This paper examines the institutional factors that affect Community Banks’ savings mobilization efficiency. It is different from most studies that focus on the impact of macroeconomic, demographic or individuals’ social-economic factors on savings mobilization. This study uses panel data of 408 observations of Community Banks whose information was gathered by the Bank of Tanzania from 1996 to 2015 on quarterly basis. Using fixed effects approach; the findings indicate that interest rate on deposits, the age of an institution and usage of greater portion of capital for lending purposes lead to mobilization of more savings from the public, while usage of commercial debt for financing purposes reduces the efficiency in savings mobilization. Bank’s profitability and financial sustainability measures were found to have a mix of both positive and negative outcomes in relation to savings mobilization. Unexpectedly, investment in fixed assets, raising the proportion of salary in the expenses and increase in size of the institutions seem to have a negative impact on savings mobilization. Our results are robust to alternative regression estimated. Recommendations on institutional set-up required for more efficient mobilization of deposits from the public are given based on the findings of this study.
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