WOLLO UNIVERSITY

COLLEGE OF BUSINESS & ECONOMICS

DEPARTMENT ACCOUNTING AND FINANCE

DETERMINANT OF FACTORS AFFECTING SAVING

MOBILIZATION OF UNITED BANK OF ETHIOPIA (A CASE
STUDY ON DESSIE BRANCH)

A RESEARCH PAPER SUBMITTED TO THE DEPARTMENT OF

ACCOUNTING AND FINANCE FOR THE PARTIAL
FULFILLMENTS OF THE REQUIREMENT OF B.A DEGREE IN
ACCOUNTING AND FINANCE

SET BY: - AZMERA EQUAR

ID NO.:- 1884/07

ADVISOR: -SEID MUHAMMED (MSC)

JUNE, 2017

DESSIE, ETHIOPIA
 ACKNOWLEDGMENT
First and for most, thanks to the God, for everything he has done for me in accomplishing my
research.

Next, I would like to express my special gratitude to my advisor Seid Mohammed for his
valuable advice and comment in the whole period of the study.

Finally my gratitude also goes to the employee of united bank of Dessie for their willingness to
provide data for the study.

The last but not the least I would like to thank for my family they support me in every aspect of
my life in financial as well as materials.

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 ABSTRACT
This study was conducted to investigate determinant Factors affecting saving mobilization of
United bank Dessie branch. The study has looked ahead at the potential of the bank regarding
saving mobilization in united bank, Dessie branch as evidence. The study used both primary and
secondary sources of data. The primary data were collected by the means of interview and
questioner and the secondary data were collected from documents and manuals. This study had
found factors that have effect on the total saving mobilization of the bank. These factors include
existence of competitor, market fluctuation, low interest rate, high limitation on providing loan
and so on. Finally, the study forwarded recommendation as to what should be done to mobilized
more saving in united bank.

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Table contents
Title pages

ACKNOWLEDGMENT............................................................................................................................i
ABSTRACT..................................................................................................................................................ii
CHAPTER ONE........................................................................................................................................1
1. INTRODUCTION.................................................................................................................................1
1.1 BACKGROUND OF THE STUDY......................................................................................................1
1.2 Background of the organization.............................................................................................................2
1.3 Statement of the problem.......................................................................................................................2
1.4. Research Question................................................................................................................................3
1. What are the internal factors that affect saving mobilization?.............................................................3
2. What are the external factors that affect saving mobilization?.............................................................3
1.5Objectives of the Study...........................................................................................................................3
1.5.1 General Objective...............................................................................................................................3
1.5.2 Specific objective...............................................................................................................................3
1.6 Research methodology……………………………………………………………………….......4

1.6.1 Research design..................................................................................................................................4

1.6.2. Data Source and Collection Methods.................................................................................................4
1.6.3 Sampling techniques and sample size.................................................................................................4
1.6.4 Data analysis and presentation............................................................................................................5
1.7. Significance of the study......................................................................................................................5
1.8. Scope of the study................................................................................................................................5
1.9. Limitation of the paper.........................................................................................................................5
CHAPTER TWO.......................................................................................................................................7
2. RELATED LITERATURE REVIEW.................................................................................................7
2.1. Definition of saving mobilization.........................................................................................................7
2.2 .United Bank Saving Mobilization........................................................................................................8
2.3. Importance of Saving Mobilization of United Banks............................................................................9
2.3.1. Saving mobilization As a Source of Fund for Loan...........................................................................9
2.3.2. Attracting Saving Mobilization is Cheaper than Raising Equity........................................................9
2.3.3. Fund Investment and Projects............................................................................................................9

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2.4. Factors affecting united banks saving mobilization............................................................................10
2.4.1. Exogenous factors............................................................................................................................10
2.5. Bank Specific Factors.........................................................................................................................12
2.5.1. Liquidity of the Banks.....................................................................................................................12
2.5.2. Profitability Of The Bank................................................................................................................13
2.5.3. Security Of The Banks.....................................................................................................................13
2.5.4. Branches..........................................................................................................................................13
2.5.5. Reserves...........................................................................................................................................14
2.5.6. Endogenous Factors.........................................................................................................................14
CHAPTER THREE.................................................................................................................................16
3. DATA ANALYSIS, PRESENTATION AND INTERPRETATION...............................................16
3.1 Survey Data from Employees..............................................................................................................16
3.1.1 Demographics of the Respondents....................................................................................................16
3.1.2 Factors Affecting the Degree of Saving In Bank..............................................................................18
3.1.3 Degree of interest rate paid by the bank in comparison to other banks.............................................18
3.1.4 The bank paid interest rate to attracting the customer.......................................................................19
3.1.5 Duration of Saving In Bank..............................................................................................................20
3.1.6 Type of Loans Rendered By the Bank..............................................................................................20
3.1.7Purpose lending money......................................................................................................................22
3.2 survey data from customer...................................................................................................................22
3.2.1. General background of the respondents (customers).......................................................................22
3.2.2. Purpose for Saving Money..............................................................................................................24
3.2.3. Reason for selecting united bank Dessie branch..............................................................................25
3.2.4 Motivation for Increasing Saving Amount........................................................................................25
3.3 Analysis of Interview...........................................................................................................................26
CHAPTER FOUR.....................................................................................................................................29
4. CONCLUSION AND RECOMMONDATION.....................................................................................29
4.1 Conclusion...........................................................................................................................................29
4.2 Recommendation.................................................................................................................................31
Bibliography..............................................................................................................................................32
APPENDIX..............................................................................................................................................33

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 CHAPTER ONE

1. INTRODUCTION

1.1 BACKGROUND OF THE STUDY

Saving is an act of giving money or securing in to a bank and to others who promises to
preserve it or to use it and return it in kind, especially the act of placing money in a bank
safety and convenience and saving is an excellent place to build up an emergency cash
fund .the emergency fund can be your life line when you are facing with unemployment
or un foreseen expense. Saving are accounts maintained by retail financial institutions
that pay interest but cannot be used directly as money in the narrow sense of medium of
exchange. Those accounts let customers set aside a portion of their liquid assets while
earning a monetary return. Saving provide the economic security of safety net. By
transferring resources from the present to the future via saving, individuals are prepared
to face an expected and irregular financial circumstance. Besides, it leads to accumulation
of wealth that enables individuals to improve their living standards and to respond to new
opportunities. Most people as form of savings maintain these accounts so as to earn
interest from the banks (Rasial, 2010).

The saving are not only held to meet the needs of the present or the near future but are
also kept by individuals as part of their total stock of wealth. One of the problems, in the
mobilization of saving is that, banking activity in developing countries is limited to the
officially existed marketing activity. In addition, the peoples in the countries have note
found well familiar with all banking activities plus when it comes to savings, people in
general and the poor in particular might not be completely rational and completely
knowledgeable. For this matter, financial education to undeveloped society enables them
to improve their financial knowledge of savings know from their daily income from
future consumption (Sergeant, 2001).

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Maximization of savings customer through intensive collection has been regarded as a
major task of banking. Acceptance of saving is the primary function of united bank.
Maximization of savings of customer can be meet by using high- technologies, training
has given to saving promoting staff, developing high organizational trust, giving client
full pledged facilitate at new(Rose ,1994).

1.2 Background of the organization

United bank was incorporated as a share company 10 September 1998 in accordance with
the commercial cod of Ethiopia of 1160 the licensing and supervision of banking
business proclamation No 84/1994. The bank obtained banking service license from
national bank of Ethiopia and is registered with the trade industry and truism bureau of
Addis Ababa city administration.

United bank built itself into progressive and modern banking institution endowed with
strong financial structure and strong management as well as large and over increasing
customer correspondent base.

United bank provide a full fledge commercial banking service in all its branch out lets to
customer with it is networked with 48 branch. United bank priority in the coming year is
to strengthen its capital base maximizing return on equity benefits from the latest
technology in order to keep a breast with the latest development in the local international
financial service industry.

Vision and mission of the organization

Vision

The vision of united bank is to be the preferred bank in the banking industry of Ethiopia

Mission

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Mission is to render efficient commercial banking product and service at competitive
prices to the best satisfaction of customer by employing state of the art technology along
with enhancing the value of its shareholder and wellbeing of its employees.

1.3 Statement of the problem

Saving is designed to attract funds from customer who wish to aside money in
anticipation of future expenditure or financial emergency. United bank of Ethiopia is
private bank which plays an important role for the overall development of the country
such as increase in saving mobilization by promoting investment as well as capital
formation. However, the bank faced by inter related problem toward of the saving
mobilizations. The problems are both internal and external. Some internal problems are
low skill of employees; management problem and external problem like government
policy affect the united bank.

Even though different researches have been conducted, generally micro finance
institution and specifically Amhara credit and saving institution (ACSI), the studies
mainly focused on credit provision sustainability rather than saving mobilization. For
instance the study conducted in (1999 E.C) by Adino Kidane Reda mainly focused
sustainability of Amhara credit and saving institution in Ambo University. But this was
not sufficient to solve those internal and external problems. This indicates that previous
studies gave less attention for saving mobilization.

As per the researcher's knowledge, so far there was no research which is conducted in
Dessie town particularly in united bank Dessie branch on the same topic and also the
researcher can't find any research conducted on the same topic. So this area gap is the
reason that initiates the researcher to conduct his study on this topic in united bank in
Dessie branch.

1.4. Research Question

In general, the study tried to answer the following research question.

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 1. What are the internal factors that affect saving mobilization?
2. What are the external factors that affect saving mobilization?
3. Which identified factor has the most influence on the mobilization of saving?
4. What activity should the bank use or follow in order to make customers save more
and attractive large number of customer?
5. How could the bank utilize the saving in full manner?
1.5Objectives of the Study

1.5.1 General Objective

The main objective of the study was to determine the factor affecting saving mobilization
of united bank in Dessie branch.

1.5.2 Specific objective

1 To identify the internal factors that affect mobilization of saving.

2 To identify the external factors that affect mobilization of saving.

3 To examine which identified factor has the most influence on the mobilization of
saving.
4 To evaluate the performance of the bank in the mobilization of saving.
5 To determine activities that initiates customer to save.

1.6. Research methodology

1.6.1 Research design

The research design is very important factor to fulfill objectives of the study. Under this
study the researcher used descriptive type of research. The major purpose of descriptive
research design is description of the state of affairs as it exists at present. This study
described the assessment of factor affecting saving mobilization. In this study
quantitative and qualitative approach of doing research will be employed, in order to
express the respondent opinion and perception in terms of percentage.

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1.6.2. Data Source and Collection Methods
In this study both primary and secondary sources of data were used. The primary data
were collected from managers, employees and the customers of united bank, Dessie
branch and allow to a greater accuracy and reliability of the data collection as they are
obtained directly from the above agents through questionnaire and interview.

Secondary data were obtained from monthly and quarterly report of united bank, Dessie
branch, from the written material like reports, books and even newspaper and monthly or
quarterly progress or audit report of this bank.

The study gathered data from primary and secondary source, which helps to achieve the
stated objective of the study. Primary data were collected through face to face personal
interview and questioners were distributed by taking a sample of employees and
customers of the bank. The questionnaires were prepared close ended question as well as
structured interview with branch manager.

1.6.3 Sampling techniques and sample size

The target population of this study was a total of 110 including customers and employees
of the organization. In order to conduct this study the researcher selected 8 respondents
from customers and 12from employees of the organization as a sample by using
purposive non probability sampling technique. The researcher used non probability
sampling technique in order to select the more informant respondents for the study
assuming that these individuals have more knowledge about saving mobilization.

1.6.4 Data analysis and presentation

After collecting the relevant data, the researcher analyzed data by using qualitative and
quantitative method .primary data are tabulated and then analyzed in the terms of
percentage .An interview are discussed in terms of statement (narrative).

1.7. Significance of the study

An increasing of saving at decreasing rate is the major problem of the saving trend. Well
saving mobilization could be explained as good instruments alleviate such problem. So
the study in this area of research will have a great important and significant. Identifying

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the factor, that affects mobilization of saving helps in giving highlight about the factors
for the bank. It also helps to evaluate its operation performance method and adjust some
problems minimize .The study can be used as reference for the future of researcher and
initiate them to perform. This study will come up with in relevant information to improve
its performance regarding saving mobilization.

1.8. Scope of the study

Although saving has many important aspects, this study is limited to deal with the factors
affecting saving mobilization of united bank in Dessie branch. It focuses on internal and
external factors that affecting saving mobilization, however the researcher anticipates
some limitations such as, lack of time during data collection and finalized the data, lack
of language, lack of adequate data, and lack of previous study materials regarding the
study. The research ranged from 2014-2016.

1.9. Limitation of the paper

Even if the study may results in important solution, it would be conducted in Dessie town
because of the existing financial constraint. This study was limited in Dessie town
particularly in united bank. The other problem faced in this research is that the planned
respondents were not give sufficient information and secondary data also not available
easily to gate sufficient information. This constraint enforced the researcher to devote
more and more time to get more information to make the research good and reliable.
Short span of time for interview collecting and analyze of question of the final data for
final report from the manager of united bank Dessie branch

1.10. Organization of the paper

The study is organized in four chapters. Chapter one deals within introduction of the
paper including , background of the study ,statement of the problem ,objective of the
study ,significance of the study ,scope of study, research methodology and organization
of the study. Chapter two deals with related literature review. Chapter three deals about,

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data presentation, analysis and interpretation and last chapter deals with conclusion and
recommendation

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 CHAPTER TWO

2. RELATED LITERATURE REVIEW

2.1. Definition of saving mobilization

Saving mobilization: – are designed to attract funds from customer who wish to set aside
money anticipation of future expenditures or financial emergencies. These mobilizations
generally pay significant higher interest rates. While their interest cost is higher in saving
or thrift mobilization are generally less costly for a bank to process and to manage. Just
as bank for decades offered only one basic transaction mobilization the regular checking
account, so it was saving plan. Book savings is sold to household customer in small
denominations and withdrawal privilege were unlimited. While legally a banker could
insist on receiving prior notice of a planned withdrawal from a passbook saving
mobilization. Few banks have insisted on this technique because of the low interest rate
paid on these account and because pass book savings tend to be stable any way with little
sensitivity to change in interest rates. Saving mobilization; these are mobilization which
the bank pays small interest to the customers who are usually small savers.

Customers can withdrawal any amount standing in their credit by checks without notice.

The bank pays another rate of interest on such saving the interest rate interest rate
increase with the length of period of saving mobilization. Early with draw all (before the
maturity data) are made up giving advance notice.

Advance loan; bank lend certain amount of money to customers as per their request and
charging higher interest rate than it pay for saving mobilization on such mobilization they
have given loan in the following ways.

Cash credits bank advance to business men against certain specified securities. The
borrower can withdraw money through checks according to his requirement, but pays
interest along with principle amount at a regular interval.

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Cash loan: -these are very shorter loans advance to the bull blacker for hot more than
fifteen day, such bills can be recalled at very short notice.

Over drafts- a banks often allows business man to draw checks for a sum greater than
the balance lying in their account. The business man is charged interest on the amount by
which his current accounts or over drawn. Discounting bill of exchange if creditor
holding a bill of exchange wants money immediately, the bank provides him the money
by discounting the bill of exchange.

Financing foreign trade – United bank finances foreign trade of its customers by
accepting foreign bill of exchange and collecting them from foreign bank. It also buys
and sells foreign currencies.

Agency services- bank acts as an agent of its customers in collecting and paying checks,
bills of exchange.

Miscellaneous: - besides, the above noted service the united bank act as, custodian of
valuables of its customer by providing them locker where they can keep their Jewells and
valuable documents.

2.2 .United Bank Saving Mobilization

United bank saving mobilization is major liabilities for united banks. Kelvin (2001) said
that savings of private banks account for about 75% of united banks liabilities. Due to the
fact that united banksare using this liability to lend and gains return on it, and their saving
are using for third person’s business. Therefore, bank should mobilizing more saving
provide limits to the working capital of the bank concerned. If bank has accepting more
saving from customer and can able to lend and through this it can earn more profit. The
higher the saving the higher will be funds at the disposal of bank to lend and earn profits
(Desingea, 1975) therefore maximize its profits the bank should increase its saving.

United banking is a service industry with a high rate of built in profit potential (menaces,
1975). The number one expense item for a bank is interest .United banks mainly depend

9
on the funds saving with them by the public to lend it to other in order to earn interest
income (Drainage 2010)

2.3. Importance of Saving Mobilization of United Banks

2.3.1. Saving mobilization As a Source of Fund for Loan

Herald (20091) states saving mobilization are one of main source of banks to provide
loan. Thus saving mobilization is mainly provided by people as Mohammad and maldi
(20001) however saving can also be provided by business organization NGo government
and so on. Therefore, whether saving are from individuals business and government they
are important financial source of funds,

2.3.2. Attracting Saving Mobilization is Cheaper than Raising Equity

Banks as any other business organization mobilize funds from debt or equity. In the
banks context raising equity is more expensive or costly than attracting saving Lorenzetti
(2010) states that, if the leading channel plays role, the saving growth should lead to an
increase in the supply of loans due to the additional source of financing for banks. As
demand for loan increases because of the development work done by individual, business
and government banks creates a saving by lending to a business man, it is clearly
performing function for which its untitled to are turn in the form of interest payment
( Harold 1946)

2.3.3. Fund Investment and Projects

Debt is largely held by domestic United bank which are funded mainly from saving of
government, demand for bank assets enabled banks to continue to expand their saving
base rapidly and profitable (herald, 2009) individual investor and government are mainly
depending on the saving of banks to fund their investment and development.

Generally, the banking system can be viable only it can mobilize saving at the required
rate and this can be done only by making a bank saving more attractive (V.V hat 1970)

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2.4. Factors affecting united banks saving mobilization
Saving mobilization is an important indicator of the success and efficiency of any credit
agency, which is also affecting banking.

Institution is, the extent to which it is able to mobilize saving of the community on the
form of saving it. But saving mobilization is very difficult task. It depends upon various
factors exogenous as well as endogenous, to the banking system (Designa, 1975).

Exogenous factors are the general economic environment of the region, the volume of the
business transaction of the region, the confidence of the people on the banking systems,
the banking habit of the people and the saving potential of the region. Even when
exogenous factors are more conductive for saving mobilization, banks may fail because
of unfavorable endogenous factors such as location, and type of building and window
dressing ( furniture checks book, vouchers, pay slips etc.) which assure the customers
about physical fitness of bank (Designa).

As Designa (1975) did the study classifies the variables which are claimed to have the
effect o the united bank saving mobilization into two namely exogenous and endogenous
factors. Exogenous has further divided into country specific factors and bank specific
factors for classification purpose. Endogenous factors can be controlled by the banking
system; however the exogenous factors cannot be controlled by the banking system. The
specific factors are factors that are specific to the banking system and the country specific
factors are factors that are specific to the banking system and the country specific factors
are factors that are beyond the banking system.

2.4.1. Exogenous factors

These are factors, that are from country and banks that can affect the growth of United
bank, saving mobilization there discussed as follow.

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2.4.1.1 Country’s specific factors
The country economic social and political factors can affect the united banks, according
to herald, (2009) country specific risks such as political and financial (risk) may affect
the propensity for saving to place funds in the banking system. A bank success in their
operation is mainly depends on the environment where the business in undertaken.

2.4.1.2. Saving Interest Rate

One of the most effective factor for deciding to save in the banking system is the interest
rate (Mohammed. 2005and mahad, 2010), interest rate in the bank system it held at
investment cost form the investor point of view and opportunity cost from the customer
point of view. Weagene banks mobilization saving are interest rate sensitive, therefore as
the interest rate change the saving mobilization United banks will change.

2.4.1.3. Inflation
Is seen as an economic problem in developed countries in the second half of 20 th century?
inflation with effect economic growth employment, income distribution , wealth as well
as social and political conditions of a country can influence its entire dignity (Mohammed
and malady, 2010) with respects to the effect of inflation on saving, it can be mentioned
that in general all individuals who save a part of their income in banks diversely damaged
by the inflation and their assets decrease in proportion with money valve decrease
(Mohamed and mashed; 2010) in the cause as Mohammed and malady (2010) describes
people try to change their cash and savings to more reliable and stable forms such as land
jewelry, antiques art collection saving mobilization.

2.4.1.4. Real Interest Rate

Rea l interest rate is nominal interest rate minus inflation rate. Mohammed and
Mahdi (2010) said that in negative real interest rate condition, people withdraw their
resource from banking system. According to Mohamed and mahadid (2010 some
research supposed that decrease in the real interest rate could decrease true demand for

12
many (in its) extensive definition including saving mobilization therefore, it states that
the interest rate and saving of the bank have positive relationships.

2.4.1.5. Economic Growth

economic performance it generally being measuring gross domestic product (GDP),
available that has also become the universal metric for standards of living (yonne , 2007)
according to herald, 2009, growth is one of the determining factors for waggle banks,
saving mobilization . GDP is calculated by adding up the value added at stage of
production (dedicating the cost of produced input and materials purchased from an
industry is supplies (Jim, 2008).

2.4.1.6. Consumer Price Index

According to heral, (2009), price can also determine United bank saving mobilization and
it can be indicated by consumer price index. In literature there is evidence for the influent
of consumer price index on united banks saving mobilization, however this area was
rarely studies

2.5. Bank Specific Factors

2.5.1. Liquidity ofthe Banks

The concept of liquidity in finance principally lies in two areas (Ismail, 2010):-

A. liquidity of financial instruments in the financial market

B. the liquidity to solvency

The former relate to liquidity of financial market and financial instruments, smooth
transactions and no barriers. As to Ismail, (010), the later discuss the obligation of banks,
to make payments to third parties (filder, 2000:442)

An important measure of liquidity is loan to saving ratio. the loan, to saving ratio is
inversely related to liquidity and conserve the higher the loans to saving ratio the lower
the liquidity and vice versa (diving, 2010). Key liquidity indicator such a share of

13
monetary aggregates loans to saving ratios are important for market operation and
management (shekess, 2005) the banks liquidity management involves acquiring
sufficient liquid asset to meet the bank obligation to customer (von-choosing etal,2010).
according to the findings of Doro, 2009) it is more profitable for savings banks to hold
liquid asset than to investment in liquid assets such as medium – term interest bank
lending to other credit institutions .

2.5.2. Profitability of The Bank

Even and Ekki (2004) find the long run relationship between united bank saving
mobilizing and the profitability of the banks. higher bank profits would tend to signed
inversed bank soundness, which could make it easier for these banks to attract saving
mobilization (herald and hero, 2009) however, the effect of bank profitability and bank
size is found to be insignificant once controlling for the other valuables so, the effect of
profitability and bank size are found to be insignificant once controlling for the other
variables.

2.5.3. Security Of The Banks

Security of banks matters in mobilization saving riskier banks would be able to attract
saving only paying higher interest rates. The security of bank has its own important on its
attractiveness for customers. For example in the existence of saving insurance the savers
no longer are concerned about the soundness of their banks because their saving are
ensured in the event of bank failure. The bank should securities system so as to mobilize
more saving than before and to attract new saving and maintain the existing saver.

2.5.4. Branches
There is relationship between united banks, saving and mobilization banks branches
expansion hot only are saving influenced by bank branches. But the expansion bank
branches are also influenced by the level of saving mobilization in any area. (M.A
Baquietal) (1987) it is expected that banks make decision on expanding their facilities by

14
considering factor such as level of competition, saving potential regional income and
existence of road and vehicles

2.5.5. Reserves
Richards (1959) Said, that reserves that are fixed legally influence the saving that banks
can hold it. According to them reserve requirement determine the maximum amount of
loans and investment that each United bank and banking system as whole may maintain
in relation to saving. Thus it the reserve requirements are 20 percent saving loans and
investment may not exceed 80 percent of saving. there for reserve requirement, limit the
total expansion of bank saving that can occur on the basis of any primary decreases in
saving reserve requirements also have the effect of limiting the reduction in bank credit
and saving that is forced upon the banking system by primary decrease in saving the
United bank can obtain currently to payout to customer only by drawing down their
money ( Richard, 1959).till money according to Richard good and thome (1959) is the
currency that banks keep on hand satisfying day to day needs. They pointed out that
bank saving are large part of the money supply in virtually all countries.

2.5.6. Endogenous Factors

In the literature of endogenous factors are identified that can be affect the growth of
United bank saving mobilization. They are awareness of the society for using banks to
saving their money, convenience of the banks office and service in the banks.

2.5.6.1. Awareness of the Society

According to Baquietal (1987) some analysts argue are determinate for saving of banking
system of the study conducted by taking rural area as its base it is obvious that in
consider the awareness as a factor of saving mobilization. It was also found that literacy
as proxy for awareness about banking, positively influence saving mobilization.

2.5.6.2. Convenience of Banks Office

Road and vehicles directly influence interest bearing rat be airing saving because of the
reduction in customer transaction costs through reduced time spent in travelling to and

15
from bank (M.A Baquietal 1987) banks can mobilize more saving when they make their
service close to their customer.

2.5.6.3. Services in the Bank

Service in the bank should be attractive enough for the customer so as to mobilization
saving. It banks could offer this services, the savers would be inclined to keep a part of
their savings in the form of saving (V.V batt, 1970) names to use to mobilize of saving.

1. Door to door collection of small saves in the form of recurring saving

2. Offering land revenue or insurance premium
3. An investment service
4. Some person like farmers get, their income says once a year, while their
expenditure is spread over the whole year. if bank could collect saving from them
at the harvesting seasons, and assures them regular withdrawals during the year,
farmers may be incurred to keep saving with the bank

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 CHAPTER THREE

3. DATA ANALYSIS, PRESENTATION AND INTERPRETATION

This chapter deals with the analysis, presentation and interpretation of primary and
secondary data. Primary data were distributed through questionnaires and interview.

3.1 Survey Data from Employees

Twenty (20) questionnaires have been distributed to employees of united bank Dessie
branch and all questionnaires are filled and retrieved well The returned questionnaires
were tabulated and then analyzed in terms of percentage in the following section.

3.1.1 Demographics of the Respondents

The general characteristics of respondents are sex, age, educational back ground and
designation are stated precisely in the below table.

Table 3.1.profile of the respondents

No Description No of respondent Percentage (%)

1 Male 12 60
Sex Female 8 40
Total 20 100
2 Less than 20 years - -
20-30 years 8 40
Age 30-40 years 7 35
Above 40 years 5 25
Total 20 100

3 Certificate - -
Educational diploma 4 20
background degree 12 60
MA/MSC 4 20
Above - -

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 Total 20 100

4 Designation Clerk 3 15
Accountant 11 55
officer 6 30
Total 20 100
Source: survey questionnaires, 2009

Above, Table 3.1. Shows demographic characteristics of all respondents by using

frequency and percentage of each response on every demographics characteristics
element of sex is one demography factor, which shows gender differences. This table
shows about 12 (60%) respondents were male and the remaining 8(40%) respondents
were female. From the above table the researcher observed that majority of respondent
were male.

Table 3.1.Indicatethat 8(40%) of respondents were within the age of 20-30, 7(35%) of
respondents were with the age of 20-40 and 5(25%) of respondents are above 40 years.
This shows that the high percentage of respondents is lies among 20-30.

The qualification of the respondent’s shows that the respondents with diploma are about
4 (20%) and the respondent educational qualification of degree are about 12(60%) and
the remaining 4(20%) respondents were with a master’s level and above and there were
none respondent with the qualification of certificate. This shows that the highest
percentages of respondents are with educational qualification of degree.

The designation of 3(15%) respondents was clerk, 11(55%) respondents are accountant,
and 6(30%) respondent are officers. This shows that accountants are more among the
respondents.

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3.1.2 Factors Affecting the Degree of Saving In Bank.
Table 3.2 Responses about factors affecting saving mobilization

No Item No of response Percentage

1 Low interest rates for saving 5 25
2 High limitation on providing 2 10
loan s
3 Market fluctuation 6 30
4 Existence of competitors 7 35
Total 20 100
Source: documentary review, (2014-2016)

From the above table respondents responded that i.e. 6(30%) were market fluctuation, 5
(25%) were low saving interest rate, 7(35%) were existence of competitor, and the last
2(10%) were high limitation on providing loan. Existence of competitors are the
identified external factor which has the most influence on the mobilization of saving for a
bank and also the market fluctuation is an external factor, which affects saving
mobilization and both low saving interest rate and high limitation on providing loan are
the internal factor of a bank that affect saving mobilization.

3.1.3 Degree of interest rate paid by the bank in comparison to other banks.
Table 3.3 Degree of interest rate paid by bank in comparison to other banks interest rate

Description Respondents Number Percentage

In comparison to Higher - -
Medium - -
other banks, what is
Lower 5 25
the degree of interest Similar 15 75
rate paid by bank? Total 20 100
Sources: documentary review of, (2014-2016)

Table 3.3 shows that none of respondents answer that the interest paid on saving
mobilization is higher than other bank while 15(75%) of respondents answer that interest
paid on the saving mobilization by United bank Dessie Branch was similar with other
bank. And 5(25%) of respondent responded that the interest rate paid on saving

19
mobilizing by United bank is lower than interest rate paid on saving mobilization by
United bank is lower than other banks. From the above table the researcher observed that
the interest rate paid on their saving is similar.

3.1.4 The bank paid interest rate to attracting the customer

Table 3.4, bank paid interest rate to attracting customers

Description No of Percentage
Is the interest rate respondent
paid by the bank
attracting the
customer
Yes 15 75
No 5 25
Total 20 100
Source: Documentary review of, (2014-2016)

From the above table 15(75%) of respondents were said yes i.e. interest rate paid by the
bank attracting the customer and 5(25%) of respondents were said no in contrast to yes.
3.1.5 Duration of Saving In Bank

Table 3.5 about period of saving familiar with bank

Description Respondents Number Percentage

Most of the Short term 9 45%
customers fall Long term 7 35%
in which Medium 4 20%
duration of Total 20 100%

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 saving
Source: Documentary review of, (2014-2016)

From the above table 9(45%) of respondents were responded short term, 7(35%) were
responded long term and the remaining 4(20%) were selected medium period of
saving. Based on the table the researcher summarized that the period of time to save is
familiar with short time.

3.1.6 Type of Loans Rendered By the Bank

Table 3.6 Types of Loans Rendered By the Bank

Description Respondents Number Percentage

How many Short term 11 55%
customers are lying in Long term 6 30%
different typesof Medium 3 15%
loans rendered by the Total 20 100%
bank?
Source; Documentary review of, (2014-2016)

From the above table most respondent’s i.e. 11(55%) was answered short term,
6(30%) were answered long term as types of loans rendered by the bank and the
remaining 3(15%) were medium term loan. So, the researcher concluded that the bank
adopted short term loan.

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3.1.7Purpose lending money
Table 3.7, about for what purpose lending money

Description Respondents Number Percentage

For what purpose New 8 40%
customer borrow business
Personal 5 25%
money from bank.
Education 4 20%
construction 3 15%
Total 20 100%
Source: Documentary review of, (2014-2016)

From the above table the respondents i.e. 8(40%) were answered for new business,
5(25%) were answered for education loan and the last 3(15%) were answered for
construction purpose, from this the type of beneficiary enjoying more service for new
business thus large number of customers of bank used the borrowed money for the same.

3.2 survey data from customer

Ten (10) questionnaires have been distributed to the customer of the bank. The returned
questionnaires were tabulated and then analyzed in terms of percentage.

3.2.1. General background of the respondents (customers)

The general characteristics of respondents like sex age, educational background,
occupation and income level are stated precisely in the below table.

Table 3.8, about background of customer (N.10)

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 No Description Gender Respondents
Number Percentage (%)
1 Sex Male 6 60%
Female 4 40
Total 10 100
2 Age Less than 20 years - -
20-30 years 5 50
30-40 years 3 30
Above 40 years 2 20
Total 10 100
3 Educational Literal 7 70
level Illiterate 3 30
Total 10 100
4 Occupation Employee 3 30
Business man 5 50
Service man 2 20
Total 10 100
5 Income Level Less than 1000 birr 2 20
1000-5000 birr 3 30
5000-10000 4 40
10000 and above 1 10
Total 10 100
Source; Documentary review of; (2014-2016)

Table 3.8 indicates that 6(60%) respondent were male and 4(40%) respondents were
female. The researcher observe that majority of the respondents were male. 9

Regarding to their age 5(50%) of the respondents were 20-30 years, 3(30%) of
respondent were 30-40 years and 2(20%) of respondent were above 40 years. The study
observes that the majority of respondent, were literates and 3 (30%) of respondents were
employee, 2(20%) were from service man.

23
Regarding educational level 7(70%) of respondent literate and 3(30%) respondent were
illiterate .the study observe that the major respondent were literate.

Regarding occupation level 5(50%) of the respondent were business, 3(30%) respondent
were employee, 2(20%) service man.

Regarding to income level 2(20%) respondents are earning less than 1,000 birr and
1,000-5,000 birr 3(30%) respondents are earning, 4(40%) of the respondents were 5,000
– 10,000 and 1 (10%) of the respondent was earning 10,000 and above. The researcher
observe that majority of respondents were 5,000 – 10,000 income level.

3.2.2. Purpose for Saving Money

Table3.9.about issue related to saving of money by customers

No Description Respondents
Number Percentage
(%)
1 Why do you saving your
money? 4 40
For security 3 30
To gain interest rate 3 30
For emergency 10 100
Total
Source: Documentary review of, (2014-2016)

The above table 3.9 indicates that 4(40%) of respondent responded that customer saving
money for the purpose of security, 3(30%) of respondents answered that they save their
money to gain interest and 3(30%) of respondents answered that they save their money
for emergency purpose. From the above table researcher observe that the customer saving
their money for the purpose of security.

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 3.2.3. Reason for selecting united bank Dessie branch.
Table 3.10 Reasons for selecting United

No Description Respondents Percentage (%)

Number
1 Why do you select United bank Dessie
branch?
1. Pay higher interest rate for saving - -
2. Near to home 2 20
3. Efficient & effective service 5 50
4. Government bank 3 30
Total
10 100
Source: Documentary review of, (2014-2016)

Table 3.10 show that none of the respondents responded that he/she select the higher
interest rate on saving mobilization, 2(20%) of respondents answered that they select the
bank because of the bank is near to home 5(50%) of respondents answered that they
select the bank because of getting efficient and effective service and 3(30%) of
respondent answer that they select the bank because of it is government bank. From the
above table the researcher observe that they select the bank because of getting efficient
and effective service.

3.2.4 Motivation for Increasing Saving Amount

Table 3.11 about Motive for Increasing Saving By Customer

Description Respondents %
What United shall doing for
customers, to increase their

25
 saving? 5 50
1. Increase interest rate 3 30
2. Provide incentive 2 20
3. Improve its service 10 100
Total
Source: Documentary review of, (2014-2016)

Table 3.11shows that, 5(50%) of respondents answered that they increase their saving
mobilization when the bank increase its interest on saving mobilization, 3(30%) of
respondents answered that they increase their saving incentives for them and 2(20%) of
respondents responded that they increases their saving mobilization when the bank
improve its services. From the above table the researcher observes that customers
increase their saving mobilization when the bank increases the interest rate.

3.3 Analysis of Interview

Factors Affecting saving Mobilization

The researcher made face to face interviews with the manager on the factors that affect
the saving mobilization are as follows:

High limitation on providing loan: - this is the factor that affect saving mobilization.
The bank do not provide loan without collateral securities unlike micro finance. Mostly
United bank provide loan to agricultural, industrial sectors and for business engaged in
import and export.

Problems in saving in agricultural sector: because some years ago government was
providing fertilizer by loan. There were high savings by them in agricultural sector, but
now a day the supply of fertilizer is provided in cash. Therefore, instead of saving they
prefer to buy the fertilizer.

26
Inaccessibility of United in Keble level:-this is also a factor that affects the united
branch saving mobilization due to micro finance, because it has easy accessibility in
Keble.

Existence of competitors: - this is also a factor that affects saving mobilization. Since
there are many private and government bank and there is strong competition among
banks. Their competitor’s affect United in many ways to mobilize saving and customers.
It extended their branch indifferent site in the town. Customer select among those
competitors on the bases of interest rate paid on saving service efficiency and site
convenience.

Interest rate affect saving mobilization; - these are also other factors that affect saving
mobilization. As mentioned above those competitors charge different interest rate on
saving mobilization. Some private bank charges higher interest rate on saving
mobilization, greater than 5% which National bank of Ethiopia (NBE) set Minimum
interest rate 5% interest rate on saving mobilization. While the United bank Dessie
branch is charging only 5% interest rate on saving mobilization. As described above the
national bank fixes only the minimum interest rate. Therefore banks can increase the
interest rate on mobilization for the competition purpose. However, as the researcher
gets information from an interview with branch manager, bank united not using these
mechanisms to increase its saving.

Expansion of informal saving:-the expansion of informal saving i.e.ekub, Indri and

arata affect the level of saving in bank. People set aside their money in such a way other
than bank.

Lack of awareness about saving:- it is the most influence factor that affect saving
mobilization people’s awareness about savings. These poor cultures of saving on society
affect the level of saving of bank.

The bank play very important role for the economic development of the country.

27
Saving mobilization: these are mobilizations on which the bank pays interest to the
customers. It is more relevant to the profitability of the bank.

Special saving mobilization: - it is a special way of saving. This kind of saving is useful
to various religious customers to save their money in bank, only for security purpose not
for interest.

In addition to above saving of the bank, also provide services like loan service and
money transfer services.

Transfer money:-when the people want to move their money from one place to another
place it can use any one of the service. For example, money grams, western union,
express money.

Growth of United bank Dessie branch is dramatic change compared to previous years
saving mobilization. Show increasing. However regarding to estimated saving
mobilization and the actual saving mobilization shows gab. United Dessie branch has its
own interest rate charged on accepted saving and lending loan.

Interest for lending loan:-the bank charged interest rate on borrowed money currently
the bank charged 9.5% interest rate on lending loan.

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 CHAPTER FOUR

4. CONCLUSION AND RECOMMONDATION

4.1 Conclusion
Based on the finding of the study and data presentation the following conclusions are
drawn. The finding of the study revealed that the existing level of saving mobilization
has affected by internal and external factor.

From external factors the existence of compotators and market fluctuation are found to a
significant factors, which affect saving mobilization.

Lower interest is rate regarded as internal factor that affect saving mobilization. And
also high limitation on providing loan found to be the factor that affecting saving
mobilization.

From the manager point of view, society does not have awareness about savings.

In accessibility of the bank in Keble level and explanation of informal saving are found
to be to be the factors that affect saving mobilization.

United bank of in Dessie branch, the most employees is degree holders and among these
most of them employees are accountant. The bank is providing special service for the
religious people according to their request.

Most of saving mobilization through shorter saving and in terms of loan short term loan
is creating more saving mobilization of the bank.

29
4.2 Recommendation
Based on the study conducting survey method the effect of internal and external factors
that determine saving mobilization were identified and possible recommendation are
forwarded so that it may help United bank of Dessie to approach the issue accordingly.
Generally, better understanding those factors and their interrelation ship, that impact
saving mobilization of customer can help to develop targeted strategy, which impact
saving mobilization in united bank.

In addition, the most obvious requirement for saving mobilization is providing high
accessibility of loans to customers and diversification of branches in the different of the
city.

Interest rate paid on saving customer those are also other factors that affect saving
mobilization since compotators charge different interest rate on saving mobilization.
Some private bank charge high interest rate on saving mobilization on national bank of
Ethiopia set minimum interest rate 5% paying interest rate in comparison to compotators
ma increasing saving mobilization customer in united bank of Dessie

In United bank Dessie branch should do more on saving promotion, to increasing saving.
The branch of bank should give more attention to satisfy the customer according to their
request.

The bank should adjust the rate of interest according to demand of loan. If the bank
revised the rate of interest it will attract customer. If the bank will provide effective and
efficient service to the customer comparatively than the compotator bank, it can also
attract the customer.

The bank should take necessary step to create saving awareness among the people by
giving attractive advertisement or they can take with the customer direct about savings.

30
 Reference
 Devinagarasian(1010) theoretical frame work of profitability as applied to United
bank in Malaysia
 ea.shad (1995) opportunity result of united bank in Jamaica (1995-1993)
 Erna rachmawat; and EKK; symasulhakim (2004) factor affecting moudaraba
saving in Indonesian. Esutaciuesn. Betubiza and Davidj.leatham 1995. Factors
affecting banking lending to agriculture southern agriculture united bank lending
to agriculture southern agricultural economy association.
 Herald fingeranheikoHess (2009): labanon – determine ants of united bank saving
in regional financial center.
 Howellspter and BainKeith (2000) financial market and institution of education.
 Kelvin A. sergeant 2001 the role of united bank in the financial growth and
economical developmentTobago.
 Saving mobilization in Bangladeshi mark Carson (2006) m. shubik and Mr.Soble
(1992) on matching book; a problem in banking and corporate of finance.
 Sayeayou nuns (2009) an analysis of interest rate spread BangladeshiPeters, rose,
1994 bank and insurance editors interest rate practical’s of united bank.
s

31
 APPENDIX
WOLLO UNIVERSITY

COLLEGE OF BUSINESS AND ECONOMICSE

DEPARTMEN ACCOUNTING ANDFINANCE

RESEARCH QUESTIONNAIRES

Dear respondent

The aim of this questionnaire was to collect data for research to be conducted on the
assessment ofdeterminant factors affecting saving mobilization of united bank Dessie
branch .your cooperation in providing genuine response to the following questions is
highly important for the success of this study it is only academic purpose your response
would be kept confidentially.Thank you in advance.

Instruction

I. No need of write your name

II. Put tick mark in the box next to the given alternatives for write your answer on the
space provided

III. Attempt all question

Part one; personal profiles

1. Sex: male □female □

2. Age: less than 20 years □20-30years □above 40 years□

30-40years□

3. Educational background: certificate □ diploma □Degree □MA/MSc□

32
 4. Designation: clerk □manager□Accountant □ officer □

Part Two; general information about the organization

5. What are the factors that affecting the level of saving in your bank?

Low interest rate for saving□market fluctuation □High limitation on providing loan
existence of competitor’s□

6. In comparison to other banks what is the degree of saving interest rate paid by your
bank?

Higher □lower □medium □

7Is interest rate paid by the bank attracting the customers?

Yes □No □

8. For what purpose customers borrow money.

New business □Education □personal □ construction□

9. Income level; less than 1,000 birr □ 5,000-10,000 □1,000-5,000 □above10, 000
birr□

10. Why do you saving your money?

For security □to gain interest rate □ foremergency □ other (please specify ……..)

11 What united shall do for customers, to increase their saving?

Increase interest rate □

Provide incentive □

Improve its service □

12 Why do you select united bank of Dessie branch?

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 Pay higher interest rate for saving□

Near to home□

Efficient & effective service □

Government bank □

13 Types of Loans Rendered By the Bank

Long term □

Short term□

Medium□

Interview questions
1. What are the internal factors that affecting saving mobilization?

2. What are the external factors that affecting saving mobilization?

3. From the factors, which is the most influencing?

4. Is saving has more relevant to the profitability of the bank?

5. What is the growth rate of saving mobilization compared to previous year?

34