Determinants of Customer Deposit Decisions in Ghana: The Case of Bank Customers in Madina Municipality

Abstract

This study aims at identifying the factors that influence customers' bank deposit decisions in Madina Municipality of Ghana. In specific terms, the study sought to determine factors influencing customer's decision to operate a bank account with a particular financial institution and also establish the perception of customers on the level of uncertainty in banking industry. In order to achieve these objectives of this study, questions such as; what are the strategies that are being implemented by the financial institutions to attract new customers; what factors are influencing customer's decision to open and operate a bank account with a financial institution; and what extent is the view of customers on uncertainty in the industry affecting their deposit decision were posed to respondents. A sample of 150 customers of various commercial banks was selected in order to identify the factors that determine customer deposit decisions regarding commercial banks in Ghana using questionnaire. The questionnaire was structured along a five Likert scale and analyzed using mean and standard deviations. The findings revealed that the size of the bank, performance and profitability of the bank, the proximity of the bank to customers' residence as well as the cost of operating the bank account does not necessarily influence the customer's decision to operate a bank account. Respondents were indifferent on whether their investments were secured with their banks and the account opening process. The findings however showed that interest rate offered on deposit, the service delivery of banks, friends and relative referrals and the stability of the banking industry in general influence customers' decisions to operate a bank account. The study also revealed generally that customers are not sure whether their investments with the banks are secured or not. It was also revealed from the study that promotional activities were the strategies used by the banks to attract new customers.