ASSESSMENT ON FACTORS AFFECTING SAVING

MOBILIZATION (IN CASE OF DASHEN BANK, SAWLA BRANCH)

ARBAMINCH UNIVERSITY
SAWLA CAMPUS

COLLEGE OF COMMERCE AND BUSINESS ADMINSTRATION

DEPARTMENT OF COOPERATIVE ACCOUNTING AND

AUDITING

A RESEARCH PAPER SUBMITTED TO THE DEPARTMENT OF

COOPERATIVE ACCOUNTING AND AUDITING FOR PARTIAL
FULFILMENT OF BACHLOR OF ARTS (BA) DEGREE IN
COOPERATIVE ACCOUNTING AND AUDITING

PREPARED BY: ID

MESUD MOHAMMED.................................…SSHR/949/14

ADVISOR: MR. DANIEL T. (MSc)

SUBMISSION DATE: MAY, 2025

GOFA, SAWLA, ETHIOPIA
 Declaration
I hereby declare that this Research Project Entitled “Assessment factors affecting saving
mobilization Sawla Branch was done by me during the course of research report and that it has
not previously formed the basis for the award of any degree or diploma, associate ship fellowship
or other similar title of any university
.
Name of the candidate: ________________ Name of the Advisor: ________________
Signature: ____________________ Signature: ___________________
Date: _______________________ Date: _________________________

Department Head: _____________________

Signature: ____________________
Date: _________________________________

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AKNOWLEDGMENT
First of all, I would like to express my deepest and heart full thanks to Almighty God and also for
my advisor instructor Daniel. T, to his valuable professional advice from the beginning to the end
of this research paper, next going to thanks all respondents who spent their valuable time in
filling questionnaire. And I am going to thanks my families and all my friends who assisted in
different aspect throughout my study. My last thanks for Arba Minch University department of
cooperative Accounting and auditing for design such project through which student development
their knowledge.

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ABSTRACT
This study aims at assessment of deposit mobilization in Dashen bank at Sawla branch. So as to
achieve stated objective the study adopted a mixed method research approach. In this regard,
primary source of data were used. To this end, the necessary data were collected through
questionnaire and interview conducted with the manager of the bank. The Researcher used
judgmental sampling technique to select target population among the employees and the
researchers used descriptive method of data analyzing. The analysis of the data revalued that the
change of the policy of the bank affects deposit mobilization this affects customer’s satisfaction in
getting service. Therefore, it is important to the company to consult the employees when the
organization aims to change the policy. So that employees become award of change and got
ready to accept the change and their performance would be improved. In addition to this the
bank hold cash for transaction motive that means for withdrawal of customer but it is not
enough, so it is better if the bank hold cash for speculative motive or investing in profitable area.
There are factors that affect deposit mobilization, saving interest rate, inflation, liquidity of the
bank, security of bank etc. if the over that mentioned by the respondents. The bank grants short
terms and long-term loans to the customer as the result of analysis reveals but most of the
respondents say that the bank grants short term loans for one year.

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KEYWORD
Saving mobilization
Commercial bank
Interest rate
Deposit mobilization
Bank sector
Customer satisfaction
Financial institution
Economic growth
Deposit mobilization
Saving behavior
Bank profitability

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Contents
Declaration...................................................................................................................................................i

AKNOWLEDGMENT..................................................................................................................................ii

ABSTRACT................................................................................................................................................. iii

KEYWORD..................................................................................................................................................iv

List of table................................................................................................................................................ vii

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

1. INTRODUCTION.................................................................................................................................... 1
1.1 Background of the study.............................................................................................................................1
1.2 Statement of the problem...........................................................................................................................1
1.3 Motivations for the Study.............................................................................................................................2
1.4 Research Questions.....................................................................................................................................3
1.5 Objectives of the Study...............................................................................................................................3
1.5.1 General Objective...................................................................................................................................3
1.5.2 Specific objectives.................................................................................................................................4
1.6 Significance of the study.............................................................................................................................4
1.6Organization of the study..........................................................................................................................4

CHAPTER TWO.......................................................................................................................................... 5

LITERATURE REVIEW...............................................................................................................................5
2.1 Theoretical Literature Review.................................................................................................................5
2.1.1 Overview of saving and saving mobilization......................................................................................5
2.1.2 Importance of Saving Mobilization........................................................................................................6
2.1.3 Factors affecting saving mobilization....................................................................................................7
2.2 Empirical Literature Review...................................................................................................................12
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 CHAPTER THREE.................................................................................................................................... 15

RESEARCH METHODOLOGY.................................................................................................................15
3.1 Research Design..........................................................................................................................................15
3.2 Sampling techniques and sample size of the study.....................................................................................15
3.3 Data source and methods of Collection......................................................................................................16
3.4 Data Analysis and Interpretation.................................................................................................................16

CHAPTER FOUR...................................................................................................................................... 17

4. DATA ANALYSIS, PRESENTATION AND INTERPRETATION...........................................................17

4.1 Survey Data from Employees.....................................................................................................................17
4.1.1 Demographics of the Respondents.......................................................................................................17
4.1.2 Factors Affecting the Degree of Saving in Bank.................................................................................19
4.1.3 Degree of interest rate paid by the bank in comparison to other banks...............................................19
4.1.4 The bank paid interest rate to attracting the customer..........................................................................20
4.1.5 Duration of Saving in Bank..................................................................................................................20
4.1.6 Type of Loans Rendered by the Bank..................................................................................................21
4.1.7 Purpose lending money........................................................................................................................21
4.2 Survey Data from Customer.......................................................................................................................22
4.2.1. General background of the respondents (customers)..........................................................................22
4.2.2. Purpose for Saving Money..................................................................................................................23
4.2.3. Reason for selecting Dashen bank Sawla branch................................................................................24
4.2.4 Motivation for Increasing Saving Amount...........................................................................................25
4.3 Analysis of Interview..................................................................................................................................26

CHAPTERE FIVE......................................................................................................................................28

5. SUMMARY, CONCLUSIONAND RECOMMONDATION....................................................................28

5.1 SUMMARY................................................................................................................................................28
5.2 Conclusion..................................................................................................................................................28
5.3 Recommendation........................................................................................................................................29

Reference 30

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 APPENDIX................................................................................................................................................ 31

List of table
Table 4. 1: Profile of the respondents...................................................................................................................17
Table 4. 2: Responses about factors affecting saving mobilization......................................................................19
Table 4. 3: Degree of interest rate paid by bank in comparison to another banks interest rate............................19
Table 4. 4: bank paid interest rate to attracting customers...................................................................................20
Table 4. 5: about period of saving familiar with bank..........................................................................................20
Table 4. 6: Types of Loans Rendered by the Bank...............................................................................................21
Table 4. 7: about for what purpose lending money..............................................................................................21
Table 4. 8: about background of customer (N.10)................................................................................................22
Table 4. 9: about issue related to saving of money by customers........................................................................23
Table 4. 10: Reasons for selecting Dashen bank..................................................................................................24
Table 4. 11: about Motive for Increasing Saving By Customer...........................................................................25

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 CHAPTER ONE

1. INTRODUCTION
1.1 Background of the study
Saving is an act of giving money or securing into 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. 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 as idea portion of their liquid assets while earning a monetary
return. Saving provide the economic security of safety by transferring resources from the
present 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 one opportunities. Most
people as form of savings maintain these accounts so as to earn interest from the
banks (Rasial, 2010).

The saving is not only held to meet the needs of the presenter the near future but is also
kept by individuals apart of them to 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 not
found well familiar with all banking activities plus when comes to savings, poor people 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. (Sergeant, 2001)

1.2 Statement of the problem

Saving is design to attract funds from customer who wish to aside money in anticipation
of future expenditure or financial emergency. The success of the banking greatly lies on
saving mobilization (Selvaraj, Kumer, 2015).
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 Despite many researches were conducted on saving mobilization in commercial banks,
the researcher found out that the major factors affecting saving mobilization are branch
expansion, saving interest rate, inflation rate, economic growth Dereje (2017), but main
limitation or weakness of the researches of the previous researches were overlooking of
other factors which are equally important for saving mobilization in commercial banks.
Some of these factors are bank services, security of bank, and other technological impacts.
The reason for my study is there are technological changes in the industry, economical
and policy changes are happening; then knowing the current situation will help to assess
the factors of saving mobilization. (World Bank, 2021)

Therefore, this was the reason that initiates the researcher to conduct their study on this topic
in Dashen bank in Sawla branch. And the purpose of this study was, to assess the factors
affecting saving mobilization for and recommend ways for enhancing the capacity for
mobilizing saving concentrating the case mainly on Dashen bank in Sawla branch.
( bogale, 2018)

1.3 Motivations for the Study

• Identification of Research Gaps: The primary motivation for this study stems from the
recognition that existing literature has not fully explored the diverse factors influencing
saving mobilization in dashen bank, particularly those related to service quality, security
perceptions, and technological impacts.

• Relevance of Technological Changes: With rapid technological advancements reshaping

the banking sector, it is vital to investigate how these changes affect customer behavior and
their willingness to save.

• Dynamic Economic Environment: The current economic climate, characterized by

fluctuating interest rates and inflationary pressures, necessitates a fresh examination of
saving mobilization strategies.

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• Policy Implications: Understanding the factors that influence saving behavior can provide
insights into how banks can align their strategies with regulatory policies aimed at
enhancing financial inclusion and stability.

• Context-Specific Analysis: Focusing on Dashen Bank’s Sawla branch allows for a

localized analysis that takes into account unique demographic and economic conditions
affecting saving mobilization in that area.

• Practical Recommendations: The study aims to provide actionable recommendations for

Dashen Bank to enhance its capacity for mobilizing savings, ultimately contributing to its
growth and sustainability.

1.4 Research Questions

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

1. What are the internal factors that affect saving mobilization?

2. What are the external factors that affect saving mobilization?
3. What activity shall the bank use or follow to make customers are more and attractive
large number of customer?
4. How can the bank utilize the saving in full manner?

1.5 Objectives of the Study

1.5.1 General Objective

The main objective of the study was to assess the factors affecting saving mobilization of
Dashen bank in Sawla branch.

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 1.5.2 Specific objectives

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

2 To determine the external factors that affect mobilization of saving?

3. To analyze activities that initiates customer to save.
4. To evaluate the performance of the bank in the mobilization of saving.

1.6 Significance of the study

The study was used to identify problems that affect mobilization of saving and
suggested or proposed solution for the identified problem based on the gathered
information. It helped banks to designed and implemented effective saving mobilization
strategies.
The other significance of this study can besides reference for the further researcher (s) and
initiate them to perform. It gave opportunities for researchers to gain deep knowledge in
practice of saving mobilization and important to improved saving mobilization policy and
practice to increased saving mobilization activities by alleviation of existing problems. It also
helps managers of banks, particularly Dashen banks to identified the cause of the
problems and redirect their policies based on the finding of this study in order to maintain
effective saving mobilization practices.

1.6Organization of the study

The study was organized in five chapters. The first chapter deals with introduction of the
paper including background of the study, statement of the problem, objective of the study,
significance of the study, scope of study, and organization of the study. The second chapter
deals with related literature review. The third chapter deals about research methodology. The
fourth chapter deals with data analysis, presentation and interpretation while the last chapter
deals with conclusion and recommendation.

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CHAPTER TWO

LITERATURE REVIEW

2.1 Theoretical Literature Review

2.1.1 Overview of saving and saving mobilization

Saving is equating to income minus consumption (Henderson, 1991). Bank savings consist of
money place into banking institutions for safe keeping. The holder of saved amount (account
holder) has the right to withdraw these funds, as set forth in the terms and conditions governing
the account agreement. Bank savings represent the most significant components of money supply
use by the public, and changes in money growth are highly correlated with changes in the prices
of goods and services in the economy (sergeant, 2001). The “saving” itself is a liability owed by
the bank to the depositor (the person or entity that made the deposit) and refers to this liability
rather than to the actual funds that are deposited.
Saving mobilization is an integral part of banking activity. Mobilization of savings through
deposit collection has to be regarded as the major task of banking industry. Saving mobilizations
is an indispensable factor to increase the sources of the bank to serve effectively. Mobilizing
savings play an important role in development of all spares of economy (Shettar, 2014).
Saving mobilization is design to attract funds from customer who wish to set aside
money anticipation of future expenditures or financial emergencies. In banking sector
saving mobilization is a scheme intend to encourage customers to save more cash with
the bank to disburse more loans and generate additional revenue for them. Furthermore,
the key role of loans, banks offer the more profit they make. However, the success of
saving mobilization process depends on development of the financial system as well as
the strategic practices adopted by banks (Richard, 2015). To mobilize enough savings,
banks shall present various kind of saving schemes to attract customers with respects to
their needs and wants (Zenon, 2015).
Therefore, banks should be more attractive and strategic to absorb those savings
(Hemachandra, 2009).
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 Purpose of saving
According the author (Bhatt, 1970), there are motives to save money, the followings
are the example of some motives: -
 To own house
 To provide for children’s education and marriage
 To provide for old age
 To bequeath property to children
 To provide for emergency expenditure

2.1.2 Importance of Saving Mobilization

A Source of Fund for Loan: -

Herald (2009) 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 (2010)
however saving can also be provided by business organization, NGO, government and soon.
Therefore, whether saving is from individuals, businesses and government they are important
financial source of bank.

Attracting saving is cheaper than Raising Equity: -

The success of the banking greatly lies on the saving mobilization. Performances of the
bank depend on savings, as the savings are normally considered as a cost-effective source of
working fund and in the bank; context raising equity is more expensive or costly than
attracting savings (Shettar & Sheshgiri, 2014). According to Elser (1999) savings are a
source of funds with low costs i.e., interest costs, compared to other commercial funds.

Fund Investment and development of Projects: -

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

2.1.3 Factors affecting saving mobilization

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 the savings
of the community in the form of deposit. But saving mobilization is very difficult task.
It depends up on various factors exogenous as well as endogenous, to the banking
system (Desinga, 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,
cheque books, vouchers, pay slips etc.), which assure the customers about physical fitness of
a bank (Desinga, 1975).
As Design (1975) did the study classifies the variables which are claimed to have effect
on the bank saving mobilization into two, namely exogenous and endogenous factors.
Exogenous has further divided into country specific factors and bank specific factors for
clarification purpose. Endogenous factors can be controlled by the banking system;
however, the exogenous factors cannot be controlled by the banking system. The bank
specific factors are factors that are specific to the banking system and the country
specific factors are factors that are beyond the banking system. (Design, 1975)

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2.1.3.1 Exogenous factors

These are factors that are from country and bank that can affect the growth of bank
savings. There are discuss as follows: -

Country’s specific factors

The country economic, social and political factors can affect the bank. According to Herald
(2009), country specific risks such as political, economic and financial risks may affect the
propensity for depositor to place funds in the banking system. A bank success in their
operation is mainly depends on the environment where the business is undertaken.

A) Saving Interest Rate

One of the most effective factors for deciding to save in the banking system is the
interest rate (Mohammed and Mahdi, 2010). Low interest rate is discouraged saving
mobilization (Mustefa, 2009). Interest rate in the bank system, it held as investment
cost form the investor point of view and opportunity cost from the customer point of
view. Bank mobilization saving are sensitive to interest rate, as the interest rate change the
saving mobilization in the bank will change.(mustefa, 2009)

B) Inflation

According to (Tareq, 2015) Inflation rate is considered to be an influential variable in saving

mobilization. It has an adverse impact on the personal savings rate in the economy.

Inflation reduces the real value of financial holdings, discouraging financial savings by inducing
their holders to shift them into physical or real assets which are better store of value. As inflation
accelerates, savings become less attractive, depending on the interest rate (Zeidy, 1996).

C) Real Interest Rate

Real 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 these authors some research supposed that decrease
8
in the real interest rate could decrease true demand for money (in its extensive definition
including savings and time deposits). Therefore, it states that the interest rate and saving of
the bank have positive relationship. (mahadi, 2010)

D) Economic Growth

Economic performance is generally being measuring through gross domestic product

(GDP), a variable 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
the growth of bank saving mobilization. GDP is calculated by adding up the value
added at each stage of production (deducting the cost of produced input and materials
purchased from an industry’s suppliers. (Herald, 2009)
Technology
Technology capability is a term used to encompass the system of activity, physical
systems, skills and knowledge base, computers usage that create a special advantage
for work simplification (paphil 2008). Technology capability that resulted from the
application of information communication technology simplifies customer service in
the bank, like quick deposit, and another bank service. These services attract more
customers not only to deposit but also new customers to join the bank due to quick
service provided. Most of the new technology is designed to reduce labor and paper
cost, making the banking industry less labor intensive and more capital intensive
(Rose, 1996)

2.1.3.2Bank Specific Factors

A) Liquidity of the Bank

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

 Liquidity of financial instruments in the financial market

 The liquidity to solvency

The former relates to liquidity of financial market and financial instruments, smooth
transactions and no barriers. As to (Ismail, 2010), the latter discuss the obligation of

9
banks to make payments to third parties. Some examples of this includes: setting up liquidity
management policies, reserve liquidity, balancing assets and liabilities and preparing liquid
financial instruments (Ismail, 2010).
An important measure of liquidity is loan to saving ratio. The loans to saving ratio is inversely
related to liquidity and consequently the higher the loans to saving ratio the lower the liquidity
and vice versa (Devinaga, 2010). Key liquidity indicators such as central bank credit to
financial institutions, savings as a share of monetary aggregates, loans to saving ratios are
important for market operation and liquidity management (Sheku, 2005). The bank’s liquidity
management involves acquiring sufficient liquid asset to meet the bank obligation to
depositors. (Sheku, 2005)

B) Profitability of the Bank

According to Erna and Ekki (2004), finds the long run relationship between bank saving
(deposit) and the profitability of the banks. Higher bank profits would tend to signal increased
bank soundness, which could make it easier for these banks to attract savings (Herald and
Heiko, 2008).
C) Security of the Bank

Security of banks matters in mobilization saving. Riskier banks will be able to attract savings
only by paying higher interest rates. The security of bank has its own impact on its
attractiveness for depositors. For example, in the existence of deposit insurance the
depositors no longer are concerned about the soundness of their banks because their savings
are ensured in the event of bank failure. (Mohammed and Mahdi, 2010),

D) Bank accessibility (branches)

There is relationship between banks savings and bank’s branch expansion. Not only are
savings influenced by bank branches, but the expansion bank branches are also
influenced by the level of saving mobilization in any area (M.A. Baqui & Richard L.
Meyer, 1987). It is expected that banks make decision on expanding their facilities by

10
considering factor such as level of competition, saving potential, regional income and
existence of road and vehicles. (Herald, 2009)

E) Reserves

Richard Goode and Richard S. Thorn (1959) said that reserves that are fixed legally can
influence the savings that banks can hold it. According to them reserve requirements
determine the maximum amount of loans and investments that each banks and banking
system as a whole may maintain in relation to savings. Thus, if the reserve requirement is
20 percent of savings, loans and investment (of the bank’s own choosing) may not exceed
80 percent of savings. Therefore, reserve requirements, limit the total expansion of bank
saving that can occur on the basis of any primary increase in saving. Reserve
requirements also have the effect of limiting the reduction in bank credit and savings that
is forced up on the banking system by primary decrease in savings. (Rose, 1996)

2.1.3.3 Endogenous Factors

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

According to Baqui et al (1987), some analysts argue are demand for savings is
influenced by education level which in turn increases the awareness of the rural
people about banking services (Mauri). Since the study of Baqui et al (1987)
conducted by taking rural area as its base it is obvious that it considers the awareness as a
factor of saving mobilization. It was also found that literacy as a proxy for awareness
about banking, positively influence savings.

B) Convenience of Banks Office

Road and vehicles directly influence interest bearing savings because of the reduction in
depositors’ transaction costs through reduced time spent in travelling to and from bank.

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Banks can mobilize more saving when they make their service close to their customers
(depositors).
B) Services in the Bank

It is known that banks are service giving organizations and the service delivery can affect
their business undertakings.

Service in the bank should be attractive enough for the customer so as to mobilize savings.
If the banks could offer the services, the savers would be inclined to keep a part of their
savings in the form of deposits (V.V.Bhatt, 1970).

The followings are services that V.V.Bhatt (1970) claims to use to mobilize of savings:-

 Door to door collection of small saves in the form of savings.

 Offering land revenue or insurance premium
 An investment services
 Some persons like farmers get their incomes say once or twice a year, while their
expenditure is spread over the whole year. If bank could collect savings from them at
the harvesting seasons, and assure them regular withdrawals during the year, farmers
may be inclined to keep savings with the bank.

2.2 Empirical Literature Review

This section provides the relevant empirical review related to the study that the title of factor
affecting saving mobilization in case of Dashen bank. According to (Gockel & Brow, 2007), the
aim of their study is to examine factors influencing deposit mobilization in private commercial
banks in Ethiopia. In doing so, the study adopted qualitative and quantitative methods research
approach using both primary and secondary data. The study had found variables that can affect
the total deposits of the banks. Seven variables are regressed with the dependent variable i.e. total
deposit. The explanatory variables are number of bank branches, saving interest rate, liquid asset
to deposit ratio, lagged value of bank deposits, net interest margin, inflation rate and economic
growth (GDP). The data for these variables were collected from the respective private
commercial banks’ financial statements. The result from regression analysis showed that number
12
of bank branches, deposit interest rate, net interest margin and GDP were significantly and
positively correlated with the explained variable. Lagged value of bank deposit was significantly
but negatively correlated with total deposit. However, liquid asset to deposit ratio and inflation
rate were negatively correlated with bank deposit. Finally, the study had recommended that
banks have to do much in branch expansion studying potential deposit areas. (Gockel & Brow,
2007)

Dereje (2017) the purpose of this study is to investigate determinants of deposit mobilization in
private commercial banks of Ethiopia. The study used both quantitative and qualitative research
approach. Secondary financial data are analyzed using multiple linear regressions models for the
bank’s deposit. Fixed or random effect regression model was applied to investigate the impact of
bank branches, exchange rate, Real Gross domestic product, Capital Adequacy and Liquidity on
private commercial banks deposits. Besides, the study used primary data analysis to ask
managers insight towards the determinants of private commercial bank saving mobilization.
Dereje (2017)
The empirical results from regression analysis showed that bank branches, exchange rate, and
real gross domestic product affects deposit of the bank positively whereas, capital adequacy and
liquidity affect the deposit of the private bank negatively. This implication showed that better
capitalized banks tend to create less liquidity that leads to mobilize little deposit amount. On the
other hand, the feedback of respondents showed that managerial efficiency, government policy,
convenience of bank office, technology, bank size and awareness of savings by society affected
deposit level of the banks significantly. Thus, management bodies of private commercial banks
should strive to strengthen the identified significant factors and government bodies should also
see the adverse effect of tight polices imposed on the existing private commercial banks as well
as for the new entrant banks. (Dereje (2017)

Conclusions and knowledge gap

Theories were well available in various literatures about saving mobilization, but they focused on
factors and challenges of saving mobilization and the empirical studies on bank saving are rarely

13
available. As it was discussed in the literature review part, most of study undertaken in our
country related to the topic of factors affecting saving mobilization focused on a separately
treating the total saving amount to private banks and some of internal and external factors that
was reviewed by different researchers in different research techniques also showed different
effect on bank saving deposit. In general, from both theoretical and empirical views the
researcher could conclude that factors such as interest rate, bank branches, GDP were
significantly and positively related with the dependent variable (total deposit), but inflation,
liquidity and capital adequacy were significantly and negatively related.
As previous studies both primary and secondary data were used and collected through
questioners from the organization employees and manager selected by using purposive sampling
technique. But this was not preferable because the purposive sampling cannot provide reliable
information since they had not included active customers of a bank and this method is with
personal bias, costly, and time consuming. In addition, some additional important variables such
as bank services, security of bank, and other technological impacts that can affect the saving
mobilization were not assessed. So, the study had tried (attempted) to fulfill the gap for the above
problems or factors that affect saving mobilization.

14
CHAPTER THREE

RESEARCH METHODOLOGY

3.1 Research Design

For the purpose of this study the researcher used descriptive type of research design. Descriptive
research proposal refers to set methods and procedures that describe research variables in which
the research method in order to answer who, what, when and how? Masoni, (1991) because the
major purpose of descriptive research is description of the state of affairs as it exists at present.
Then the study was described and critically to assesses the problem that challenges saving
mobilization of Dashen bank in Sawla branch. In this study quantitative and qualitative approach
of doing research was employed in order to express the respondent opinion and perception in
terms of percentage.
3.2 Sampling techniques and sample size of the study
To conduct this study, the researcher focused on Dashen Bank’s Sawla branch, which has 30
employees and serves 11,000 active customers—the target population for the research. A mixed
sampling approach was used to gather data from both employees and customers, ensuring a well-
rounded perspective on saving mobilization.
Since the number of employees was relatively small (30), the researcher included all of them in
the study, ensuring every staff member’s insights were considered. For the much larger customer
base, a simple random sampling method was applied to select 99 respondents from the 11,000
active customers. The sample size was calculated using the formula:

[n = {N}/ {1 + N (e) ^2}]

15
Where (N) is the total customer population, and (e) is the margin of error (set at 10%). This
approach helped minimize bias and gave every customer an equal chance of being selected,
improving the reliability of the findings.

To deepen the understanding of institutional challenges and strategies, the researcher also
conducted a one-on-one interview with the bank manager using purposive sampling. By
combining structured questionnaires with qualitative insights from the interview, the study
provides a comprehensive view of the factors influencing saving mobilization at Dashen Bank’s
Sawla branch...follows:
Sample size of customer in Dashen bank users
n= N/1+N (e) 2
Given,
N =11,000
e =0.1
Where, n=sample size
e=sample error
N=total population
1=constant
The researchers will take sample error of 10%
Then, n=11,000/ 1+11,000(10%) 2 =99 so, the researcher used 99 customers from the total
population of
11,000 who save in Dashen bank by using this formula?
3.3 Data source and methods of Collection
The researcher for this study would use only primary source of data. Primary source of data
collected from managers, employees and customers of Dashen bank in Sawla branch and allow to
a greater accuracy and reliability of the data collection as the researcher obtained directly from
the above agents through questionnaire and interview.
3.4 Data Analysis and Interpretation
In the study process different types of raw data would collected. After collecting this raw data
processed and analyzed by using qualitative and quantitative methods. Primary data was
16
 tabulated and then analyzed in terms of percentage. An interview discussed in terms of statement
(narrative).

CHAPTER FOUR

4. 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.
4.1 Survey Data from Employees
Thirty (30) questionnaires have been distributed to employees of ashen bank in Sawla 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.

4.1.1 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 4. 1: Profile of the respondents

N Description No of respondent Per c ent a ge ( % )

o
1 M a l e 2 0 6 7
Sex F e m a l e 1 0 3 3

T o t a l 3 0 100
2 Less than 20 years - -
20-30 years 1 2 4 0
Age 30-40 years 1 0 3 3
Above 40 years 8 2 7

17
 T o t a l 3 0 100

3 Certificate - -
Educational background D i p l o m a 6 2 0
d e g r e e 1 8 6 0
MA/MSC 6 20
A b o v e - -
T o t a l 3 0 100

4 Designatio n C l e r k 4 1 3
Accountant 1 8 6 0
O f f i c e r 8 2 7
T o t a l 3 0 100

Source: questionnaire, 2020

Above, Table 4.1. 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 20 (67%)
respondents were male and the remaining 10(33%) respondents were female. From the above
table the researcher observed that majority of respondent were male.
Table 4.1.Indicatethat 12(40%) of respondents were within the age of 20-30, 10(33%) of
respondents were with the age and 8(27%) 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 6(20%)
and the respondent educational qualification of degree are about 18(60%) and the remaining
6(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 4(13%) respondents was clerk, 18(60%) respondents are accountant, and
8(27%) respondent are officers. This shows that accountants are more among the respondents.

18
4.1.2 Factors Affecting the Degree of Saving in Bank.

Table 4. 2: Responses about factors affecting saving mobilization

N I t e m No of response Percentage
o
1 Low interest rates for saving 7 23
2 High limitation on providing loan s 4 13
3 Market fluctuation 9 30
4 Existence of competitors 10 33
T o t a l 30 100
Source: questionnaire, 2020
From the above table respondents responded that i.e. 9(30%) were market fluctuation, 7 (23%)
were low saving interest rate, 10(33%) were existence of competitor, and the last 4(13%) 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.

4.1.3 Degree of interest rate paid by the bank in comparison to other banks.

Table 4. 3: Degree of interest rate paid by bank in comparison to another banks interest rate

Description R Num P
e ber e
s r
p c
19
 o e
n n
d t
e a
n g
t e
In comparison to other banks, what is the degre of interest rate H - -
paid by bank? i
g
h
e
r
M - -
e
d
i
u
m
L 10 3
o 3
w
e
r
S 20 6
i 7
m
il
a
r
T 30 1

20
 o 0
t 0
a
l

Sources: questionnaire, 2020

Table 4.3 shows that none of respondents answer that the interest paid on saving mobilization is
higher than other bank while 20(67%) of respondents answer that interest paid on the saving
mobilization by Dashed bank Sawla branch was similar with another bank. And 10(33%) of
respondent responded that the interest rate paid on saving mobilizing by Dashen bank is lower
than interest rate paid on other banks. From the above table the researcher observed that the
interest rate paid on their saving is similar.

4.1.4 The bank paid interest rate to attracting the customer

Table 4. 4: bank paid interest rate to attracting customers

Description No of respondent Percentage

Is the interest rate paid by the bank at racting the
customer?
Y e s 20 6 7
N o 10 3 3
Total 30 1 0 0

Source: questionnaire, 2020

From the above table 20(67%) of respondents were said yes i.e. interest rate paid by the bank
attracting the customer and 10(33%) of respondents were said no in contrast to yes.

4.1.5 Duration of Saving in Bank

Table 4. 5: about period of saving familiar with bank

Description Respondents Number Percentage

21
 Most of the customers Short term 15 50%
fal in which duration Long term 9 30%
of saving
Medium 6 20%

Total 30 100%

Source: questionnaire, 2020

From the above table 15(50%) of respondents were responded short term, 9(30%) were
responded long term and the remaining 6(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.

4.1.6 Type of Loans Rendered by the Bank

Table 4. 6: Types of Loans Rendered by the Bank

Description Re N Percentage
spo u
nd m
ent b
s e
r
How many customers are lying in dif erent ypes of loans rendered Sh 1 53%
by the bank? ort 6
te r
m
Lo 9 30%
ng
te r

22
 m
Me 5 17%
diu
m
Tot 3 100%
al 0

Source: questionnaire, 2020

From the above table most respondent’s i.e. 16(53%) was answered short term, 9(30%) were
answered long term as types of loans rendered by the bank and the remaining 5(17%) were
medium term loan. So, the researcher concluded that the bank adopted short term loan was
appropriate.

4.1.7 Purpose lending money

Table 4. 7: about for what purpose lending money

Description Re N Percentage
sp u
on m
de b
nts e
r
For what purpose customer bor ow money from bank. Ne 1 33%
w 0
bu
sin
es
Per 8 27%
so
nal
Ed 7 23%
uc
23
 a ti
on
Co 5 17%
nst
ruc
tio
n
Total 30 100%

Source: own questionnaire, 2020

From the above table the respondents i.e. 10(33%) were answered for new business, 8(27%) were
answered for personal, 7(23%) were answered for education loan and the last 5(17%) 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.
4.2 Survey Data from Customer
Ninety-nine (99) questionnaires have been distributed to the customer of the bank and 89 failed
and 10 of them Collected back. The returned questionnaires were tabulated and then analyzed in
terms of percentage.

4.2.1. 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 4. 8: about background of customer (N.10)

No Description Gender R e s p o n d e n t s
Number Percentage (%)
1 Sex Male 5 60%
Female 4 40
Total 10 100
2 Age Less than 20 years - -
20-30 years 5 50

24
 30-40 years 3 30
Above 40 years 2 20
Total 10 100
3 Educational evel Literal 7 70
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
1000-5000 birr 2 20
5000-10000 3 30
10000 and above 4 40
Total 1 10
100
10

Source: own questionnaire, 2020

Table 4.8 indicates that 6(60%) respondent was male and 4(40%) respondents were female. The
researcher observe that majority of the respondents were male.
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.
Regarding educational level 7(70%) of respondent literate and 3(30%) respondent was illiterate.
the study observe that the major respondent was 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
25
 (10%) of the respondent was earning 10,000 and above. The researcher observe that majority of
respondents were 5,000 – 10,000 income level.

4.2.2. Purpose for Saving Money

Table 4. 9: about issue related to saving of money by customers

N Description Respondents
o
Number Percentage (%)
1 Why do you saving your money?
For security 4 40
To gain interest rate 3 30
For emergency 3 30
Total 10 100

Source: own questionnaire, 2020

The above table 4.9 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.

4.2.3. Reason for selecting Dashen bank Sawla branch.

Table 4. 10: Reasons for selecting Dashen bank

N D e s c r i p t i o n Respondents Number Percentage (%)

o
1 Why do you select Dashen bank Sawla branch? _ _

2 Pay higher interest rate for saving - -

26
 N e a r t o h o m e 2 2 0

Efficient & effective service 5 5 0

Government bank 3 3 0

T o t a l 10 1 0 0

Source: questionnaire, 2020

Table 4.10 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.

4.2.4 Motivation for Increasing Saving Amount

Table 4. 11: about Motive for Increasing Saving By Customer

Description Respondents percentage%

What Dashen bank shall doing for customers, to increase their saving?
Increase interest rate
Provide incentive 5 50
Improve its service 3 30
Total 2 20
10 100

Source: questionnaire, 2020

27
 Table 4.11shows that, 5(50%) of respondents answered that they increase their saving
mobilization when the bank increases 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 increase their saving mobilization when the bank improves its services. From
the above table the researcher observes that customers increase their saving mobilization when
the bank increases the interest rate.

4.3 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
does not provide loan without collateral securities unlike micro finance. Mostly the 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.
Inaccessibility of Dashen bank in Keble level:-this is also a factor that affects the Dashen 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 Dashen 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
7% which National bank of Ethiopia (NBE) set Minimum interest rate 7% interest rate on saving
28
mobilization. While the Dashen bank Sawla branch is charging only 7% 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 managers, Dashen
bank using these mechanisms to increase it is 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.
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 Dashen bank Sawla 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. Dashen bank Sawla branch has its own interest rate charged
on accepted saving and lending loan.

29
 CHAPTERE FIVE

5. SUMMARY, CONCLUSIONAND RECOMMONDATION

5.1 SUMMARY
The study assesses the factors affecting saving mobilization at Dashen Bank's Sawla branch,
using a mixed-method approach involving questionnaires and interviews. Key findings reveal
that internal factors such as low interest rates and high loan limitations, and external factors like
market fluctuations and competition, significantly impact saving mobilization. Employees and
customers highlighted that while the bank's interest rates are comparable to competitors;
increasing rates could attract more savings. Customers primarily save for security and prefer
short-term deposits, while the bank mainly offers short-term loans, often for business purposes.
Challenges include limited branch accessibility, informal saving practices, and low public
awareness about formal savings. Recommendations include expanding branches, adjusting
interest rates competitively, improving services, and launching awareness campaigns to enhance
saving mobilization. The study underscores the need for strategic adjustments to align with
customer needs and market dynamics.

5.2 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.

30
From external factors the existence of compotators and market fluctuation are found to a
significant factor, 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.
Dashen bank of in Sawla 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.

5.3 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 Dashen bank 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 Dashen 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 7% paying interest rate in comparison to compotators ma increasing saving
mobilization customer in Dashen bank of Sawla.
In Dashen bank Sawla 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.

31
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.

Reference
 Abay S. (2010). Domestic Resource Mobilization in Sub-Saharan Africa: The case of
Ethiopia, Addis Ababa. Rate of domestic saving
 Dereje Hailemariam Amene (2017). Determinants of Saving in Ethiopian Private
Commercial Banks.
MSc. Addis Ababa University.
 Desinga (1975). “Saving mobilization by cooperative banks: A comparison Economic and
Political weekly” No. 29, pp. 1098-1100

 Herald (2009). “Lebanon-Determinants of commercial banks deposit in a regional financial

center” IMF Working paper, Wp/09/195.

 Ismail (2010). “The Management of Liquidity in Islamic Bank in Case of Indonesia”.

 Mohammed N. & Mahadi S. (2010). The role of Inflation in Financial Repression:

Evidence from Iran.

 Panphil, p., (2008) Information technology, 1st Edition Dashen Bank S.co.,

 Philip .T (2010). “Interest Rate Practice of Commercial Banks: Case for Official
Regulation”.

 Rose,S.P (1996) “Commercial Bank of Management “ 3rdEdtion,

32
  Samuel Tesfahunegn (2015). Challenge of saving Mobilization for Private Commercial
Banks in Ethiopia (The Case of Awash International Bank S.C.).

 Several& kumar (2015). A Study on the Deposit Mobilization Pattern of the Dindigul
Central Bank Co- Operative Bank Limited.

APPENDIX

ARBA MINCH UNIVERSITY

COLLEGE OF COMMERCE ANDBUSINESS ADMINISTRATION

DEPARTMENT OF COOPERATIVE ACCOUNT AUDITING

Research questionnaire
Dear respondents! The purpose of this study is to investigate about factors affecting saving
mobilization in Dashen Bank in Sawla branch. This study is for academic purpose only, so your
cooperation to provide honest and relevant information is highly important and appreciated for
the success of the study. This questionnaire is to collect data for the study on the title factors
affecting saving mobilization in case of Dashen bank Sawla branch. The researchers like to
assure you that your response will be kept confidential. Therefore, please feel free to give answer
for all questions frankly and accurately. Thank you for your precious time that you spend for
answering the questions.
Instruction
I. No need of write you name

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

33
III. Attempt all question

Part one; personal profiles

1. Sex: male □ female□
2. Age: less than 20years□ 20-30 years□ 30-40years□above
40years□
3. Educational background: illiterate□ certificate□ diploma□
Degree□ MA/MS□
4. Work position: clerk□ accountant□ manager□ vice
manager□

Part Two; general information about the organization

5. What are the external factors the affecting the level of saving in your bank?
Individual income□ Market fluctuation□ expansion of informal saving□ existence of competitors

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

Higher□ lower□ medium□

7. Is 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; lessthan1,000birr□5,000-10,000□ 1,000-5,000□ above10, 000 birr□
10. Why do you saving your money?
For security□ to gain interest rate □ for emergency□ other (please specify...............)

11. What Dashen shall do for customers to increase their saving?

Create awareness about saving□
Provide incentive□
Improve its service □
12. Why do you select dashan bank of (Sawla) branch?
34
 Near to home□
Efficient &effective service □
it provides special privilege□
13. Types of Loans Rendered By the Bank
Long-term□
Short
term□
Medium□
14. Most of the customers fall in which duration of saving?
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 them of generous?

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?

35