BAHIR DAR UNIVERSITY

COLLEGE OF BUSINESS AND ECONOMICS

DEPARTMENT OF ACCOUNTING AND FINANCE

FACTORS AFECTING DEPOSIT OF AWASH BANK; A CASE STUDY ON

NORTH WEST REGION.

A RESEARCH PROPOSAL SUBMITTED ON THE ACCOMPLISHMENT OF THE

BUSINESS RESEARCH METHOD COURSE (MSC IN ACCOUNTIN AND FINANCE)

Prepared by: Enchalew Alehegn

ID-:BDU1501369

Submitted to:

D.R Tirngo. T

January 2023

Bahir Dar, Ethiopia

1
 Table of contents
Table of contents..............................................................................................................................2
Abstract............................................................................................................................................4
Chapter-One.....................................................................................................................................5
Introduction 1.1 Background of the Study......................................................................................5
1.2 Statement of the Problem...........................................................................................................5
1.3 Objectives of the study..............................................................................................................7
1.3.1 General Objective...............................................................................................................7
1.3.2 Specific objectives..............................................................................................................7
1.4 Research questions.................................................................................................................7
1.5 Limitations of the study.........................................................................................................8
1.6 Scope (Delimitation) of the study..........................................................................................8
1.7 Significance of the study........................................................................................................8
1.8 Organization of the study...........................................................................................................9
CHAPTER -TWO..........................................................................................................................10
REVIEW OF LITERATURE........................................................................................................10
2.1 THE CONCEPTUAL FRAMEWORK OF THE STUDY......................................................10
2.2 Empirical evidence from different studies...............................................................................13
2.3 Summary and knowledge gap..................................................................................................16
CHAPTER- THREE......................................................................................................................18
METHODOLOGY 3.1 Research Approach and design................................................................18
3.2 Sampling design.......................................................................................................................18
3.3 Data collection method............................................................................................................20
3.4 Data analysis method...............................................................................................................20
3.5 Ethical considerations..............................................................................................................20
36. TIME AND COST BUDGET.................................................................................................20
3.6.2 Financial Budget...............................................................................................................22
References......................................................................................................................................24

2
 Abstract
The objective of this study is to identify the factors affecting (determining) total deposit of awash
bank North West region and to determine the relation between total deposit and the identified
factors as well as to conclude and suggest some recommendations at the end of the study. The
study will tries to answer research questions like what are the variables that can affect deposit of
north west region, how did deposit rate, inflation rate and accessibility (branch expansion) relate
to total deposit, what is the effect of awareness of the society, convenience of branch's office,
transaction of deposit mobilization and services in the branch of awash bank's total deposit, and
what should be done to manage total deposit of awash bank north west region. The population of
this study is customer of awash bank branches under the domain of North West region. The
sampling design used for this study is mixed sampling which is composed of both probabilistic
(stratified) and non-probabilistic (convenience) technique and the sample size for the study is 58
of which 14 is from city branches and 44 is from outline branches. The data collection method
will be survey method by employing both questionnaire and interview and the collected data will
be analyzed by using both qualitative and quantitative data by employing descriptive data
analysis method.

3
 Chapter-One
Introduction
1.1 Background of the Study
The financial system in all economy is composed of the Bank-based system where provision and
monitoring of investments funds are made through the banks on one hand and the stock market
where investors (surplus units) enter directly through ownership of securities. Banks play an
intermediary role of mobilizing funds from savers and subsequently lend them to investors-
individuals or corporations.
Banks play a key role in improving economic efficiency by channeling funds from resource
surplus unit to those with better productive investment opportunities. Banks also play key role in
trade and payment system by significantly reducing transaction costs and increasing convenience
(NCA, 2006) that is why I became interested to study on this topic. In less monetized countries,
like Ethiopia, whereas financial sector is dominated by banking industry, effective and efficient
functioning of the latter has significant role in accelerating economic growth.
In Ethiopia, commercial banks are the main controller of the financial system by performing
financial intermediation. They control greater portion of the investment funds from domestic
deposits and are the main creditors of the corporate bodies and individual investors. That is why
the traditional banking business of supplying funds to the economy is still of importance. For
example, most business organizations especially in Ethiopia are highly dependent on bank loans
as a source of capital and the ability of banks in giving loan depend much on their ability to
attract deposits. Even though, mobilizing deposit is the major activity of all commercial banks,
managing and identifying the determining factors of deposit is a mandatory task for banks.
Mobilizing deposits is not possible without knowing and controlling the factors affecting it.
Bank deposits represent the most significant components of the money supply used 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). Bank deposits are made to deposit accounts at a
banking institution, such as savings accounts, checking accounts and time deposit accounts.

1.2 Statement of the Problem

Deposit mobilization is the major Aim of awash bank to achieve their goal. Deposits are of
course mobilized to meet the required liquidity for credit customers of banks. But this too
depends on the availability of credit facilities which in turn depends on the level of funds loaned.
4
In this regard currently in Ethiopia, the pace of the banking system to mobilize adequate
resources would not be sufficient, given the large fund requirement of the economy that would
certainly result in liquidity gap. The major reasons for liquidity gap are money may be kept in
traditional way and majority of population is unbanked. This shows that the deposit mobilization
practice among awash bank in Ethiopia is not developed. So this type of traditional banking
practices should be stopped and replaced by the new and relevant deposit mobilization strategy.
Knowing such new strategy is essential to scale up the current deposit mobilization efforts and it
forces this study to be undertaken.
The study will tries to determine factors affecting the deposit mobilization of awash bank of
Ethiopia an empirical study on North West region. As households, businesses, government and
many other different institutions borrow money from awash bank; the deposit should be
available first in order to be capable of granting loan to the mentioned classes. The awash bank
will lend money from the deposits kept with them. A deposit comes from the depositors who are
saving their money in awash bank. Deposit is the liquid cash that must be ready for use by a
body in need of the fund. So many factors will affect deposit of business organization.
Identifying those factors has a great significance for the successful operation of the organization
because these factors will be a means for measuring the weakness and strengths to realize the
changing business environment. The main factor that affects deposit of the banks will be highly
related to the emergence of new potential competitors in the market which may reduces market
share. In addition to this, efficiency of banking services to customers like loan facilities, deposit
services (different deposit products) in comparison to other competitors will be another factor.
This study will fill this gap by identifying the factors that can affect the deposit in awash bank of
Ethiopia North West region and determines the extent to which they are affecting it.
From the countries' tradition and societies' saving culture, peoples may be keeps their money in
traditional way rather than keeping or depositing their money at bank. This shows that the
Deposit mobilization practice by banks in the country should be developed as a mechanisms to
mobilize such deposit rather than sitting and waiting for depositors to come and deposit their
money. The need for studying such mechanisms encourages this study to be undertaken.
The empirical study on the area of factors affecting deposit awash bank in Ethiopia is rarely
available. Since the major determinants of bank deposit were not studied before in the case of
awash bank, there is a research gap and need to identify these important determinants of bank

5
deposit in the case of awash bank in Ethiopia. Therefore, this study intended to identify and
evaluate external and internal factors that affect the deposit of awash bank in Ethiopia an
empirical study on North West region by providing some proof on the factors that contributes to
the deposit of awash bank
As research under this article is not significantly available (rare), academicians and different
interested individuals lack the reference material on this area. Thus, the researcher is motivated
to undertake a research in this particular area to fill the gap.
1.3 Objectives of the study
1.3.1 General Objective
To identify the factors affecting (determining) total deposit of awash bank North West region's
and to determine the relation between total deposit and the identified factors as well as to
conclude and suggest some recommendations at the end of the study.

1.3.2 Specific objectives

 To identify the factors that determines total deposit of awash bank north west region
 To determine the relationship between the awash bank North West region's total deposit and
deposit rate, inflation rate and accessibility (branch expansion).
 To determine the effect of awareness of the society, convenience of branch's office,
transaction cost by banks and services in the bank on total deposit of awash bank North West
region.
 To recommend on what should be done in managing total deposit of awash bank North West
region.
1.4 Research questions
The research to be conducted on the title of Factors Determining Deposits of awash bank: An
Empirical study on North West region answers the following questions:-
 What are the variables that can affect the amount of awash bank North West region
deposit?
 How did deposit rate, inflation rate and accessibility (branch expansion) relate to North
West region's total deposit?
 What is the effect of awareness of the society, convenience of branch's office, transaction
of deposit mobilization and services in the branch of North West region's total deposit?
 What should be done to manage total deposit of awash bank North West region?
6
1.5 Limitations of the study
The study have only one dependent variable, total deposit of awash bank North West region, and
three independent variables namely accessibility (branch expansion), deposit rate, and inflation
rate. Even if there are many different determinant factors, the researcher is interested to see the
effects of the mentioned independent variables on the named dependent variable. This study
employs both probability (stratified random sampling) and non- probability (purposive) sampling
technique. The use of non-probability sampling i.e. convenience sampling even if mixed
sampling technique used, its effect of not generalizing the research result to the population may
rarely limit the study. The study is also limited to consider ethical responsibility to conduct a
research honestly and with integrity by detecting fraud that may comes in the form of being
selective in sampling, falsifying data, data make up & not reporting survey response rate as well as
biasing data presentation and analysis

1.6 Scope (Delimitation) of the study

Deposit mobilization is performed by many other private banks in addition to awash bank
including savings and loan institutions. However, this study is limited to awash bank which is the
only bank that started Intra teller Machine (ITM) in Ethiopia in order to encourage saving habit
in the country and to increase the deposit of in particular. To make the study more manageable,
the scope is further delimited to North West region.

1.7 Significance of the study

Banks play an important role in economic development through mobilization of funds from
within and outside the country and channeling such funds to various needy and viable sectors
of the economy. To put in place adequate bank deposit management tools, understanding factors
that determine awash bank deposit play a crucial role. The study has great contribution to the
existing knowledge in the area of factors determining awash bank deposit in the case of awash
bank. This in turn contributes to the well-being of the financial sector of the economy and the
society as a whole. Therefore, the major beneficiaries from this study are awash bank, regulatory
bodies and the academic staff of the country. Furthermore, it will serve as stepping stone for
further research in similar area. Lastly, this study will give good idea to the researcher about this
specific topic and general knowledge about any research.

7
 1.8 Organization of the study
This paper was organized in four chapters. Chapter one provides the general introduction about
the whole study. Chapter two describes the review of related literatures. Chapter three provide
detail description of the methodology. Chapter four contains action plan of the study.

8
 CHAPTER -TWO
REVIEW OF LITERATURE
2.1 THE CONCEPTUAL FRAMEWORK OF THE STUDY
The variables involved in this particular study are four variables, which is one dependent
variable (total deposit of awash bank North West region), and three independent variables
(inflation rate, deposit interest rate and branch expansion/accessibility). This conceptual
framework describes the relationship among the dependent variable with the independent
variables involved in the by using the following diagram.
Figure 1: Relation between deposit and its determinants

2.1.1 Interest rate

How do interest rates affect savers and saving levels?
Interest rates determine the amount of interest payments that savers will receive on their
deposits.
An increase in interest rates will make saving more attractive and should encourage saving.
A cut in interest rates will reduce the rewards of saving and will tend to discourage saving.
However, in the real world, it is more complicated. The link between interest rates and saving is
not clear because many factors affect saving.

Interest rate

Deposits of
awash bank
North West
region
Inflation rate
Market Share

Branch Expansion
/accessibility

Income and substitution effect of higher interest rates.

If interest rates fall, the reward from saving falls. It becomes relatively more attractive to hold
cash and / or spend. This is the substitution effect - with lower interest rates, consumers
substitute saving for spending.

9
However, if interest rates fall, savers see a decline in income because they receive lower income
payments. A pensioner relying on interest payments from saving may feel he needs to save more
in order to maintain the income from savings. Usually, the substitution effect dominates. Lower
interest rates make saving less attractive. But, for some, the income effect may dominate, and
people may respond to lower interest rates by saving more in order to maintain their standard of
living.
Alternatively, a lower interest rate may encourage other forms of saving and investment. With
very low bank rates, it has encouraged people to look for better yields in the stock market. This is
one reason why the stock market did well in the great recession of 2008-2013 - savers have been
buying shares to get a better rate of interest rate than they can in a bank and on bonds.
Base rates and bank rates
Usually, a cut in Central Bank base rates leads to an equivalent fall in bank rates. However, in
the aftermath of the credit crunch, bank rates didn't fall as much as base rates. In the UK, bank
rates (e.g. Libor were higher). Therefore, the cut in base rates didn't have as much impact. In
recent months, the UK has seen a fall in Libor rates, and bank rates have come closer to base
rates.
Relative interest rates
It is also important to consider interest rates relative to other countries. If UK rates fall, but are
still higher than other major economies, this could lead to an inflow of hot money as investors
take advantage of the relatively higher interest rates. If UK rates are lower than Europe, some
investors may move their money out of the UK and into European banks.
Confidence in the exchange rate is also important. If the Pound is deemed a `safe haven'
currency. (e.g. during Euro crisis of 2011), this could cause higher demand for Sterling deposits.
Real interest rates
Real interest rates measure the interest rate - inflation rate. If interest rates are 5%, and inflation
3%, the real interest rate is 2%. Savers are increasing their real wealth. However, if we have
negative interest rates, (interest rates of 0.5% and inflation of 3%), then savers will see a fall in
the real value of their savings.
2.1.2 Inflation
As to Herald and Heiko (2009), inflation is one of the factors that determine awash bank
deposits. Fischer showed that in Latin America the effect of inflation on savings and time deposit

10
to GDP was significantly negative (Mohammad and Mahdi, 2010). The classical belief is that,
because bank assets and liabilities are expressed in monetary terms and because these assets will
normally grow in line with growth in money supply, banks are relatively immune from the
effects of inflation (Devinaga, 2010). In brief, monetary policy works by controlling the cost and
availability of credit. During inflation, the Central bank can raise the cost of borrowing and
reduce the credit creating capacity of awash bank. According to Devinga (2010), this will make
borrowing more costly than before and thereby the demand for funds will be reduced. Similarly
with a reduction in their credit creating capacity, the banks will be more cautious in their lending
policies. Since the banks demand for fund decreases obviously the deposits will decrease.
Banking system was affected by inflation in terms of deposit absorption and facilities grant
(Mohammad and Mahdi, 2010). As to Mohammad and Mahdi (2010), in developed countries
negative correlation between inflation and absorbed deposits and granted facilities has been
documented. However, in developing countries the opposite is true. Banks in their quest to boost
deposits and increase self sufficiency must analyze the behavior of depositors in a period of
inflation. The latter is the persistent increase in the general price level for a specified period of
time. Thus, it is a fall in the market value of money (purchasing power) as a result of persistent
rise in prices. Real value of money declines resulting in benefit to debtors and loss to creditors
(Brealey and Myers 2003). Inflation is seen as an economic problem in developed countries in
the second half of 20th century. Inflation with effect in economic growth, employment, income
distribution and wealth as well as social and political conditions of a country can influence its
entire dignity (Mohammad and Mahdi, 2010). Moreover Mohammad and Mahdi (2010) Banking
system as an important effective factor in economic performance has also been under the
influence of inflation.
As to Mohammad and Mahdi (2010), as far as the effect of inflation on financial sector conceived
the literature demonstrates that inflation affects the capacity of financial sector for optimal
allocating of resources. That is as inflation rate increases, true yield rate of money and assets
decreases; therefore deposits are no longer attractive. Also the increase of inflation rate has a
negative effect on the performance of financial sector through the market credits and in turn, on
the performances of banks and capital markets and finally on the long term economic growth
(Mohammad and Mahdi, 2010). With respect to the effect of inflation on savings, it can be
mentioned that in general, all individuals who save a part of their incomes in banks are directly

11
damaged by the inflation and their assets decrease in proportion with money value decrease
(Mohammad and Mahdi, 2010). In that case as Mohammad and Mahdi (2010) describes people
try to change their cashes and savings to more reliable and stable forms such as land, jewelry,
antiques, art collections, foreign currencies that causes to definite decrease in commercial bank's
total deposit. High inflation rates reduce the real value of deposits (Baqui et al, 1987). According
to Baqui et al (1987),
2.1.3 Accessibility/Branch expansion
There is a relationship between awash bank deposits and awash bank branch expansion. Not only
are deposits influenced by bank branches, but the expansion of bank branches is also influenced
by the level of deposits in any area W. A. Baqui et al, 1987). It is expected that banks make
decisions on expanding their facilities by considering factors such as level of competition,
deposit potential, regional income and existence of road and vehicles. As deposit potential is one
thing that banks consider in expanding its branches, the deposit can also be a reason for branch
expansion strategy that the banking sector uses.
Daniel (2005), suggest that the lack of widespread branching bank networks hindered the
development of large-scale industrial firms. It is stated that unit banks become increasingly
incapable of receiving deposits from a widespread geographic area. The single office bank is also
not able to monitor geographically diffuse debtors as easily as could be done with multiple
offices. Moreover, it can be concludes that under branch banking the mobility of capital is almost
perfect ( D e l 2000).
2.2 Empirical evidence from different studies
The empirical literature part discusses past studies that were conducted on the area of factors
determining commercial banks deposits. In this part the variables that were included, the
methodology that is used to undertake the study and the results of the study under review are
discussed. These will help to see where the literature on this area is and how this study will add to
the existing literature. Accordingly, the articles will be discussed below one by one.
An empirical study made by (Lomuto, 2008), on commercial banks in Kenya with the aim of
identifying and examine the key determinants of Kenyan Commercial Banks Deposit growth. Its
main objective was to analyze the factors that influence Commercial banks deposit growth in
Kenya. Time series data covering 1968 - 2006 was analyzed. First, the time series characteristics
of the data were assessed using unit root tests to examine the stationarity of each variable.

12
Secondly, the test for co integration was performed to determine the long run relationship of the
non-stationary variables. Lastly, estimated model was a single regression equation with deposit
as the dependent variable and explanatory variables as deposit rate, nominal exchange rate,
investment income ratio, number of cheques cleared (used as proxy for innovations in the
financial sector), real GDP, ratio of monetary GDP to total GDP and Structural Adjustment
Programs (SAPs). Estimation was done using Ordinary Least Squares (OLS) technique and
Econometric Views (E-views) statistical package.
Analyzed results showed that lagged Commercial bank deposits and all the other variables
including Structural Adjustment Programs (SAPs) significantly affect Commercial bank deposit
growth in Kenya. Based on these results, several policy implications were drawn that aim at
encouraging deposits growth by Commercial banks for the benefit of the domestic deposit
mobilization. First, growth enhancing policies promotes deposits growth. Second, the stability
of macroeconomic system should be maintained. Lastly, financial sector innovations encourage
deposit growth in Commercial banks in Kenya as people reduce their demand for carrying cash.
(Herald & Heiko, 2008), had written a working paper which empirically examines the demand
for commercial banks deposits in Lebanon, a regional financial center. They classified the
variables into two, i.e. macro and micro level variables. At the macro level, they found that
domestic factors such as economic activity, prices, and the interest differential between the
Lebanese pound and the U.S. dollar are significant in explaining deposit demand, as are external
factors such as advanced economic and financial conditions and variables proxying the
availability of funds from the Gulf. At the micro level, they found that in addition, bank-specific
variables, such as the perceived riskiness of individual banks, their liquidity buffers, loan
exposure, and interest margins, bear a significant influence on the demand for deposits.
They have used quarterly data from 1993 to 2008. They have estimated a number of vector error
correction model (VECMs) to take account of cointegration in the non-stationary time series.
They have collected the data for their study from 50 Lebanon banks.
They found that both domestic and international factors help explain deposit demand. Among
domestic variables, they found that the coincident indicator for real economic activity in
Lebanon, consumer prices, and the interest differential between the local currency and the U.S.
dollar matter. Among the external variables, advanced economy economic and financial
conditions appear significant (especially advanced economy industrial production and the

13
Goldman Sachs Risk Aversion Index), as do some variables proxying the availability of funds
from the Gulf. While both domestic and external variables are significant in explaining deposit
demand, impulse response functions and variance decomposition analyses underscore the
relative importance of the external variables. Regarding bank specific variables they found that
the banks’ perceived riskiness (z-score), their liquidity buffers, loan exposures and interest
margins all bear a significant influence on deposit growth at the bank level, controlling for
domestic and external macroeconomic factors.
The article is written in 2006 by Professor Sudin Haron and Dr Wan Nursofiza which
investigates the structural determinants of deposits level of commercial banks in Malaysia, using
cointegration techniques. The results suggest that determinants such as rates of profit of Islamic
bank, rates of interest on deposits, base lending rate, Kuala Lumpur composite index, consumer
price index, money supply and gross domestic product have significant impact on
deposits. They also found that in most cases, customers of conventional system behave in
conformity with the savings behavior theories.
The objective of the study was to examine the effect of selected economic and financial
variables on deposits placed at the commercial banks in Malaysia. Both long- and short-
run relationships between these variables are measured using cointegration techniques.
The data for the study were taken from the monthly statistical bulletin of Bank Negara
Malaysia (www.bnm.gov.my). The study uses monthly data covering the period January
1990 to December 2003. In examining the determinants of deposit levels of both Islamic
and conventional banks, the paper employs recent advances in time series econometrics.
These techniques are cointegration and error correction framework, which was conducted
within the vector autoregression (VAR) framework. The first step of the analysis was to
test for the presence of unit roots of the variables in the system using the Augmented
Dickey-Fuller (ADF) test. Once the stationary condition is examined, the next step is to
conduct a cointegration test.
And finally they concluded that in most cases, the behavioral patterns of Malaysian depositors
are in conformity with the existing saving theories. However, there are also deviations from these
theories. For example, both inflation and returns on deposit are supposed to have a positive
relationship but the study found otherwise. Similarly, instead of an inverse relationship, both
composite index and money supply have positive sign with savings account. For each of the

14
deviation found, an explanation has been put forward. And also the study does not differentiate
the behavioral pattern of different classes of depositors. It is interesting to examine whether
different types of depositors have the same long-run influencing factors. In view of this, they
proposed that future research agenda on this matter of 5 years from 2007 to 2011 which also
covers the period of the Asian financial crisis 2008. Bank’s liquidity is measured by two ways;
one is cash and cash equivalents to total assets (Li) and second is advances net of provisions to
total assets (L2). Two models are estimated based on these measures of liquidity. The results of
model 1 (Li) indicate that the bank specific fundamentals (NPL and TOA) and monetary policy
interest rate positively determine the bank liquidity whereas inflation has a negative impact.
Bank liquidity measured by Li is negatively and significantly affected by the financial crisis. The
results of model 2 (L2) indicate that the bank size and monetary policy interest rate positively
and significantly determine the bank liquidity.
2.3 Summary and knowledge gap
Based on the above theoretical as well as empirical review, deposit mobilization is the major
activities for all banks especially for commercial banks since their function is mobilizing deposit
to meet the required liquidity for credit customers of banks. But this too depends on the
availability of credit facilities which in turn depends on the level of bank deposit. It also revealed
that banks deposit can be affected by different factors such as bank specific and macroeconomic
factors. While this study focused on some of the bank specific and macroeconomic factors
affecting bank deposits.
Theories on bank deposits are well available in various literatures. But the empirical studies o
bank deposit are rarely available especially in Ethiopia. According to the review, most of the
empirical studies done on the area of bank deposit and its determinants were done following
uprising of privatized economy system introduced in developing countries. As the result of this,
bank deposits become a challenge to commercial banks and investigating the factors influencing
it comes in practical.
Based on socio economic factories of the individual countries, an important gap still exists in
the empirical literature about deposits and its determinants. All studies cited above suggest that
commercial banks deposit is determined both by bank specific factors and macroeconomic
factors. Some of the studies given more attentions to the macro determinants rather than bank
specific and the significance of the determinants identified by the studies are completely

15
different. Thus the researcher concludes that there is no perfect and generally expected
relationship between dependent in independent variables in all jurisdiction.
To the knowledge of the researcher there is no empirical studies done regarding to determinants
of bank deposit in the case of awash bank. Although the research made by (Wubitu Elias, 2012)
focused on only branch expansion and deposit interest rate determinants by taking 10 years data
to see the impact on bank deposit. Since awash bank is in the growth stage with opening of new
branches aggressively, using new technologies like e-banking, given attentions to public
awareness creation and investing huge amount of money for promotional activities were not
analyzed well. It is an essential of identifying the important determinants of bank deposits and
its influence on the growth of deposit by making empirical investigation.
And finally, this study is different from previous works done by others; specifically it examines
six determinants of bank deposit in awash bank and then assesses the quantitative and
qualitative data for these determinants based on the context Ethiopia. The focus is on bank
deposits in awash bank, and its determinants.

16
 CHAPTER- THREE
METHODOLOGY
3.1 Research Approach and design
The study will uses quantitative research approach. The study will employ both explanatory
research design. The qualitative data to be collected will be described. In addition, through
statistics tools, the quantitative data of the dependent variable (explained variable) which is total
deposit of awash bank North West region and the independent variables (explanatory variables)
such as branch expansion of awash bank North West region, inflation rate and deposit rate will
be used. This shows that the research will be descriptive and explanatory (casual) in nature.
Explanatory research aims to understand phenomenon by discovering and measuring causal
relations between variables. That is, explanatory research looks for cause and effects. As the
researcher has intended to describe the qualitative data received from respondents and explain
the relationship between deposit (dependent variable) and interest rate, inflation rate and branch
expansion/accessibility (independent variable) using correlation and the effect of variables using
multiple regressions, the research type can be called descriptive and explanatory research. It
involves both qualitative and quantitative approach as the study involves quantifying the result in
figure and explaining of terms which cannot be figured
3.2 Sampling design
Samples will be drawn from the population of the study target. The population of the study is
saving account holders of awash bank branches under the domain of North West region by
excluding current account holders as current account doesn't bear interest.
There are about 467,107 customers by excluding current account holders. There are about
401,712 active accounts of the total saving account holders. Out of which the researcher
considers active account holders due to the effect that they can use the service of the bank more
frequently than the inactive account holders. The researcher will use a mixed method of
sampling technique which is a combination of both probability and non-probability sampling
procedure. According to Charles and Fen (2007), Mixed method sampling strategies are
combinations of (intermediate points between) the
Based on this, Stratified and convenient sampling method will be applied to select the sample
respondents from the total population size. Stratified is used because the customer are considerd
to be heterogeneous in nature as they are living in a different environment with different level of
infrastructures which affect both customers and bank's deposit. In addition to this, the
17
stratification helps the researcher to address respondents from all round corners of the region so
that the sample could be more representative. Customers found in city and rural areas are taken
as two groups of strata. Samples from the strata were selected conveniently. This is because
once the population is stratified in to homogonous group it is representative to select any of the
customer from the strata i.e. city branches and outline branches under North West region. There
are 58 branches under North West region of which branches are city branches or located in bahir
dar part of North West and 14 branches bahir dar
There are a number of sample size determination methods (for large Population). But this study
selects the traditional inferences of computing sample size of Daniel (1999) as sighted in Naing,
Winn, and Rusli (2006) in the following manner.
n={Z2*(P)*(1-P)}
d2
Where,
P=Percentage of active account holder
P = Active account holder
Total population of the study
=1,598,155/1,658,860 = 0.96 =96
n =number of sample size
d = level of precision or sampling error. at is assumed that 5 times out of 100 the estimate from
sample will not include the population).
Z = Confidence interval = 1.96 (For 95% confidence
Taking 95% confidence levels and P = 0.96
n = { 1.96 * 1.96 * (0.96) * (1-0.96)1/0.05 *0.05
= 0.14751744/0.0025 = 59
n =59
The sampling procedure is summarized in the following table
Strata in %age in the strata*n Sample customer

No. of customer the

City branches 134,285 =8.1% 0.081*96 7.776
Outline branches 1,524,575=91.9% 0.919* 96 88.224
Total 1,658,860= (100%) 185

18
 3.3 Data collection method
The researcher will use survey data collection method. The study uses both primary and
secondary data. The primary data will be collected from managers and customers of awash bank
branches under North West region by considering customers who are saving account holders
enjoying deposit interest rate from awash banks saving account products and active account are
mandatory while selecting sample customers. The study uses a set of close ended questionnaire
and interview questions to gather primary information from the customers and the employees of
awash bank North West region located both from city branches and outline branches. Regarding
the secondary data, the researcher will uses time series readymade data. The data relevant for the
study will be gathered from awash bank North West region and its head quarters annual report.
3.4 Data analysis method
As the study is descriptive and explanatory/casual in nature, the data collected from customers
will be summarized and analyzed in the way that gives the necessary information to answer the
research questions. The study will uses descriptive data analysis method by using different
descriptive statistics tools to test reliability of data and then after to analyze data. A correlation
technique will be used to test and establish the relationship between the independent and
dependent variables as well as multiple regression analysis will be also used to measure the
significance level of the effect of independent variables on the dependent variable. Finally, the
output will be presented by using tabulation and results will be described accordingly.
3.5 Ethical considerations
The researcher will carry out the research work in ethical manner honestly and with integrity by
detecting the probability of fraud that may arise from being selective in sampling, deliberately
biasing data collection, making up data, not reporting survey response rate falsifying analysis
and data presentation. Conduct the study as much as possible with high integrity by taking
ethical responsibility in to consideration.
36. TIME AND COST BUDGET
3.6.1. Time Budget
It describes the plan of assessing the ongoing progress toward achieving the research objectives.
It specifies how each project activity is to be measured in terms of completion, the time line for
its completion. Therefore, to enable us and the advisor to monitor project progress and provide
timely feedback for research modification or adjustments we will use the following time plane.
19
20
3.6.2 Financial Budget
It will show how much it will cost to answer the question. We are explicitly state cost for every
budget item that should be quantitatively shown. Typically, our proposal budget reflects as
follows;
Table 3.2 Budget plan

Budget item Units Unit cost(Br) Est.

Cost(Br)

1. Personnel (number of Daily Wage

persons x working (including per
days) Diem)

Principal researcher 1x20 Br150 Br3000

Secretarial works 1x20 100 2000

Personnel costs Br5000

2. Transport No of km(use of Cost per km

vehicles x number
of Days x travelled
km)

Principal researcher 2x20x100 Br 1.50 Br6000

(private taxi)

Transport costs Br 6000

3. Supplies Number Cost per Item

Stationery Br 1500
(different)

paper sheet 1 package 550 550

Water, coffee and tea 500

21
 Stationery costs Br2,550

4.Communication Number Cost per Item

Mobile card 20 Br50 Br 1000

Internet 20hrsx60mts/hr 0.45/mts 540

Communication Br1540
costs

5. Material Prod& Number Cost per Item

Dissemination

Printing & Binding 72 Br3/Q Br216

Questioner

Printing & Binding 3 100 300

final report

Material prod & Br 516

diss costs

Contingency(10%) Br700

Grand Total costs Br16,306

22
 References
Athukorala, P.-c., & Sen, K. (2001).The Determinants of Private Saving in India
https://crawford.anu.edu.au/acde/publications/publish/papers/wp2001/Privat.pdf.
Begashaw D. Woldemichael (2010),"Deposit Mobilizations Performance of Ethiopian
Microfmance Institutions: Challenges and Prospects, Degree of Master's Thesis the State
University of Bergamo.
Devinaga, R. (2010). Theoretical Framework of Profitability as Applied to Commercial Bank in
Malaysia. European Journal of Economics, Finance and Administrative Sciences, Multimedia
University, Faculty of Business and Law, Melaka, Malaysia.
Kelvin, A. S. (2001). "The Role of Commercial Banks in Financing Growth and Economic
Development in Trinidad and Tobago and the Caribbean: A Perspective From The Royal Bank
of Trinidad and Tobago" Central Bank ofBelize.

Malaysia. European Journal of Economics, Finance and Administrative Sciences, Multimedia University,
Faculty of Business and Law, Melaka, Malaysia.

Erna, R., & Ekki, S. (2004). “Factors Afecting Mudaraba Deposits in Indonesia. Working Paper in
Economics and Development Studies” Padjadjaran University, Indonesia.

Eustacius, N. B., & David, J. L. (1995). “Factors Afecting Commercial Bank Lending to Agriculture”
Southern Agricultural Economics Association.

Evan, G. T., & Philip, E. S. (2006). “Managing Bank Liquidity Risk: How Deposit -Loan Synergies Vary
With Market Conditions” Federal R eserve Bank of New York.

Franklin, A., & Elena, C. (2008). “The Roles of Banks in Fi nancial Systems” University of Pennsylvania,
University of Frankfurt and CFS.

Hamid, R. (2011). Credit to Private Sector, Interest Spread and Volatility in Credit- Flows: Do Bank
Ownership and Deposits Matter?DESA Working Paper No. 105.

Harold, L. S. (1946). The Problem of Excessive Commercial Bank Earnings.Oxford University Press. The
Quarterly Journal of Economics , Vol. 60, No. 3, pp. 365 -389.

Herald, F., & Heiko, H. (2008). “Lebanon-Determi nants of commercial banks Deposits in a Regional
Financial Center” IMF Working paper , WP/09/195.

ISMAL, R. (2010). “The Managmant of Liquidity Risk in Islamic Banks:

Martin J. et al. (2013), Savings as a cornerstone laying foundation for financial inclusion, SEEP
Citi Foundtions
23
Mustafa, K. M., & Sayera, Y. (2009). "An Analysis of Interest Rate Spread in Bangladesh" The
Bangladesh Development Studies. National Bank of Ethiopia, (2009). Monetary Policy
Framework
Opoku S. (2011), Mobilizing Deposits: The Role of Commercial Banks in Ghana, Kwame
Nkrumah University
Websites and others
Bank OF Abyssnia : www.BoAcometh.et
http://www.economicshelp.org/blog/102/interest-rates/effect-of-interest-rates-on-saversand-
economy/
International Monetary Fund, International Financial Statistics and data files.
http://www.indexmundi.com/ghana/stock_of broad_money.html.
National Bank of Ethiopia: www.nbe.gov.et
The World Bank: Key Development Data and Statistics: http://www.worldbank.org
United Nations Statistics Division: http://unstats.un.org/unsd/default.htm,
www.deepethiopian.com.(2014).http://www.deepethiopian.com/2012/04/ethiopiancomm ercial-
bank-that-was.html.

24