Determination of Bank Choice and Reasons for Formal Savings in A Developing Country

Abstract

ABSTRACT:

Savings mobilization is one of the difficult tasks in the banking industry especially in a developing country; this is because of a great variety of social and cultural factors in addition to the disposable income and other factors. At the strategy level, banks are trying all over the year to reshape their development strategy in order to induce households to transfer a larger part of their savings in to the form of formal financial assets and ensuring the efficient allocation of these assets to investment. The purpose of this paper is to provide some explanations to the determination of bank choice and reasons for formal savings in a developing country, and to suggest certain measures to increase saving level in the economy. To achieve the objective of the study, a survey on random basis was largely undertaken and analyzed to answer the research questions and hypotheses. The study provides a non- surprising result that widespread of banks, location and related geographical description, reputation, hours of operations and availability of credit were the major decision criteria behind the formal savings in developing country. The critical pressures behind savings were to acquire physical assets (house) and for educational expenses. At the policy level, mobile banks model, doing business morning and evening, special programs and services for child, youth and women are advisable to attract formal deposits in a developing country.