Savings mobilization behavior of NCBs in Bangladesh

Abstract

Successful savings mobilization requires conductive macroeconomic environment. Savers tend to accumulate real assets rather than depositing their money in savings accounts in an economy where political turmoil, high inflation and uncertainty about the future prevail. Policy makers must ensure an effective regulatory framework that provides adequate protections of savings and provides incentives for sound management, at the same time permitting a diversity of institutional models, and development paths as well as financial innovations. This paper is an overview on the savings mobilization behavior of the schedule banks of Bangladesh over the period 1992-2006. This paper uses a Log-linear model and finds that the Income and the Literacy level of the individuals the most important factor affecting the savings mobilization of Nationalized Commercial Banks (NCBs) of Bangladesh. Besides the Transaction cost and the Return on the Substitutes investments do play an important role in determining the level of deposits.