive use of it to those with productive venture. 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.

B. Low cost
According to (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.(Elser, 1999)savings are a source of funds
with low financial costs i.e., interest costs, Compared to other commercial funds. With regard to
financial costs, most of the institutions apply a differentiated interest rate schedule, compensating
for the higher administrative costs with no or low interest rates on small savings and increasing
them according to the size of the deposit.
C. Source of profit
According to (Varman, 2005) the ability of a bank‘s management and staff to attract checking
and saving accounts from business and individuals is an important measure of the bank‘s
acceptance by the public. Deposits provide most of the raw materials for bank loans and thus
represent the ultimate source of bank profits and growth. 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.

9
D. Economic Growth and Development
According to (Orgore, 2013) 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.

2.2 Challenges of Commercial Banks Deposits

2.2.1Saving Interest Rate
The main focus of every financial system is financial intermediary that is, mobilizing financial
resources from the surplus sector and lend to the deficit outlets to facilitate business transactions
and economic development based on the monetary and fiscal policy of the nation. The attraction
for getting the deposit from the surplus sector is interest payment, which must be reasonable and
acceptable to the owner of the money (Dereje, 2017)

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
business men and households respectively. The supply of funds is governed by the time
preference and the demand for capital by the expected productivity of capital.
(Mckinon, 1999)argue that for the typical developing country, the net impact of a change in real
interest rate on saving is likely to be positive. This is because, in the typical developing economy
where there is no robust market for stocks and bonds, cash balances and quasi-monetary assets
usually account for a greater proportion of household saving compared to that in developed
countries.

2.2.2 Security
Security of the bank is a much-concerned challenges affecting for deposit mobilization. When a
bank has high security adoptions they can attract more deposits. In recent times, many banks
address the issues and risks related to deposits by adopting, deposit insurance scheme. This
movement can be witness nowadays in each country. This insurance scheme signals the
depositors that their deposits are protected in the event of bank failure(Samuel., 2014)

1
People save money in the banks because they believe banks are the most efficient caretakers of
their short term and long term savings. Therefore, banks should be more provident and careful on
the funds when they do their business activities since banks use savings as their capital to carry
on the business (Samarasiri., 2014).Hence deposits are the oxygen for banks(Garo,
2015).Therefore, it is must to maintain security of people’s deposits in order to get a good
reputation and well-establishment of banks among public (Samarasiri., 2014)

However according to the study on safeguarding the banks; the challenging role of the
security manager carried out by (Wan, 2016), he indicates that even though traditional
banks prioritized their security requirements to protect its physical assets as cash, after the
technology greatly intervene to banking activities, present banks face many serious security
issues than the past.

The security management of deposit taking institutions by considered 157 deposit taking
institutions in Washington(McNeal, 2014). The study identifies that, 75% of institutes manage
their system internally and also 90% majority of institutes follow up five pillars of avoiding
security threat related to banking technology, namely (1) a written security policy, (2)
Security awareness education (3) risk management and cyber risks, (4) information security
audits and (5) incident monitoring and reporting. Also, most banks use diversified security
technologies as anti-virus, spy ware, mal ware detection, intrusion prevention. Furthermore,
banks allocate more shares in their budget to ensure system security. Therefore, according to
(McNeal, 2014)these adoptions are finally enabling a secured banking environment and attract
more deposits as a result of that.

2.2.3 Branch Expansion

There is a relationship between branch expansion of banks and deposit growth of banks(Banqui,
1987) .Banks make their expansion decisions based on level of competition, deposit
potential, regional income and development of infrastructure (roads). However, since
deposit mobilization is the main role of banks, branch expansion also decided on the
level of deposit mobilization (Samuel., 2014). According to the study of (Bhattecherjee,
2012)reveal that branch expansion is a significant factor affecting for deposit mobilization.

(Haresh, 1999)explain, how branch expansion determines the deposit mobilization. Among
many challenges affecting for deposit mobilization, to deposit money in a bank depositors first

1
take into consider location of branch (whether bank is rural, urban or semi-rural) and second,
they consider the region of bank belongs. The study further reveals that regions with high income
earners and abundant of branches have high deposits per branch while regions with low income
earners and also associate with low spread of branches denote low amount of deposits. This
study has been concluded by deciding branch expansion is the most effective factor for deposit
mobilization.

Among the challenge prominently identified as affecting deposit variability one is bank size.
Evidence indicates that the number and diversity of the ownership of individual deposit accounts
as well as the distribution of deposits by type vary with bank size (George, 1972). (Harald,
2009), founds that although insignificant once controlled by other variables bank size have an
effect on deposits. A smaller bank has to generate less deposit in absolute terms to achieve the
same deposit growth than large banks, thus possibly favoring smaller banks in achieving higher
deposit growth.

2.2.4 Bank Image

Customers select a bank to deposit their money based on several determinants as attractiveness
of the deposit interest rate, attractive adverting on mass media, minimum loan conditions and
also sometimes customers assumed that state-owned banks are more reliable than the private
banks. Moreover, some customers assume that when banks have wide branch network then that
bank is good for their deposits. Although all the aforementioned factors are important when
depositing money, among them bank image is the most important factor of choosing a secured
place to deposit valuable deposits of customers. Bank image can be determined through the
financial business and the management information about the business activities of the bank.
Therefore, one of the most significant challenges affecting for deposit mobilization is bank
image. Since customers always expect a secured place for their deposits, most of the time they
tend to deposit money in the institutions or banks which have a positive image (Samarasiri.,
2014)
According to (Telatela., 2013) bank image is determined by the reliability, responsiveness,
assurance and empathy. Savers are always nosy about the safety of their funds, recurring cases
of forgeries, theft and bankruptcies occurred. Therefore, they always deposit more money in
banks which have good bank image.

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2.2.5 Promotion

The marketing and advertising fraternity can tailor these promotional channels to address
specific goals, audiences, and budgets. These channels deliver highly targeted advertising
content to multiple audience segments, including the expanding online audiences. Marketing
gurus and professionals aver that paid media promotional channels generate very heavy brand
‘lift’ and confer significant exposure upon the products and services being advertised(Kumar,
2013).

Display advertising represents one of the most effective promotional channels in modern
markets. The purveyors of this mode of publicity and advertising can design graphical
advertisements and ensure their strategic placement on various websites, e-mails, social media
messages, landing pages, search engine result pages, online video platforms, micro-blogging
platforms, and other digital formats. Display ads can be placed in the form of text, images, audio
clips, video clips, animation, and other manifestations of interactive content. The efficacy of
online display advertisements is determined by calculating the number of received by an
advertisement. Other metrics include the number of times a display ad was shown to online
audiences and any follow-up action initiated by audiences. Promotion plays an important role in
today's competitive world by which banks communicate with their customers, both current and
potential (Kumar, 2013).

2.2.6 Service quality

It is known that banks are service oriented organizations and the service delivery can affect all
the activities that a bank performs. According to (Khalily, 1987)indicates that two variables
affecting for deposit mobilization in their models in which services to customers considered as a
significant and positively related to each other.

The study by (Goiteom, 2011), on the bank selection decisions customers more emphasize on
factors such as convenience, service provision, employers influence and bank image. Therefore,
banks should consider these factors when implementing their market strategies to absorb more
deposits. Generally, banks are providing services but competition among banks are determined
by the quality of the banking services. According (Khalily, 1987)there should be strategy
requires as policy and procedural changes, development of innovative programs and
improvement in the quality of services provided to the depositors. Furthermore, the quality of

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banking services mainly depends on several factors as, Branching Policy: The expansion of
banking facilities is the key factor for deposit mobilization and when providing facilities
accessibility is the most important factor, Innovative approaches, Interest rate policy, more
incentives to depositors, more incentives to bank employee when achieving targets on deposit
mobilization, training for bank employees and expansion of infrastructure. However similar
studies have carried out by(Hooman, 2016), regarding the factors affecting for quality of
services. The phenomenon of quality of banking services can be obtained only by ensuring the
quality of e-banking services, employee’s competence and skills, reliability of the banking
system, an impeccability banking system integrity and accountability measurements are the
effective factors that make the quality service.

According to (Johnton, 1997), there is a close relationship between banking services and
customer awareness. These two variables should be integrated with each other to have high
deposit mobilization. However, by considering modern banking services, the study indicates that,
banks need to constantly look for innovative services which offer convenience of transacting
from anywhere, anytime. Demands and expectations of the customers are fast growing.
Therefore, banks should be able to achieve these rapid growing customer needs to attract more
customers since banks operate in the oligopolistic market structure. Therefore, interdependency
among banks are high, this will create customers to shift from one bank to the other bank easily.

(Maharana, 2015)also carried out a study similar to the study of (Johnton, 1997), showing out
that deposit mobilization is affected by innovative banking services. Thus, computer based
banking services like ATM encourage customers to deposit more money since the transaction
cost is very low.

According to (Samuel., 2014), European central bank stated that the information
communication technology development had a strong influence on the structure and the activities
of the banking sector. The elements that have changed are several, besides allowing transactions
to be conducted more efficiently; technology allows banks to market their products more
effectively. The technology deployed in banks affects its operational efficiency and determines
its competitive position in the market. Nowadays, all kinds of traditional and conventional
banking activities have changed. So much of man power has been substituted by machines with
very fast responses (Magembe, 2002).

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According to (Andrew, 2004), IT driven banking services increase the productivity of the
employees thus it increases the business without the number of employees. Further this
productivity can cause to increase customer satisfaction and deposits can be mobilized
automatically.

According to the study “The effect of location and Information Technology on bank deposit
mobilization status in Ethiopia carried out by (Banson, 2012),there is a significant and positive
correlation between using of information technology and deposit mobilization. Furthermore, this
study reveals that, holding other factors constant, the probability of adopting ICT increased by
1.94% of deposit status of banks.

According to(Kariyawasam, 2016), there is broad range of the advantages of internet banking as
convenience, speed and reliability, security and low cost. However, they further illustrate barriers
of internet banking as, system failures, security threats, internet and E-banking unawareness in
remote locations. This study also reveals the issues related to the lack of using internet
banking facilities.

2.2.7 Society awareness

Awareness is a social component which increases the collective consciousness among the people
and generates confidence in the industrial to face problems confidently. However, the success of
the banks depends on to which extent people in the particular country aware about the banking
activities. When considering about the deposit mobilization, customer awareness is a key
element to absorb high amount of deposits. Customer awareness about the services depends upon
many factors such as return on investments, promptness, care, security, convenience, growth,
flexibility etc. Hence integral part of banks is deposit mobilization, therefore banks should pay
attention to attract more deposits by giving knowledge and promoting them (Kanthi, 2015).

According to (Banqui., 1987)some analysts argue that demand for deposits influenced by
education level and awareness of customers related to banking activities. Moreover, according to
the study done by Banqui it considers the awareness as the factor affecting for deposit
mobilization and concluded as it has significant and positive impact on deposit mobilization.
“Challenges of Deposit Mobilization and related Costs”, the study carried out by (Garo.,

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2015)reveals that customer awareness is highly associates with the deposit mobilization by
performing regression analysis.

According to(Banqui., 1987), also indicates that among so many factors affecting for deposit
mobilization, consumer awareness is crucial factor. Some factors that emphasize the need of
making consumer aware in order to achieve maximum satisfaction as protection, against
exploitation, control over adverse selection, motivate people for savings, knowledge to handle
problems, and finally to construct healthy society, customers are to be awaked by the banks
because customers have right to safety, informed, choose, information and redressed.

2.2. 8. Working hours

Working hours is the best method of business area to provide for customer to sale the output
.Working time in bank industry the major input. Majorly, an investment banker is an individual
who works in a financial institution that is in the business primarily of raising capital for
companies, governments and other entities, or who works in a large bank’s division that is
involved with these activities, often called an investment bank. Investment bankers may also
provide other services to their clients such as mergers and acquisition advice, or advice on
specific transactions, such as a spin-off or reorganization. In smaller organizations that do not
have a specific investment banking arm, corporate finance staff may fulfill the duties of
investment bankers(Gregory, 2008).

Generally speaking, the investment banker will save the company in question time and money by
identifying risks associated with a project before the company moves forward. In theory, the
investment banker is an expert in his or her field who has a finger on the pulse of the current
investing climate, so businesses and institutions turn to investment bankers for advice on how
best to plan their development, as investment bankers can tailor their recommends to the present
state of economic conditions(Gregory, 2008).

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2.2.9 Inflation rate

Banks in their quest to boost deposits and increase self-sufficiency must analyze the behavior of
depositors in a period of inflation. The latter is the persistent increase in the general price level
for a specified period of time. Thus, it is a fall in the market value of money (purchasing power)
as a result of persistent rise in prices. The real value of money is decline for the resultofin benefit
to debtors and loss to creditors (Brealey, 2003). From the monetarist point of view inflation is
demand pull and an exogenous rise in money supply is the causality. In the short run an increase
in money supply induces demand above supply of goods and services which causes prices to rise
until the market adjusts to the equilibrium. The structure alist, however, argues from the effect of
changes in the socio-political, economic and institutional structures with the view to increasing
growth in the economy of market failures”. (Kirkpatrick, Nixon, 2001) expresses the most
popular view held by economists by characterizing on int1ationary period as the period of
uncertainty. Distortion of capital gain and negatively impacts on the real interest rate making
markets difficult to allocate resources efficiently. Investors with surplus funds hold on to assets
which can appreciate in value rather than money whose value are frequently eroded away.
Empirical evidence from Latin American countries as stated in the World Development Reports
indicates that inflation is an implicit tax on depositors and has the capacity to reduce profits
through low deposit rates. A strong correlation exists between real interest rates and inflation as
both can impact on deposits and savings.

2.2.10 Exchange Rate

Exchange rates are quoted as foreign currency per unit of domestic currency or domestic
currency per unit of foreign currency (Bishop, 2006). Exchange rate allows denominating the
cost or price of a good or service in a common currency. As Thomas’s explanation, the term
depreciation and appreciation is used to show the decrease and increase in the value of currency.
Depreciation isa decrease in the value of currency relative to another currency.Appreciationsand
increase in the value of a currency relative to another currency. The main factors that influence
exchange rate are: inflation, interest rate, speculation, and change in competitiveness, balance of
payment, government debt, government intervention and Economic growth / recession.

According to(Ngula, 2015) as currencies depreciated in one country deposit will be reduced
since investors tend to withdraw deposit and exchanged to keep it by appreciating currency

1
(Hard currency) or invest in another form of investment rather than bank deposit. (Alemayehu.,
2015)also confirms that for developing country in general saving is negatively correlated with
unstable exchange rate.

2.2.11 Technology
Technological progress and banking organization size Technological progress may facilitate
increases in bank size(Radecki, 1997). It may create new services that are subject to more scale
economies or fewer diseconomies than traditional services. For example, IT-driven innovations
for delivering depositor services, such as call centers, ATMs, and Internet banking, may exhibit
greater economies or less diseconomies of scale than traditional branching networks (Wenninger
and Orlow, 1997). Similarly, some wholesale products that are financial technology-driven, such
as securitization, derivatives, and other off-balance activities may be more efficiently provided at
the margin by large banks, consistent with the dominance of large banks in these products.
Technological progress may create new technologies for producing existing banking services
that are subject to greater scale economies or fewer diseconomies than the technologies they
replace. The newer electronic payments processing technologies may have increased scale
economies due to IT innovations. Similarly, credit scoring may be characterized by greater scale
economies or fewer diseconomies than the lending technologies it replaces. This may be most
likely when credit scoring supplants relationship lending, which may be most efficiently
provided by small institutions. Third, technological progress may allow large banks to push out
their risk-expected return frontiers more than small banks. Any scale economies in new risk
management systems may help large banks control risks more than small banks. This may
expand or create advantages for large banks to make high risk-high expected return investments,
improve access to uninsured funding, and/or economize on costly equity capital. Fourth,
technological progress may reduce managerial diseconomies of scale. IT advances may improve
monitoring and control within large banks more than within small banks. These technologies
may make it easier for managers of large banks to monitor the behavior of their staff, reducing
agency problems and better aligning incentives within the bank. New technologies may also help
spot operational problems and keep track of the profits and risks associated with different
operations. In addition, many of the advances in financial technologies are based more on “hard”
quantifiable and verifiable information that may be easier for the management of large
organizations to track. To the extent that new products of financial engineering, such as
derivative contracts or loans based on credit scores, are more the provinces of large banks, they
may improve their monitoring of performance more than small banks (Orlow, 1997).

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2.2.12 Consumption

Consumption theories have been developed over the years to explain consumption nd
income. The specific and simple consumption has a positive function of disposable income.
Thus, consumption expenditure increases as disposable income increases and saving
amount decrease(Smith, 2005). Though consumption depends on disposable income, there
is a part of consumption which does not depend on disposable income and this is called the
autonomous consumption. Consumers increase their consumption as their income
increases but not as much as the increase in their income. The average propensity to
consume which is the ratio of total consumption to total income falls as the level of income
increases(Smith, 2005).Current consumption depends on current income but this
assumption is not always true in reality. Taken consumption and savings decision, people
considers both present and future. So that, the more people consume in the current period
the less they save, the less they save less they will be able consume in the next period.
Deposit rate is major motivating factor for consumers to save in the current period(Smith,
2005).

2.2.13 Management Administration

Management administration refers to the process of managing the bank’s statutory activity. Bank
management is characterized by the specific object of management financial relations connected
with banking activities and other relations, also connected with implementation of management
functions in banking (Minsk, 2017)

The main objective of bank management is to build organic and optimal system of interaction
between the elements of banking mechanism with a view to profit. Successful optimization of
the "profitability-risk" ratio in a bank lending operations is largely determined by the use of
effective methods of bank management(Belarus, 2017). Ability to take reasonable risk is one of
the elements of entrepreneurship culture in general and banking culture in particular. Reliability
of the bank management is determined by the following characteristics, management expertise in
strategic analysis, planning, policy development and management functions; quality of planning;
risk management (credit, interest rate and currency risks); liquidity management; management of
human resources; creation of control systems: audit and internal audit , monitoring of

1
profitability and risks liquidity; unified information technology system: integrated automation of
workflow, accounting, current analysis and control, strategic planning (Minsk, 2017).

The role of managers to facilitate deposit mobilization are assess and studying the saving culture
of target community , evaluate the relevance and sustainability of strategy selected to expand
saving schemes and studies and submit alternative saving models to assist in the inculcation of
saving culture and hence increase of deposit(Tobias ,2011).

Performance will depend on the vision, capability, agility, professionalism, integrity, and
competence of the Financial Institution’s management. A sound management is crucial for the
success of any institution. The quality of the management will determine the success of a bank or
financial institution. The performance of a bank is largely dependent on the vision, competence,
and integrity and risk appetite of the management (Tobias, 2011).

A positive relationship is expected between efficiency and profitability of banks. The analysis of
the quality of a management is based on the experience of the management and their track record
in terms of their vision and competence in running the bank. The analysis of the management
also factors in their integrity and the overall corporate governance standards in the bank. The risk
appetite in terms of the bank’s exposure to various categories of asset, adoption of technology
and responsiveness to competition and growth strategy impacts the bank’s profitability thus is
considered during the analysis of bank profitability (Brickwork ratings 2008). Although, the
relationship between expenditure and profits appears straightforward implying that higher
expenses mean lower profits and the opposite, this may not always be the case. The reason is that
higher amounts of expenses may be associated with higher volume of banking activities and
therefore higher revenues (Tobias, 2011).

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2.2.14 Banking Ethics

Banking ethics for the development of banking were developed three general concepts like
Concept of general ethics, Concept banking professional ethics and Concept of ethical bank. The
first concept is related to the promotion of the basic idea of the banking that there can be no
moral standards other than generally accepted by society. This is the earliest conception of the
ethics of banking rather be called general banking ethics and some basic rules, for example, are
related to the formation of customer relationships have been formed since antiquity. In some
countries, traditionally, any activity, including banking, is influenced by the dominant religion.
New era of knowledge comes with a new concept of banking development which is mainly
related to the practice of banking in the virtual environment in which regular personal contact
with the customer in classical banking actually become an exceptional personal service for elite.
Bank management must take into account that a well- managed complaint (discussed and
resolved properly) is a commercial act strongly contributing to the preservation and deepening
customer relationships, to preserve the image of the bank and not least the continuous
improvement of services (Dobran, 2009). Concept of ethical bank which in some sources is
called social civic or sustainable banks activity is related to the financial institution that gives
priority in its social and environmental impact of its investments and loans. Promoting support
for sustainable development in the banking sector is facing two main directions (Eremia, 2006).
The mainstreaming sustainable development is the core activities of the bank by integrating
environmental and social considerations into product design policies and strategies. A similar
form of manifestation of banking ethics is the concept of socially responsible bank referring to
an alleged bank debt (as a social actor) would have it to all parties involved in the conduct of
banking. According to the literature, the banking sector showed a delay in considering issues of
sustainable development despite the exposure to risk this intermediate sector of the economy.
The effort to adopt socially responsible practices includes adhering to a series of internationally
recognized principles and practices. In many countries, some banks are considered as adhering to
the concept of social bank statements only at confusing it with mere charity activities (Dobran,
2009).

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2.3 Empirical Literature Review

Under this section, previous empirical studies on the challenges of deposit mobilization in
commercial banks and related studies in developed and developing countries like Ethiopia will
be reviewed. The past models for banks deposit have been further developed in recent times and
empirically tested worldwide. Many empirical studies have estimated the effects of various
economic and demographic variables on bank deposit in cross-country, using time series and
panel data samples. The literature suggests that there are a number of challenges that crucially
affect the commercial banks deposit activities including Interest Rate, Inflation, exchange rate,
monetary policy, service, security, bank image and value of money.
The study conducted by (Abera, 2017), the study were used to identify deposit mobilization
activities by using descriptive analysis, techniques in managing deposit mobilization used by the
bank and challenges faced with respect to deposit mobilization in bank of Abyssinia .The study
shows that bank of Abyssinia's deposit mobilization strategy is successful and the bank mobilizes
its deposit in different strategies. Such as, give support to branch managers, attracting depositors
by visit customers in their office, contacting customers to reactivate their inactive account,
handling staff salary of the customer company. But, BOA fails to offer different products for
women and youth, incentive for new customers, enough training for staffs about deposit
mobilization, fair loan distribution for its branch and customer.

The study conducted by (Kibebe, 2016), to assess determinants of deposit mobilization in

Ethiopian private commercial banks and the study adopts mixed approach to gather the data. The
primary data is gathered using questionnaire. Sampling method of the primary data is purposive
sampling technique. While the secondary sources of data were extracted from annual reports of
all private commercial banks of Ethiopia, data from National Bank of Ethiopia (NBE) and from
Central Statistical Authority (CSA). Regarding the secondary data, the study used time series
data from 2000-2014 for analysis made using Classical linear regression method. The study
shows that, Age dependency ratio, Investment and money supply, are the most significant factors
of deposit mobilization activity. The other variable such as per capita income has insignificant
power to influence the dependent variable. As a result, the study recommended that, Government
should increase investment so as to promote economic growth to mobilize deposits since there is
exist a positive relationship between deposit and investment. And private banks ought to increase
number of branches to mobilize more resources.

2
The study conducted by (Sisay, 2013), examines and assesses factors affecting deposit
mobilization of private commercial banks. Those having two years and above experience senior
Addis Ababa area branches and head office employee were selected for data collection. The
research has used questionnaire and structured interview discussion for employees and the
management of Awash International Bank Share Company. The result shows that the
reconstruction of Addis Ababa roads, aggressive branch expansion of CBE, the current
condominium house construction program, peoples attitude towards using private banks and poor
parking area are strongly influence the deposit mobilization process of Awash International Bank
S.C. Opening of additional branches, and upgrading service deliverance can boost the deposit
balance of a bank positively. The study suggested the management of the bank should arrange
and apply incentive program such as coupon prizes to attract more depositors, open additional
branches near to the customers, promote excellent services and other mores are discussed in the
research

The study conducted by (Sylvester, 2011)the article were used data aims to evaluate the design
of bank products and services; assess their effectiveness of harnessing domestic deposits and
challenges they face in mobilizing deposits. The research is based on relevant books, journals,
articles and other publications. In addition, data from commercial banks in Ghana on deposits
they received from 2000 to 2004 were studied to make recommendations. Results from the
analysis indicated that deposits mobilization of Commercial Banks in Ghana though, has an
upward trend, it increases at a decreasing rate hence, the present level of deposits as a ratio of the
total amount of money in circulation is woefully inadequate. The study also reveals certain basic
facts about commercial banks in Ghana. Their concentration in the cities and a few urban areas
as well as their product design and services are targeted to the literate formal sector employees.
In addition, unfavorable macroeconomic conditions have resulted in negative real interest rate on
deposits while unnecessary government intervention has reduced the confidence in the banking
sector. The effects of these factors are the low deposits that commercial banks receive. The study
concluded with recommendations for commercial banks such as; the need to redefine their
product target, increase their scope to include the large majority etc. in order to ensure
improvements in their operations.

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2.4 Research Gap

The literatures revealed above were not enough by themselves to answer the research question
under consideration, they have some limitations. Most of the literatures were not considered
challenges of political unrest with in the country, challenges of bank management administration,
challenges of promotion, challenges of banking ethics, challenges of working hour, challenges
on increment of consumption, challenges of employees experience sharing, challenges of attitude
and beliefs of customer, challenges of bank service standard and challenges of adapting new
technology which may effect on the result of deposit mobilization on the study. Some of the
literatures were conducted on determinant and factors that affect deposit mobilization of the
bank. And even the variables included in those studies were not all inclusive of the variables
considered in the current study. In order to address the research gap this study uses the research
design presented in the following chapter.

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 CHAPTER THREE
3. RESEARCH METHODOLOGY
3.1 Research methods and approaches
The three common approaches to conducting research are quantitative, qualitative and mixed
approach. Researchers typically select the quantitative approach to respond to research
questions requiring numerical data, the qualitative approach for research questions requiring
textural data, and the mixed methods approach for research questions requiring both
numerical and textural data. Quantitative research can used in response to relational questions
of variables within the research. Quantitative researchers seek explanations and predictions
that will generate to other persons and places. Quantitative research “employs strategies of
inquiry such as experimental and surveys, and collect data on predetermined instruments that
yield statistical data. Qualitative research is also described as an unfolding model that occurs
in a natural setting that enables the researcher to develop a level of detail from high
involvement in the actual experiences. In Mixed methods approach to research, researchers
incorporate methods of collecting or analyzing data from the quantitative and qualitative
research approaches in a single research study. That is, researchers collect or analyze not only
numerical data, which is customary for quantitative research, but also narrative data, which is
the norm for qualitative research in order to address the research question(s) defined for a
particular research study (Cresewell, 2003).

The researcher used mixed approach. Because Mixed methods research is an approach to
inquiry involving collecting both quantitative and Qualitative data provides a more complete
understanding of a research problem than either quantitative or qualitative approach alone
( Creswell, 2003).Looking at the research problems and the philosophy of the different
research approaches together triangulation approach adopted in this study. In this
triangulation, both qualitative and quantitative methodologies used to increase the perceived
quality of the research. The study used both quantitative and qualitative research approaches
(used mixed method) in order to generate the advantage of both approaches like; to address
different objectives of the study, which cannot be achieved by a single method and to enable
one approach to inform another approach, either in design or in interpretation. It also helps to
triangulate the findings of different approaches (either performed concurrently or
sequentially) in an effort to provide greater confidence to the study. But it presents challenges

2
of identifying the quantitative results to further explore and the unequal sample sizes for each
phase of the study.

3.2 Sources of data

The study used both primary and secondary data. The primary data collected through
questionnaire and interview. The questionnaire may comprise both closed and open ended
questions. Closed ended questions are quicker and easier both for respondents and researcher.
Adding open ended questions allows respondents to offer an answer that the researcher didn’t
include in the questions. And also, interviews made for those most related bank officials.
Secondary data will be collected from banks annual report of Bunna international bank s.c
Oromia international bank s.c Brehan international bank s.c, and CBE. While collecting and
using these data for the study, more considerations give to their time period, reliability, and
relevance to the purpose of the study.

3.2.1 Methods of data collection

Method of data collection for this study used questioners, interview and document sources
method. From the several methods of data collection for primary data collection particularly
in surveys is better for descriptive researches. Because it is more important by using of (i)
observation method, (ii) interview method, (iii) through questionnaires, (iv) through
schedules, and (v) other methods which include. Secondary data means data that are already
available i.e., they refer to the data which have already been collected and analyzed by
someone else. Secondary data may either be published data or unpublished data. Researcher
must be very careful in using secondary data (Kotheri, 2004).Therefore the researcher used
questionnaire, interview and document source methods of data collection.

3.2.1.1 Questionnaire
Questionnaire as a tool for data collection has its own advantages and limitations. The
advantages found from the literature includes that the data collected through the use of
questionnaire are efficient, reliable because of anonymous, honest, economical (in terms of
time and money), quick (even possibly mailed), consistent (little scope for bias), offers the
possibility of standardizing and comparing scales, and enables the anonymity of the data
sources to be preserved. Nevertheless, the major limitations are nonflexible (no longer
possible to backtrack once the administration phase is under way), lack of qualitative depth,
low response rate, inability to offset a lack of sufficient data or an error in the scale used

2
(Manion, 2000). The researcher can select several types of questionnaire, from highly
structured (closed ended) to unstructured (open ended). Structured questionnaire is
appropriate to gather straightforward and uncomplicated information. The researcher also
may not have a full range of responses to prepare closed ended questionnaire. In addition, the
respondents have no chances to express their own views, and to qualify, develop or clarify
their own answers. On the other hand, unstructured questionnaire gives a greater insight and
understanding of the topic being studied. To mitigate the limitations of both types of
questionnaire, semi-structured questionnaire is a powerful tool. Researchers tend to use a
combination of both open and closed questions (Dawson, 2002).

Therefore the researcher used questioners for senior staffs and shareholder of Bunna
international bank s,c by using of survey method to accomplished the study of this paper.

3.2.1.2 Interview methods:

An interview is a purposeful discussion and/or conversation with two or more people, and
helps the researcher to gather valid and reliable data that are relevant to achieve research
questions and objectives. The interview method of collecting data involves presentation of
oral-verbal stimuli and reply in terms of oral-verbal responses. This method can be used
through personal interviews and, if possible, through telephone interviews. This sort of
interview may be in the form of direct personal investigation or it may be indirect oral
investigation. The method of collecting information through personal interviews is usually
carried out in a structured way. As such we call the interviews as structured interviews. Such
interviews involve the use of a set of predetermined questions and of highly standardized
techniques of recording (Kotheri, 2004)

The researcher used to interview for branch managers. The reason for the use of interview
with branch manager is summarized reports are prepared by them and also they are involved
on the deposit, supervision and monitoring of the deposit mobilization process in the branch.

3.2.1.3 Document source

The use of documentary analysis has its own strengths and limitations. The strengths are
enables the researcher to obtain the language and words of participants, can be accessed to
the researcher at a time conveniently, represents data which are thoughtful and economical.
Whereas, the limitations include incompleteness, lack of accuracy, requires transcribing or

2
optically scanning for computer entry, not all people are equally articulate and perceptive,
and may be protected from private access (Cresewell, 2003)). For this study data obtained
through other documents such as annual report Bunna international bank s.c, annual report of
Oromia International bank s.c , annual report of Brehan international bank s.c annual report
CBE, accounting manual ,credit producer manual ,domestic banking manual and others
documents that are relevant for the study.

The document analysis is applied for examining the number of employees and shareholders a
given fiscal year challenges of management administration, challenges of country political
unrest, challenges of promotion, challenges of increase in consumption, challenges of
banking ethics, challenges of working hour, challenges of employees experience sharing,
challenges of attitude and beliefs of customers, challenges of bank service standard and
challenges of adapting new technology report from 2013/2014_2017/2018 in five
consecutive years in Ethiopia. The data collected five consecutive years because if more than
this the researcher may be difficult to manage. This study use multiple sources of data
including document review, interview and questionnaire that helps to cross validate the data.

3.3 Target Population

Population is the full universe of people or things with a sample would draw from
(Diamantopoulos, 2004). The target population suitable for this study is 359 staff employees
for questioner and 76 branch manager for interview in 76 branches of BIB in Addis Ababa
branches. Target population does not include outline branches because of for deposit
mobilization purpose more represent by city branches and highly effective in deposit
mobilization activities in BIB to considering of other constraint to collect the data from
outline branches. In addition to this the target population includes 20 shareholder of BIB. But
target population does not include outline branches staff 532 (Human resource Directorate,
2017/18), non-clerical staffs 217 (Human resource Directorate, 2017/18) and division head,
department directors and senior officer in head office 165 (Human resource Directorate,
2017/18) because of for deposit mobilization purpose city branches are highly characterize
and more effective in BIB. From the target population the researcher collect different
information and data on the character, practice, type and source of deposit mobilization
challenges in the study area. Employees selected as a target population because, all are
working in bank industry BIB and they are expected to know the challenges of deposit
mobilization of the branches. Shareholders selected as a target population because since they

2
are the owners of the bank and to know the service quality provided by the banks with branch
location and employees, the bank working hours, availability of technology by the bank with
its used challenges and other related problems according to deposit mobilization challenges.

3.4 Sampling technique and procedure

Census type of inquiry involves a great deal of time, money and energy. Therefore, when the
field of inquiry is large, this method becomes difficult to adopt because of the resources
involved. At times, this method is practically beyond the reach of ordinary researchers.
Further, many a time it is not possible to examine every item in the population, and
sometimes it is possible to obtain sufficiently accurate results by studying only a part of total
population. The respondents selected should be as representative of the total population as
possible in order to produce a miniature cross-section. The selected respondents constitute
what is technically called a ‘sample’ and the selection process is called ‘sampling technique’
(Kotheri, 2004)

Probability sampling refers to the sampling method in which all the members of the

population have a pre-specified and an equal chance to be a part of the sample. This

technique is based on the randomization principle, wherein the procedure is so designed,

which guarantees that each and every individual of the population has an equal selection

opportunity. This helps to reduce the possibility of bias (Kotheri, 2004).Therefore to achieve

the objective of the study the researcher used probability sampling of stratified sampling for

senior. For selecting sample employee the researcher use stratified sampling because in order

to get critical information that banking industry’s branches are different grade level and each

grade level has different parameter like in deposit amount, different services quality, variation

in employees in sex, age, education, batch, customer status, work experience etc.

The researcher also used none probable of judgmental sampling to select a particular group

of unit from the population by using of judgmental sampling for appropriate particular unit

from the selecting shareholders. It help in a accomplishing the purpose of a research and

2
enables a researcher to pick those respondents who were useful in data collection for research

findings. Also supported by (Babbie, 1992), this technique enabled the researcher to select a

sample on the basis of his or her knowledge of the population, its elements and research aims.

Maximum variation sampling, also known as heterogeneous sampling used in this research to

capture a wide range of perspectives relating to the thing that the researcher is interested in

studying. It helps the researcher to identify common themes that are evident across the

sample.

The total numbers of target population are 455. From this 359 are branch senior staffs for
questioners, 76 branch manager for interview and 20 are shareholders of BIB for questioners.
Thus in this case the sampling procedure firstly, identify and define the population, determine
the desired sample size, identify the variable and subgroups (strata) for which you want to
guarantee appropriate, equal representation, classify all members of the population as
members of one identified subgroup, randomly select, using a table of random numbers an
“appropriate” number of individuals from each of the subgroups, appropriate meaning an
equal number of individuals

3.5 Sample Size Determination

Sample size determination is the act of choosing the number of observation or replicates to
include in a statistical sample. Sample size refers to the number of individual pieces of data
collected in a survey (Kotheri, 2004). Sampling formula uses two key factors: firstly, the risk
the researcher is willing to accept in the study, commonly called the margin of error, or the
error the researcher is willing to accept, and secondly, the alpha level, the level of acceptable
risk the researcher is willing to accept that the true margin of error exceeds the acceptable
margin of error(Sangeeth, 2007). Often, the sample size is expressed in terms of variance.
Provides the Following simplified formula to calculate sample sizes Yamane, (1967:886)
n=N/ (1+N (e) 2)
Where n is the sample size, N is the population size, and e is the level of precision
Sample Size for ±5% Precision Levels where Confidence Level is 95%, N= 359 and P=0.05
Therefore for questioners n=359/ (1+359 (0.05) 2) =359/1.89=189 employees and for
interview Sample Size for ±5% Precision Levels where Confidence Level is 95%, N= 76 and

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 P=0.05 n=76/ (1+76(0.05) 2) =76/1.19=63 branch managers and 20 shareholders the total
sample size is 272. The larger the sample size means the error was minimized therefore large
sample size is meaning full for reducing errors.

Table3. 1Number of senior staff in different grade level in city branch in BIB
N Grade Branch For questioner For interview
o level number No of %ge % Branch No of %ge %
employee share share*samp number branch share share*sa
le size 189 manager mple
size 63

1 Grade1 64*4 256 71 134 64 64 84 53

2 Grade 2 9*8 72 20 38 9 9 12 7
3 Grade 3 2*9 18 5 9 2 2 3 2
4 Grade 4
5 Grade 5 1*13 13 4 8 1 1 1 1
Total 76 359 100 189 76 76 100 63
Source: BIB human resource directorate, 2017/18

3.6 Validity and reliability of the tools

Sound measurement must meet the tests of validity, reliability and practicality. Validity is the
most critical criterion and indicates the degree to which an instrument measures what it is
supposed to measure. Validity can also be thought of as utility. In other words, validity is the
extent to which differences found with a measuring instrument reflect true differences among
those being tested. One can certainly consider three types of validity in this connection: (i)
Content validity; (ii) Criterion-related validity and (iii) Construct validity. The validity of the
secondary data approved through different mechanisms. The researcher use bank report of the
bank but in order to check the truth the researcher used the team leader’s report of different
department in each year. The researcher assured the validity of the data and method by
showing to research experts. The researcher determined sampling validity by comparing the
instrument items from the sample with the population items that theoretically explained. This
paper compare characteristic of the challenges for deposit mobilization the sample and from
remaining population.

The Pilot Study: The pilot study conducted in 10 branches to see whether the intended
instruments could work as planned. The study suggests that certain items of the
questionnaires and interviews need to be modified. Accordingly, some inconsistencies among

3
the items will be avoided and the ambiguous questions will be corrected. The researcher used
the language of editor in order to assure the reliability of the questioner. In order to check
reliability of responses the researcher followed two procedures. If the percentage and nature
of response are similar and the statistical analysis is the same, the sample can be regarded as
reliable (Inter-rater reliability).

Cronbach’sAlpha: Cronbach’s alpha is most commonly used to assess the internal

consistency of a questionnaire (or survey) that is made up of multiple Likert-type scales and
items. First, Cronbach’s Alpha for pilot study of the instrument devised by the researcher was
determined, and then, after some modifications, the tests were subjected to the final
questionnaire. All of the measures included in the questionnaire showed acceptable levels of
internal consistency reliability (Bagher, 2003).Therefore the researcher used Cronbach’s
Alpha in order to assess reliability of the questionnaires.
Table3. 2Cronbach’s Alpha result
variables No of items Cronbach's α
(n)
Deposit mobilization activities 10 0.84
Management administration 9 0.95
Adapting of new technology 10 0.92
Legal framework 4 0.82
Customer attitude and beliefs 5 0.81
Service quality standard 6 0.83
Source: Output of SPSS 20
Reliability should not be below 0.80 (Carmines & Zeller, 1979, p. 51). Coefficient α:
Exemplary .80 or better; Extensive 0.70 -0.79; Moderate .60-.69; Minimal <.60 (Robinson,
1991, p. 12-18). Look for high positive coefficients e.g., .60 or above (Creswell, 2008, p.
181). Acording to Zikmund Coefficient alpha 0 meaning no consistency, 1 meaning complete
consistency, scales with a coefficient α between 0.80 and 0.95 are considered to have very
good reliability. Scales with a coefficient α between 0.70 and 0.80 are considered to have
good reliability, and α value between 0.60 and 0.70 indicates fair reliability. When the
coefficient α is below 0.6, the scale has poor reliability

From the above table 3.2, it is seen that the reliability value was estimated to be between the
scales 0.8_0.96. Therefore, for all cases the scales used by the research are very good reliable
for data analysis.

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3.7 Methods of data analysis
The term analysis refers to the computation of certain measures along with searching for
patterns of relationship that exist among data-groups. A psychometric response scale
primarily used in questionnaires to obtain participant’s preferences or degree of agreement
with a statement or set of statements. Likert scales are a non‐comparative scaling technique
and are un dimensional (only measure a single trait) in nature. Respondents are asked to
indicate their level of agreement with a given statement by way of an ordinal scale. Most
commonly a 5‐point scale ranging from “Strongly Disagree (SD)”, “Agree (A)”, “Neither
(N)”, “Disagree (DA)”, “Strongly Agree (SA)” used. Each level on the scale is assigned a
numeric value or coding, usually starting at 1 and incremented by one for each level (Likert,
1932)Therefore the researcher used a 5‐point likert scale “Strongly Disagree”, “Agree”,
“Neither”, “Disagree”, and “Strongly Agree”. Descriptive statistics were employing to
analyze data and to conduct documentary analysis. The data presentation conducted based on
Percentages, median, average, tables, and figures to understand the data. Data may also be
used to examine the data in graphical format, to obtain additional insight regarding the
messages within the data and to help clearly and efficiently communicate the message to the
audience. Data visualization uses information displays such as tables and charts to help
communicate key messages contained in the data. Tables are helpful to a user who might
lookup specific numbers, while charts (e.g., bar charts or line charts) may help explain the
quantitative messages contained in the data.

3
 CHAPTER FOUR
4. DATA PRESENTATION AND ANALYSIS
This chapter presents the detail analysis make to assess the challenges of deposit mobilization
in Bunna international bank s.c based on the techniques and procedures identified in the third
chapter. As it was mentioned earlier, data collections was using questionnaires, interviews
and reviews of secondary data. Total questionnaires were 187 collected senior branch staffs
and BIB shareholders. From this questionnaires were167 from senior branch staffs and 20
from share holders. In addition the primary data were collected from interview of 45 branch
managers. That is the response rate is 89.4% for questioners and 71.4% for interviews. The
chapter includes the summaries of data using graphs, tables and charts, different description
of values and interpretations.

4.1 Background information of respondents

From table 4.1 out of the total 167 senior branch staff respondents, 45.5% has females and
54.5% were males. Regarding education level, 82.6% of respondents were BA degree holder,
11.9 % are master holder and 5.5% are attaining master program. Banking work experience
of the respondent are 7.8% were below 3 years, 55.1% were 3-5 years, 23.9% were 5-7 years
and 13.2% were more than 7 years. The variation of respondent’s in terms of education level
and job experience show that they have able to understand the addressed questions.

Table4. 1Respondent Information Background

Variable N=167 Count Percent
Female 76 45.5
Sex Male 91 54.5
Degree 138 82.6
Education level Master 20 11.9
Attending master 9 5.5
Below 3 years 13 7.8
Banking 3-5 years 92 55.1
work experience 5-7 years 40 23.9
Above 7 years 22 13.2
Source survey result of 2019

4.2 Deposit mobilization performance of BIB

All private banks including BIB mobilize their funds from shareholders contribution, their
operational profit and customers’ deposit. From this source largest proportion is deposit.
Therefore, deposit mobilization is a major task for banks and is becoming a decisive factor

3
for private banks in Ethiopia following the growing demand for loan of the expanding
business activities of the country and after the issuance of NBE directive with regard to 27%
bill purchase. This directive instructs all private banks to purchase government bond on 27%
of all loan disbursements (NBE Directive MFA/NBEBILLS001/2011).

Bunna international bank deposit mobilizes mainly in three forms, by demand deposit, fixed
time deposit and saving deposit. Demand deposit is non-interest bearing deposit in BIB that
the bank collects mainly from companies and businessman with the deal that they can
withdraw their money on demand. Fixed time deposit is the contract between the bank and its
customers, which states about the date of withdraw and the special and negotiated interest the
bank should give to the depositor. The last one is saving deposit is an interest bearing the
minimum interest on saving deposit is fixed and settled by national bank of Ethiopia(NBE).
Commercial banks in the country can give interest above the minimum interest rate more than
fixed by NBE as a means to attract customer and compete with each other, but doesn’t pay
less than minimum interest settled / fixed by National bank of Ethiopia (BIB, 2010).

3
 Table4.2 Deposit performance of Bunna International bank s.c
Growth rate in %
Deman saving fixed total
Years Demand Saving Fixed Total d
2013/2014 663,582,816 1,129,550,072 358,457,851 2,151,590.74 - - - -

2014/2015 1,134,566,302 1,823,960,182 542,514,975 3,501,041,459 70.97 61.47 51.34

2015/2016 1,440,008,614 2,753,995,548 1,190, 599,600 5,384,603,762 26.92 50.98 119.45

2016/2017 1,928,093,371 4,081,614,416 1,469,878,258 7,479,586,045 33.89 48.2 23.45

2017/2018 2,231,392,000 5,830,959,000 1,091,209,000 9,153,260,000 15.73 42.85 -25.78

Total 7,397,643,103 15,620,079,218 4,652,659,684 27,670,382,005

Share in 26.73 56.45 16.82 100%

%
Mean 1,479,528,620.60 3,124,015,843.60 930,531,936.80

Variance 388,209,316,201,02 3,512,372,433,585, 215,543,171,140,316,

3,000 350,000 000

Standard 623,064,455.90 1,874,132,448 464,266,271.80

deviation

Sources BIB Annual report from 2013/14- 2017/18

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 Figure 4.1 Growth rate of demand, saving and fixed deposit of BIB

119.45

120
100
80
70.9761.4571.34
50.98
60 48.2 demand deposit in % -
23.45 42.85
Saving deposit in % - Fixed dep
40 26.92 33.89
20
15.73 Fixed deposit in % -
0 Saving deposit in % -
-20 demand deposit in % -

-40 -25.78

Sources BIB Annual report from 2013/14- 2017/18

An analysis of table 4.2 and figure 4.1 reveals that BIB total five year deposit mobilization are
birr 27,670,382,005 which is constituted from saving, demand and fixed deposit by the
contribution share of 56.45%, 26.73% and 16.82%, of deposited respectively largest to
smallest. Which means the bank largest source of deposit is saving deposit. The deviation of
demand deposit is 623,064,455.9, fixed deposit 464,266,271.8 and saving deposit
1,874,132,448. The low standard deviation mean close to the mean while high standard
deviation indicate the data are spread out over wider range of values. When we see the
growth rate of demand deposit in 2014/2015 it accounts 70.97% growth but it gradually
increase in decreasing rate at four consecutive years and in 2017/2018 increase at a rate of
15.73%. the growth rate of saving deposit are seems like demand deposit in 2014/2015 it
accounts 61.47% growth but it gradually increase in decreasing rate four consecutive years
and in 2017/2018 increase at a rate of 42.85%. The growth rate of fixed deposit in 2014/2015
is 51.34% and in 2015/2016 the growth rate is 119.45% and gradually increases at a
decreasing rate in 2016/2017 the growth rate is 23.45%. But in 2017/2018 the growth rate of
fixed deposit are negative which decrease at 25.78%. From the interview result these gradual
increase at decreasing rate and negative growth rate the result of challenges of BIB
characterized by heightened internal weakness and external stiff competition from rivalry
between 16 private banks and 2 government owned banks, customer sophistication,

3
 technological advancement, general high cost of doing business, easy availability of substitute
products from other banks with in bank industry, office rent cost etc. These and other
challenges reduce Bunna international bank s.c deposit mobilization growth performance.
Therefore the fluctuation of gradual increase at decreasing rate and negative growth rate
showing an unfavorable environment for the BIB.

4.3 Challenges of deposit mobilization

4.3.1 Challenges related to deposit mobilization activities performed by the bank
The main task of commercial banks in order to increase deposit mobilization are increase the
awareness of the people about saving, increase quality of customer services, increase scope of
their branch, assess best legal environment, reduce transaction cost, differentiate interest on
different saving account, winning stiff competition by introducing new product and applying
different technology (Kibebe, 2016)
Table 4.3 Challenges related to deposit mobilization activities performed by the
bank
s/no Percent
Statement SA A N D SD
1 BIB is strongly expand its branch number 1.2 44.3 0.6 53.9
2 The bank introduce new product for deposit mobilization 2.9 64.1 1.8 31.2

3 The bank are not offer gift for new depositors 4.2 73.7 1.2 19.8 1.1

4 BIB use different deposit mobilization activities

51.3 48.7
5 BIB gives different train for its staff about deposit 4.2 22.2 2.4 71.2
mobilization
6 Branch manager and customer relation manager visit 15. 8.4 3.6 72.4
selected customer and invite to use the bank product 6
7 The branch doesn’t collected cash from customer by 81.4 1.2 17.4
home to home services

8 Branches have their plan and achieve the given target 44.7 55.3
plan
9 The branch handle different company staff salary for 1.8 64.1 4.2 29.9
deposit activity
10 BIB doesn’t use fully operate interest free banking 92.8 3.6 3.6
services to increase deposit of bank
Source survey questioner 2019

3
Table 4.3 show that more than a half of respondents (53.9%) expansion of branch in BIB is not
ample, and on the reveres 44.3 % of respondents say that the branch expansion is more than
enough. According to (Nursofiza.W, 2006) there is a long run relationship between
commercial bank branch and commercial banks deposits. While branch manager interview
about branch expansion even if the bank try to expand the branch number by intimidation of
NBE the branch opening activity is not accessible and comfort to the customer because of
most of BIB branch’s that operate on first floor and second floor. So that, the challenges of this
factor is difficult to achieve the bank deposit performance activities.

The majority of respondents about 64.1% are BIB introduced new products for depositors and
31.2% of respondent oppose the idea of on BIB introduced new products for depositors on the
other hand interview of branch managers indicate that BIB introduced different product like
Bunna minor’s trust account , Bunna youth target deposit account, Bunna deposit account for
investment , salary drawing account, student fund transfer account, Bunna star account, Bunna
gold account, gift cheek account, Bunna special purpose account and Bunna money market
account to attract depositors they are not fully implemented due to lack of announcement to
customers and lack of initiation of employee to make the customer to use this product. All in
all introduction of new product in BIB as not effective to mobilize deposit. Commercial banks
should offer well designed saving products so that customers of all types can customize their
use of these products to meet their own need which help the bank to mobilize more
deposit(Ariful, 2014).

BIB use different deposit mobilization activities 51.3% and 48.7% of respondent agree and
disagree respectively. From interview result Bunna international bank s.c is start their activities
by use of good name of visionary bank, public powered, uniquely flavored and the most
accessible bank. The bank strategic activities were maintaining its focus on markets and
segments can apply its core competence and strength to win business and deepen relation with
various stakeholders. The bank use five years strategy plan activities to perform deposit
mobilization that strategy plan stretching to 2020/2021(BIB M. , 2016).

That is why 71.2% of respondents are BIB cannot provide training for their employee on
deposit mobilization, and 26.4% respondent are together BIB gives different training for its

3
staff about deposit mobilization. Remain 2.4% respondent are in tacit. Giving training about
the bank service, marketing, and customer service and so on increases the knowledge and
confidence of employees(Girma, 2015).

The majority of respondents about 72.4% are suppose that branch managers and customer
relation managers not visit and promote selected customer and invite to use the bank product
while 15.6% of respondents diverge. Communicating individuals and companies helps the
bank to know the needs of the customers which increases the opportunity to the bank to satisfy
its customers(Assefa, 2014). In other direction the majority of respondents from the survey
result 73.7%, 82.4% and 92.8% are suppose the bank cannot perform the activity of offering
gift to depositors, home to home service and interest free banking service respectively and the
remain respondents oppose the issue. According to (Kumar, 2000), create time-limited
marketing incentives to attract new deposits. For instance by offering a gift to new depositors
commercial of Ethiopia from 2016 up to 2018 developed there deposit by 10%(CBE, 2017/18)
and Oromia international bank mobilized there deposit by 3.2 billion birr from deposit and 188
million birr profit by providing interest free banking service(OIB, 2017/18) . But in BIB there
is no implementation of these activities. So that BIB lost most of benefit for the previous years
from above product.

Branches have their plan and achieve the given target plan 55.3% and 44.7% agree and
disagree respectively. From BIB branch manager response in bank level and all branch level
there is deposit strategy plan. The plan implementation in different branch depends on branch
capacity. The plan that is forward to branches depends on the previous implement activities of
each branch. The level of plan implementation in some years achieved while in other is not
achieved because of internal and external factor. The challenge in bank industry is specially in
BIB is , political unrest in the country, challenges of stiff competition with other private and
government owned bank, customer attitude and believes towards BIB, government interruption
in bank industry related to interest rate, network interruption from Ethio-Telecom and their
own bank system, services quality give to the customer, the problem of adapting and
availability of new technology to the customer, branch location, branch accessibility and
branch convenience, customer expectation from bank.

4
Even though 64.1% of respondents agree On BIB handle different company staff salary for
deposit activities, the branch managers responded during interviews that the performance is
low due to government enforcement of government office and NGO employees paid their
salary on government owned bank.

4.3.2 Challenges related to bank management administration for deposit

mobilization
Bank management administration depends on the vision, capability, agility, professionalism,
integrity, and competence of the Financial Institution’s management. A sound management is
crucial for the success of any institution. The quality of the management will determine the
success of a bank or financial institution. The performance of a bank is largely dependent on
the vision, competence, and integrity and risk appetite of the management(Nugel.R, 2012).

Table4.4 Challenges related to bank management administration for deposit

mobilization
Percent
s/n Statement SA A N D SD
1 The bank management use aggressive promotion to 1.2 32.9 5.4 60.5
increase deposit amount
2 The branch get necessary support from bank 4.8 46.7 48.5
management about deposit
3 The bank management use effectively new product 24.6 8.3 67.1
announcement to increase deposit of the bank
4 The bank management fulfill the branch required staff 43.7 56.3
number
5 The management /branch/ manager assess and studying 53.3 1.2 45.5
saving culture of target community
6 Management /manager/ evaluate the relevance and 52.7 7.8 39.5
sustainability of strategy selected to expand saving
scheme
7 Management/manager can study alternative saving 3.6 50.3 46.1
model to assist in the inculcation of saving culture and
hence increase of deposit
8 The management provides training schemes to the 10.7 4.8 84.5
employee
9 The management introduce sharing experience with 1.8 5.4 84.4 8.4
in the branch and other bank branch staffs
Source survey questioner 2019

4
The above table 4.4 shows more than half of respondents disagree (60.5% and 67.1%) on BIB
management used aggressive promotion to increase deposit amount and management of bank
can use effectively new product announcement to increase deposit of the bank; for underpin of
this idea: from branch managers interview the bank using different promotion method and
announcement, but not effective for the reason that media cost and the used media is
infrequent attending from the customer. Promotion plays an important role in today's
competitive world by which banks communicate with their customers, both current and
potential (Kumar, 2013).

On the issue of BIB offering branches necessary support from management about deposit:
there is a dispute among respondents 48.5% of the respondents adversary bank management of
BIB offer branches necessary support about deposit mobilization, although 51.5% of advocate:
there are management support to branches on deposit mobilization since 4.8% of respondents
strongly agree on the idea. From the interview result deposit mobilization activity is the major
the strengthen function of branch. But the plan is forwarded from head office the department
of Economic Research planning Monitoring and Evaluation department. So that, departments
that is not support deposit mobilization activities of branches rather than plan and forward
strategy plan to branch and prepared the final deposit mobilization report by collecting from
different branch. Furthermore 56.3% of respondents the branch required staff amount in
number is not fulfill by BIB management; on the reveres other respondents 43.7% BIB
management can fulfill the branch required staff amount in number as per requested. However
during the interview BIB branch managers respond the required number of employees that the
task need are not balanced with the actual job description and lode performed that mean small
no of employees cover different tasks beyond their capacity.

The 53.3% of respondents believes that the management /branch manager/ assess and
studying saving culture of target community while 45.5% of respondents are there is no
management /branch manager/ assessment and studying on saving culture of target.
Community Communicating individuals and companies helps the bank to know the needs of
the customers which increases the opportunity to the bank to satisfy its customers (Assefa,
2014).

4
 4.3.3 Challenges related to adapting of Technology for deposit mobilization
The use of technology is sophisticated information and communication between customer and
banks to give better services in a secure, reliable affordable manner and sustain competitive
advantage over the other banks. Technology deployed in banks affects its operational
efficiency and determines its competitive position in the market (Brickwork ratings 2008).
Technological development removed repetitive and time consuming tasks, reduced human
error and extended access to banking related facilities.
Table4.5 Challenges related to adapting of technology for deposit mobilization
Percent
s/no SA A N D SD
Statement
1 The bank uses internet banking, and easily understand 20.9 8.9 70.2
by customer to facilitate deposit mobilization
2 The bank use new technology and update system to 1.8 48.5 2.4 47.3
increase deposit amount by competing with other banks
and to run deposit
3 ATM & Poss machine is available for provide/necessary 22.7 1.8 73.1 2.4
area for satisfaction of customer to deposit mobilization
4 The bank use PC banking to increase customer 7.8 92.2
satisfaction for deposit mobilization
5 The use of mobile banking to facilitate deposit 2.9 94.6 2.5
mobilization for customer is without internet
6 The bank has call banking center to increase deposit 1.2 2.9 91.6 4.3
7 There is no system and internet interruption from Ethio- 25.7 72.5 1.8
telecom and the bank
8 Different service charge to provide new technology is 5.4 25.7 68.3 0.6
fair
9 The use of technology is easily understand by customer 3.5 93.6 2.9
10 The bank use merchant banking 9.6 85.1 5.3
Source survey questioner 2019
From table 4.5 over third fourth and above respondents which are as a ratio of hundred 70.2%,
73.1%, 92.2%, 94.6% and 85.1% are have no interest to use internet banking, ATM and POSS
service, Personal Computer banking, regular mobile banking and merchandise banking
respectively. This indicates that BIB adaptation of technology is not as such effective and
fruitful to mobilize deposit. The reason of the respondent not adopts the available technology
and it is sophistication to adopt this technology; it is not user friendly (93.6% of respondent)
and in addition (68.3% of respondent) service charge on ATM service is costly compared with
other commercial banks in the country. E-banking has enabled banking institutions to compete
more effectively in the global environment by extending their products and services beyond
the restriction of time and space (Turban 2008).

4
More and more the challenges of adoption of new technology is emanates from other third
party called Ethio-telecom which provide networking and communication service for
Ethiopian as a monopole. From the survey 72.5% of respondents there are system and internet
interruption to provide a service. These implies that the eternal and external factors as one
have effect on adoption of modern technology that leads to the deposit mobilization of in BIB
develop into at decreasing rate. From the of that described that even if BIB introduce new the
use of mobile and internet banking to facilitate deposit mobilization for customer is without
internet is impossible and doesn’t easily adopted by users rather than it is difficult and very
complex to apply and it required more knowledge to use these new technology even if new
technology is an essential feature of international banking system. From shareholder response
banking sector has embraced the use of technology to serve its client’s faster and also to do
more with less time. Shareholders indicate that emerging of technologies have changed the
banking industry from paper and branch based banks to digitalized and networked banking
services is changing the way how banks are delivering services to their customers by accessing
of money through an automatic teller machine (ATM) any time, to pay bills and transfer
money without leaving from living room by using online banking etc. But the drawbacks of
technology are not easily adopted by bank users especially in developing countries like
Ethiopia. Due to these customers are forced to go to banks for payments and still they do not to
feel comfortable due to long queues and people are not aware of utmost utilization of
technology since they have a threat towards safety. Introduction of information communication
technology enhances deposit status of the bank adopts information technology based banking
which modifies the way in which customers have accesses to banks and increase customer
access to funds by expanding ATM networks and improving online banking services (Kumar,
2013)

4.3.4 Challenges related to legal framework for deposit mobilization

Banks in Switzerland have been facing pressure due to regulatory and legal developments.
They have led to heavily increased reporting burdens. In addition the tougher international
capital and liquidity standard set and have led to increase cost of bank capital and long term
funding which together have resulted in declining profitability. Government participation in
banking industry, government law such as imposing tax based on bank statement and report to
financial intelligence center Banking regulation in (Swizerland, 2019)

4
 Table4.6Challenges related to legal framework for deposit mobilization

Percent
s/n Statement SA A N D SD
1 NBE rule and regulation equally support all 45.5 0.6 52.7 1.2
commercial bank
2 NBE rule and regulation allows commercial banks 69.6 2.9 27.5
use incentive for deposit mobilization
3 Government rule and regulation for high paid up 5.4 80.8 1.2 12.6
capital& reserve saving to banks negatively affect
deposit growth of the bank
4 The country political unrest is negatively effect of 97.6 0.6 1.8
deposit mobilization activities
Source survey questioner 2019
The rule and regulation which is admin the commercial bank is emanated from national bank
of Ethiopia centrally. The imposition and regulation of the rule and regulation have their own
dilemma some of respondents about 45.5% are the rule and regulation of NBE support and
compress all commercial banks equally; but about 52.5% of respondents are suppose that NBE
rule and regulation have a bias among commercial bank source from survey table 4.6. The
government laws such as private banks doesn't have permission to process every export goods
to china which leads the major depositor of the bank to transfer their account to public banks
and report also another challenge for private banks because the customers were in fear to
deposit in the bank (Shemisu, 2015.

Government rule and regulation for high paid up capital & reserve saving to banks negatively
affect deposit growth of the bank 82.8% agree and 12.6% are disagree. From the additional
suggestion high paid up capital is negatively affected banks because of this amount of money
put in NBE with less interest rate even if that money collected from customer by high interest
rate. The result on country political unrest is negatively effect of deposit mobilization
activities show the 97.6% agree while 1.8% disagrees. From branch manager interview
indicate that in previous few years’ political unrest that has great uncounted impact on deposit
mobilization activities and the great challenges in all private and government owned bank.

4
 4.3.5 Challenges related to customer attitude and beliefs towards private bank
Demographic, social, economic, cultural, psychological and other personal factors largely
beyond the control and influence of the market have a major effect on customer behavior and
purchasing decision (jobber, 2001). Attitude towards a brand is a predisposition to respond in a
favorable or unfavorable manner to a particular brand after the advertising stimulus has been
shown to the individual. Attitude towards a brand has been found to play an important role in
influencing customer purchase decision (Phelps, 1996).

Table4.7 Challenges related to customer attitude and beliefs towards BIB

Percent
S/n SA A N D SD
Statement
1 The attitude and belief of customer is good to the 43.2 5.9 50.9
BIB for deposit mobilization
2 The customer withdrawal their money frequently 49.7 50.3
from BIB bank
3 The customer save their money frequently from 44.3 55.7
private bank
4 The deposit habit of customer for BIB bank are 31.7 2.9 65.3
high
5 Customers deposit their money from excess of 89.2 10.3
consumption
Source survey questioner 2019
Table 4.7 indicates that 43.2% and 50.9 % of respondents agree and disagree in feel of
customer’s attitude and belief to the BIB for deposit mobilization. The additional comment
from BIB manager shows that the customer belief and attitude to private banks still in growing
stage depend on brand name of bank, name of the bank builder and other related issue
customers less interest on BIB even if BIB shareholder is mixed of every region population
and number of shareholder is more and more than other bank shareholder from the beginning.
Most of shareholder selection depends such as profit, amount of dividend, reputation; interest
charged on savings accounts, interest charged on loans, accessibility, attitude toward bank
nationality, bank brand name, incentives for depositor, new product availability within bank,
quick service, location on city and hours of operation are viewed as having more importance
than other criteria such as friendliness of employees, modern facilities, drive-in-service, etc are
the criteria for shareholder purchase of share and the use of service bank selection.

4
The result of customer withdrawal their money frequently their money from BIB bank show
49.7% respondent agree and 50.3% respondent are disagreeing. The customer saves their
money frequently the result indicate the respondent 44.3% agree and 55.7% disagree. For
deposit habit of customer for BIB are high respondent result 31.7% agree and 65.3% are
disagree. While 89.2 and 10.3% agree and disagree respectively customers deposit their money
from excess of consumption. From the comment result of respondent said that the saving
culture of in developing country like us saving is the excess of consumption rather than to save
the money by minimizing expenditure.

4.3.6 Challenges related to service quality standard by the bank

Bank is a customer oriented service industry. A bank depends up on the customers for their
survival in the market. The customer is the focus and customer service is the different factors
(Guo et al.,2008). Organization in business operating in service industry should consider
service quality a key strategic issue for the business success (Spathis et al., 2004). Research
indicates that companies with an excellent customer service quality record reported 72%
increase in profit per employee, compared to similar organization that have demonstrated poor
customer service quality, it is also five times costlier to attract new customer than to retain
excising customers (Duncan,2004).

4
 Table4.8 Challenges related to service quality standard by the BIB
Percent
S/n Statement SA A N D SD
1 The bank working hours are enough for deposit 43.7 2.4 53.9
mobilization
2 The branch opining are full fill the standard 71.5 1.1 25.7 1.7
requirement that sitting by NBE
3 The branch location are convenience for the 22.2 2.9 68.3 6.6
customer
4 The BIB applies standard service measurement in 64.6 35.3
order to provide service to the customer
5 The services serve to the customer is the same in all 81.8 1.2 17.9
BIB branches
6 The quality of service to give the customer it has 51.7 48.3
good quality
Source survey questioner 2019
Table 4.8 most of respondent 43.7% agree and 53.9% disagree about bank working hours are
enough for deposit mobilization and from shareholder and other respondent result indicated
that even if the BIB working hours is for inaugurate local time 2:00 AM up to 12:00 AM hours
are doesn’t enough for deposit mobilization even if working hours depend on three main
factors: the bank, the team, and the situation. In the competition industry the working hours in
BIB is not enough. BIB extends the working hours like that of other banks until local time 2:00
AM up to 1:00 PM or more than that in order to competitive with other private and
government bank.

The branch opining are full fill the standard requirement that sitting by NBE the respondent
result 71.5% argued and 25.7% are oppose the idea. The respondent result about branch
location is convenience for the customer 22.2% and 68.3% respectively. From interview result
indicate that the branch location for BIB not convenience because most of BIB branch open
around first flower, second floor and notin clear area. So that, the BIB management
administration over views their branch location and introduce new method about branch
location. The bank applies standard service measurement in order to provide service to the
customer 64.6% accept and 35.3% reject the opinion. The services serve to the customer is the
same in all BIB branches the respondent result is 81.8% agree and 17.9% are disagree. The
majority of respondent indicate that the quality of service to give the customer it has good
quality 51.7% agree and 48.3% are disagree. From the shareholder indication services quality
of in BIB is in growing stage. Quality of service delivered to customers has been argued to be
critical to customers’ satisfaction, customer retention and contribute to continued existence of
4
the business organization that provides the services. Because customers’ perpetual demand for
improved services quality has kept organizations in the service industry that desire survival in
the highly competitive markets on their toes to continue to seek ways to provide high quality
services for product of the BIB. The BIB services quality is leading performance metric that is
used to rate the bank. In order to competitive with other bank service sundered by BIB good.
But in some branch employee service to the customer there is unexpected response from
branch manager as well as other employees like services not give the customer on time related
to foreign remittances and loan borrowing area, corruption, services delaying from employees
etc. This was also supported by (Macintosh and lockshin, 2007), they said that quality of
service is an important element in the business for maintaining and attracting more customers,
as it increase value (that means may permit higher margins, improve profits, gain competitive
advantages, and maintain loyalty to customers)

4.5 Compressions deposit mobilization challenges

The descriptive statistics (such as mean of distribution and standard deviation of the
distribution) can be employed to investigate and present an overview of from deposit
mobilization, management administration, adopting new technology, legal framework,
customer attitude and beliefs and Service quality standard challenges of deposit mobilization
in BIB bank branches which is more observed problem. Table 4.9 shows the descriptive
statistical results of corresponding 167 total observations. It also describes the overall nature
of employed in the study and their interpretation is presented as follow.
Table4.9 descriptive statics output
variables observation mean Standard deviation
Deposit mobilization activities 167 2.9 1.35
Management administration 167 2.6 1.22
Adapting of new technology 167 2.5 1.2
Legal framework 167 2.45 1
Customer attitude and beliefs 167 2.7 1.21
Service quality standard 167 2.8 1.37
Buna international bank 2.74 1.23

Source: Output of SPSS 2020

4
According to (Best, 1977), standard deviation of the score from 1-1.80 is lowest, from 1.81-
2.61 is lower, from 2.62-3.41 is average/moderate, from 3.42-4.21 is good/high, and 4.22-5 is
considered very good. Besides, the decision rules used in the analysis was average mean less
than 3 was considered as low, average mean equal to 3 was considered as medium and average
mean greater than 3 was considered as high (Best and khan,1995). The mean distribution of
deposit mobilization of the study is 2.74 which are less than 3 that are low and standard
deviation statistics is 1.21, which is in between 1-1.8 that is lowest. It shows as per the
employees perception challenges of deposit mobilization BIB are high.

The mean value of deposit mobilization activities was 2.9 which are lower than the medium
level 3 and its standard deviation was 1.35 which is in between 1-1.8 that is lowest. It shows
the as per the employees perception challenges of deposit mobilization activities on deposit
mobilization of Buna International Bank are higher. The mean value of management
administration was 2.6 which are lower than the medium level 3 and its standard deviation was
1.22 which is in between 1-1.8 that is lowest. So its implication is employee’s perceptions on
management administration in deposit mobilization are lowery workable for the bank done in
target population. The mean value of adapting of new technology was 2.5 which are lower
than the medium level 3 that is low and its standard deviation was 1.22 which is in between 1-
1.8 that is lowest. So its implication is employee’s perceptions of adapting of new technology
on providing bank service are lower.
The mean values of legal framework are 2.45 which are lower than the medium level 3 that is
low and its standard deviation was 1 which is in between 1-1.8 that is lowest. So its
implication is employee’s perceptions of Legal framework on deposit mobilization of BIB
bank service are lower.

The mean values of customer attitude and beliefs are 2.7 which are lower than the medium
level 3 that is low and its standard deviation was 1.21 which is in between 1-1.8 that is lowest.
So its implication is employee’s perceptions of customer attitude and beliefs on deposit
mobilization of BIB banking services are lower. The mean values of Service quality standard
are 2.8 which are lower than the medium level 3 that is low and its standard deviation was 1.37
which is in between 1-1.8 that is lowest. So its implication is as employees perceptions of
service quality expected from deposit mobilization of BIB banking service provisions are low.

5
 CHAPTER FIVE
5. Summary, conclusion and recommendation
5.1 Summary
The purpose of this study was to examine the challenges of deposit mobilization in Bunna
international bank s.c in Addis Ababa branches using of descriptive statistics. The research
instruments were survey questionnaires developed with stratified sampling method, interview
with deposit activities for branches department and documentary review on the last 5 years
performance of the deposit process are applicable constructs. The study applied mixed
approach to get advantage on draw backs of using one approach. In the chapter four, the data
instruments (questioner, interview and documentary analysis) has been analyzed and
interpreted in relation with the statement of the problem and objectives of the study. Then in
this chapter conclusions are made by summarizing the results stated on the data collection
instruments on chapter

5.2 Conclusions
According to the analysis made above in the fourth chapter the researcher has identified a
number of challenges which generally stated below.
From the five consecutive deposit mobilization performance of Bunna international bank s.c
deposit mobilization growth rate increase at decreasing rate for different deposit product
especially fixed time deposit. One of the challenges encountering for deposit mobilization
activities of BIB doesn’t use remarkable branch expansion even if to know its branch number
to increase deposit performance of the bank. The introduction of new product for deposit
mobilization are present but lack of effective promotion these product are not properly
implement with poor selection of announcement media. The way of training support each
staff for deposit mobilization are not properly apply. Even if most branch manager and
customer relation manager visit selected customer but doesn’t invite to use the bank product
due to these new product implementation is low. The cash collection home to home service of
the BIB branches does not use. The branch more likely attempt to handle different company
staff salary for deposit activity but the government and NGO company employees doesn’t use
this product. BIB doesn’t use fully operate interest free banking services to increase deposit of
bank.

5
BIB management administration relatively good related management support to branches by
way of giving plan and evaluate the result of deposit performance with manger study the
saving culture of society but, there is poor management administration related to aggressive
promotion for deposit and new product announcement, branch require staff number is not
enough as with job burdens , low level of training supply and sharing of experience between
bank to other banks and within branch to branches are poor.

BIB apply to use technology in order to create cashless society by providing new technology
and update system to increase deposit amount to competing with other banks and to run the
deposit mobilization activities but, mobile and internet banking not easily understand by
customer, ATM and Poss machine is not available for provide/necessary area with high service
charge, person computer, call banking center and merchant banking is not implement within
the bank. System and internet interruption from the bank and Ethio-Telecom is higher with in
country.

The government rule and regulation allows using all commercial banks incentive for deposit
mobilization but, NBE not equally support all commercial bank there is a bias between private
and government owned banks. High amount of paid up capital and reserve on saving to banks
negatively affect deposit growth of the banks because the collect amount of deposit that fully
use by the bank rather than save on reserve account with less interest rate. The country
political unrest is negatively affected of deposit mobilization activities.

The main challenges of deposit mobilization in BIB is the attitude and belief of customer is
significantly affected that means frequently withdraw their money and as much as not
frequently deposit their money in private bank. The deposit habit of customer in BIB saving
are after excess of consumption.

The services provision to customers from employees serve to the customer is the with branch
to branch is the same by full fill the standard requirement settled by NBE to giving quality
service to the customer but, working hours are not enough for stiff competition for
convenience time for every customer.

5
5.3 Recommendations
Based on the conclusion as well as analysis made in the previous chapters, the following
recommendations are proposed:
 From the finding of the study shows that BIB deposit mobilization growth rate
increase at decreasing rate so that, to advise BIB use increase rate growth at increasing
rate by minimize the finding challenges in order to competitive with other private and
government owned bank in the country.
 BIB branch expansion, connivance location of the branch, service quality and
inaugurate of working hours not attractive and effective. In order to avoid these
challenges BIB advised to use the remarkable branch expansion, connivance location
of the branch in ground level and clear area, rendering quality service excellence to
customer and extended working hours. These would maintain, satisfy and attract more
customer to increased deposit mobilization, because the study confirmed that these
challenges are mostly affected and at the same time show effectiveness in influencing
increased deposit mobilization.
 BIB is also advice to apply of interest free banking and give incentives for depositor,
because the study confirmed that these challenges are extremely effective but not
applied by BIB to influence increased deposit mobilization. Therefore if these
challenges applied then will effectively influencing increased deposit mobilization.
 BIB are advised to use new technology and updated version system and E-banking
such as internet banking facilities, telephone banking facilities, ATM services in all
branches, Poss machine, other credit card banking services, Personal computer
banking, merchant banking and call center banking to facilities deposit inter-bank
networking and widening their services in different areas with minimum service charge
because these challenges were found applied but not effective in influencing increased
deposit mobilization.
 BIB new product promotion and supervision of branches by management are not
properly effective. So that, to recommended BIB management not only product
creation and plan forward to branches rather to using of aggressive product promotion
with frequently attainable media selection and regular supervision and orientation are
necessary for effective deposit mobilization activities.

5
 From the finding system and network interruption in Ethiopia is common in bank
industry in BIB. In order to avoid system and network interruption recommended to
BIB use other alternative system or other option to save the customer.
 The present study assessed only 10 challenges includes challenges of political unrest
with in the country, challenges of bank management administration, challenges of
promotion, challenges of banking ethics, challenges of working hour, challenges on
increment of consumption, challenges of employees experience sharing, challenges of
attitude and beliefs of customer, challenges of bank service standard and challenges of
adapting new technology. The study also focused only on senior staffs and branch
managers in Addis Ababa and shareholders. Therefore further studies could asses more
challenges that influence deposit mobilization focus on all bank staff and customers’ in
city and outline branches and also other banks and/or other financial institution, and if
possible in other area of studies, as it might have different outcomes when compared to
the current study.

5
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 APPENDIX I
Questionnaire for employees
St. Mary’s University School of Graduate
Studies MBA Program
Questionnaire to be filled by Bunna international bank S.C Employees
The purpose of this questionnaire is to collect first-hand information for a study being
conducted on the topic, "challenges in Bunna international bank S.C." case study Addis Ababa
branch as partial fulfillment of Masters of Business Administration (MBA) program at St
Mary’s University prepared by Demeke Tilahun. To this end, I kindly request you to provide
me genuine information, to the best of your knowledge, so that the findings of the study would
be legitimate. The study is purely academic research.

Therefore, for sure, all your responses will be kept confidential. I would like to thank you for
your willingness, effort and sharing precious time to fill the questionnaire and returning it the
earliest possible.
Instruction: Please use the choice from the options given and answer in appropriate. You
don’t have to write your name.
Part I: Respondent profile
1. Gender A, Male B, Female
2. Age A, below 25 B, 25-40 C, 40- 55 D, above 55
3. Education A, Diploma B, Degree C, Master D, Phd
4. Work experience in bank industries A, below 3 years B, 3-5 years
C, 5-7 years D, above 7 years
PART II - Questions on deposit mobilization Please read each statements in this
part carefully and show the extent of your agreement on the statements by putting
" √" or "X" mark in the boxes using the following rating scales( likert scales):
Strongly agree = (SA), Agree = (A), Neutral = (N), Disagree = (D), and Strongly
disagree = (SD)

6
1. Challenges related to deposit mobilization activities performed by the bank
s/no SA A N D SD
1 The bank is strongly expand its branch
2 The bank introduce new product for deposit
mobilization
3 BIB mostly offer gift for new depositors
4 BIB use different deposit mobilization activities
5 The bank gives different train for its staff about
deposit mobilization
6 Branch manager and customer relation manager
visit selected customer and invite to use the
bank product
7 The branch collected cash from customer by
home to home services
8 Branches have their plan and achieve the given
target plan
9 The branch handle different company staff
salary for deposit activity
10 BIB does not full operate interest free banking
services to increase deposit of bank
Please indicate any additional suggestion if you think it is important for question
number 1

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 2. Challenges related to bank management administration for deposit
mobilization
s/n SA A N D SD
1 The bank management use aggressive promotion to increase
deposit amount
2 The branch get necessary support from bank management about
deposit
3 The bank management use effective product announcement to
increase deposit of the bank
4 The bank management fulfill the branch required staff number
5 The management /branch/ manager assess and studying saving
culture of target community
6 Management /manager/ evaluate the relevance and sustainability
of strategy selected to expand saving scheme
7 Management/manager can study alternative saving model to
assist in the inculcation of saving culture and hence increase of
deposit
8 The management provides training schemes to the employee
9 The management introduce sharing experience with in the
branch and other bank branch staffs
Please indicate any additional suggestion if you think it is important for question number 2

6
3. Question related to adapting of Technology for deposit mobilization
s/no SA A N D SD
1 The bank uses internet banking to facilitate deposit mobilization
easily understand
2 The bank use new technology and update system to increase
deposit amount by competing with other banks and to run deposit
3 ATM machine is available for provide/necessary area for
satisfaction of customer to deposit mobilization
4 The bank use PC banking to increase customer satisfaction for
deposit mobilization
5 The uses mobile banking to facilitate deposit mobilization for
customer is without data
6 The bank has call banking center to increase deposit
7 The is no system and internet failure from Ethio-telecom
8 E- banking system is properly effective in BIB
9 The use of technology is easily understand by customer
10 The bank use merchant banking
Please indicate any additional suggestion if you think it is important for question number 3

4. Question related to legal framework for deposit mobilization

s/n SA A N D SD
1 NBE rule and regulation equally support all
commercial bank
2 NBE rule and regulation allows commercial banks
use incentive for deposit mobilization
3 Government rule and regulation for high paid up
capital to banks negatively affect deposit growth of
the bank
4 The country political conflict is negatively affect of
deposit mobilization activities
Please indicate any additional suggestion if you think it is important for question number 4

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5. Question related to customer attitude and beliefs towards private bank
S/n SA A N D SD
1 Attitude and belief of customer is good to the private
bank
2 The customer withdrawal their money frequently
3 The customer save their money frequently
4 The deposit habit of customer for private bank are
high
5 Customers deposit their money only excess of
consumption

Please indicate any additional suggestion if you think it is important for question number 5

1. Question related to service quality standard by the bank

S/n S A N D SD
A
1 The bank sitting working hours are enough for deposit
mobilization
2 The branch full fill the standard requirement that sitting by NBE
3 The branch location are convenience for the customer
4 The BIB apply service standard measurement in order to provide
service to the customer
5 The services serve to the customer is the same in all BIB
branches
6 The quality of service to give the customer it has good quality
Please indicate any additional suggestion if you think it is important for question number 6

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 Appendix II
Interview question
St. Mary university MBA program
1. Can you explain the existing performance and practices of deposit mobilization
in BIB depend on your branch activities?
2. What are the main challenges that affect total deposit mobilization of Bunna
international bank s.c (BIB) especially in your branch briefly explain?
3. Do you have any department that support in your bank deposit mobilization
process? If your answer is yes how this department works?
4. Do you have deposit plan in your branch, if yes what are your strategies to
achieve your deposit plan? Can you achieve the plan in previous budget years?

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 Appendix III

ለቡና ኢንተርናሽናል ባንክ ባለ አክስዮኖች የተዘጋጀ መጠይቅ

ይህ መጠይቅ በ ደመቀ ጥላሁን የሁለተኛ ድግሪ በቅድስት ማሪያም ዪኒቨርሰቲ ትምህርት
ዝግጅት ለ ማጠናቀቅ የተዘጋጀ ሲሆን የጥናቱ ርዕስም በ ቡና ኢንተርናሽናል ባንክ አ.ማ
ቁጠባ ላይ የሚታዩ ተግዳሮቶችን ለመዳሰስ በአዲስ አበባ ላይ ዉስጥ ባሉ ቅርንጫፎች
የተመሰረተ ሲሆን ይህንን ጥያቄ ለመመለስ ዉድ ግዜዎትን ሰዉተዉ ፍቃደኛ በመሆንዎ
በቅድሚያ ምስጋናየን እያቀረብሁ ለሚያደርጉልኝ ትብብር ከልብ አመሰግናለሁ፡፡

1. የቡና ባንክ የአክስዮን ባለበት የሆኑበት እና የባንኩ ደንበኝነት የመረጡበት

መስፈርት ምንድን ነዉ ? ቢያብራሩልኝ?

2. በቡና ባንክ አገልግሎት አሰጣጥ ላይ የሚታዩ ችግሮች ካሉ ቢያብራሩልን?

3. በቡና ባንክ አገልግሎት አንዲሰጡ በተመደቡ ሰራተኞች በኩል የሚታዩ

ችግሮች ካሉ ቢያብራሩልን?

4. ቡና ባንክ የሚጠቀምበት የስራ ሰዓት ከጥዋቱ 2፡00 እስከቀኑ 12፡00 በቂ ነዉ

ወይ?
ሀ. አዎ ለ. አይደለም
5. በተራ ቁጥር ጥያቄ 4 መልስዎ አይደለም ካሉ ከስንት እስከ ስንት ቢሆን
ይላሉ?

6. በአሁኑሰዓትባንኮችእየጠቀሙበትያለቴክኖሎጅእናየህብረተሰቡንየቴክኖሎጅአጠቃ
ቀምእንዴትያዩታል?