THE ASSESSMENT ON THE CONTRIBUTION

OF DASHEN BANK OF JIMMA BRANCH FOR

THE DEVELOPMENT OF JIMMA TOWN

A RESEARCH PAPER SUBMITTED TO CONDUCT

IN PARTIAL FULFILLMENT OF THE
REQUIREMENT OF BACHELOR OF ARTS IN
MANAGEMENT

Prepared By: Sisay Zenebe

Advisor: Reta Megersa (MBA)

JIMMA UNIVERSITY
COLLEGE OF BUSINESS AND
ECONOMICS
DEPARTMENT OF MANAGEMENT
 May, 2012
Jimma, Ethiopia

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 ACKNOWLEDGMENT

I would like to thank Reta Megersa (MBA) my advisor of this research

project to his constructive support, commitment and suggestion that
play significant role on the preparation of this research.

I would like again to thank Jimma University, College of Business And

Economics, and department of management for the providing of guide
lines to accomplish this research project. I would also thank Dashen
bank of Jimma branch for its support by giving the necessary
information.

At last, not least, I would like to thank Firehiwot Yimer for her diligent
work in typing of this research project.

I
 ABSTRACT

The study was conducted on the assessment of the contribution of Dashen

bank of Jimma branch for the development of Jimma town. The study
would focused on this society in particular to evaluate the contribution of
the mention financial institution to the economic development of the town
or the society. The main objective of the study was to assess the
contribution of Dashen bank of Jimma branch to the development of
Jimma town. It was specifically analysis in detail about the bank
contribution to the local people and the people’s awareness about the
importance of the mentioned financial institution. The study was based on
primary data obtained from employees and customers or society of the
bank. The researcher would use judgmental or purposive sampling
technique to conduct this study. To conduct this research project the
researcher has selected 28 of employees and 66 of customers of the bank
as samples. The major finding of this paper is the bank is very important
to the society to give different services. The data was obtained through
interview, questionnaire and observation. In addition to primary data,
secondary data was also used. After the data was gathered from
samples, it would analyzed and discussed qualitatively and quantitatively
to the indicated the result.

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 TABLE OF CONTENTS

CONTENT PAGE

Acknowledgement...........................................................................I
Abstract..........................................................................................II
Table of Contents ..........................................................................III
List of Tables .................................................................................IV
Chapter One
1. Introduction ..............................................................................1
1.1 Background of the study.......................................................... 1
1.2 Background of the organization ...............................................3
1.3 Statement of the problem .........................................................5
1.4 Objectives of the study .............................................................6
1.4.1 General objective ...............................................................6
1.4.2 Specific objective ................................................................6
1.5 Significance of the study...........................................................7
1.6 Scope of the study....................................................................8
1.7. Limitation of the Study ...........................................................8
1.8. Organization of the Paper........................................................8
Chapter Two
2. Literature review ........................................................................9
2.1. Contribution of Banks to Economic Development ................9
2.2. Foreign aid .........................................................................10
2.3 Why foreign aid/loan ...........................................................11
2.4. Functions of Dashen Bank .................................................12
2.5. Investment Policy of Dashen Bank ......................................13
Chapter Three
3. Methodology .............................................................................14
3.1 Source of data ......................................................................14
3.2 Methods of data collection......................................................14

III
3.3 Method of sampling and sample size determination ...............14
3.4 Method of Data Analysis .......................................................15
Chapter Four
4. Data Presentation and Analysis ................................................16
4. Presentation and Analysis of Primary data................................16
Chapter Five
5. Summary, Conclusion and Recommendation ...........................27
5.1. Summary ...........................................................................27
5.2. Conclusion ........................................................................28
5.3. Recommendation ...............................................................30
 Reference ............................................................................32
 Questionnaire......................................................................33

IV
 List of Tables

Table 1: Sex and Age wise classification of the respondents ..........16

Table 2: Occupation status of the respondents .............................17
Table 3: Religion of the respondents .............................................17
Table 4: Analysis of Monthly income of the respondents ...............18
Table 5: Problems related to delivering of bank service/product . . .19
Table 6: the analysis of the re-payment of loan .............................20
Table 7: Problems that affect banks contribution on the customer
side.................................................................................20
Table 8: Customer Satisfaction .....................................................21
Table 9: Loan provided by the respondent .....................................22
Table 10: People’s attitude towards the bank service ....................23
Table 11: Banks contribution to the economic development of the
town .............................................................................24
Table 12: Ways of banks contribution to the town ....................... 24

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 CHAPTER ONE
1. INTRODUCTION

1.1 BACK GROUND OF THE STUDY

The financial sector plays a critical role in the process of economic

development by effective mobilization and locate financial resources for
their most productive uses. The development of financial sector reduces
information and transaction costs encouraged financial savings and
investment. A bank makes investment in government securities and in
the stocks of large reputed industrial concerns. While in case of loan the
bank advances money against recognized security and bills (International
Trade and Bank and Money Page 153).

Dashen bank of Jimma branch is one branch of Dashen Banks among

from 64 banks which is found South West of Addis Ababa 346 km away.
It is establish to provide different services for the society and make profit
for share holders. Dashen bank create job opportunities to those
individuals taking alone, by providing fund to operate their business
activities and receive return as interest for the principal they lend. So
creating job opportunity increases the individuals living standard and
the return increases the asset of the bank, these also leads to economic
development of the country (from the Bank Manual).

Currently Dashen bank offers the following credit products:-

- Term loans (short; medium and long term loans)
- Over draft
- Merchandise loans

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And the bank accepts the following assets as collateral
- Building
- Motor Vehicles
- Construction machinery

The reason for the study is to assess the contribution of Dashen bank for
the economic development of the society, it especially in depth the bank
contribution of the local people and increasing the people’s awareness
about the importance of the Dashen Bank.

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 1.2 BACKGROUND OF THE ORGANIZATION

Among Banks in Ethiopia, Dashen bank is the bank that has a great
market share with 64 branches.

From its establishment in 1995 up to now, Dashen bank play a great role
in the economic development and progress of a country. Currently
Dashen bank has about 22000 account holders and more than 1000
employees.

As we know Jimma is one of the well known coffee traded regions in

Ethiopia, so there are many traders and farmers who engage in the
activity of coffee trade and production of coffee for their effective activity.
The people of Jimma town and its surrounding did not take any long
time to introduce to the banking services when the Dashen bank of
Jimma branch established in 1996 G.C (From the bank manual).

Dashen bank of Jimma branch was established at the construction cost

of 15 million Ethiopian birr, at the center of Jimma town.

From its establishment up to now the bank provides different services

like, current account, saving account, lones and other services to its
customers. The banks also make profits for its shareholders and
distribute this profit interims of dividend (From the bank manual).

Vision of the organization: In as much as mount Dashen excess all other

mountains in Ethiopia. Dashen bank will continue to prone unparalleled
in banking service.

3
Mission of the organization: Provides efficient and customer focused
domestic and international banking services. Over coming to continue
challenges for excellence through the application of appropriate
technology. The organizational structure of the bank constitutes of the
general assembly of share holders at the top followed by board of
directors, the presidents, the vice presidents and various departments
division and area bank (From the bank manual).

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 1.3 STATEMENT OF THE PROBLEM

The bank promotes economic development by gathering the supply of

funds from millions of individuals, depositors and making them available
to investors those a real assets. In performing these function the Dashen
banks improve the well being of both depositors and investors by
improving economic efficiency that arises their living standard. Banks
contribution in economic development of the society may have some
problems in multi directions, either the bank fails to provide a qualified
service or on the customer side may have problem like that of lack of
people’s awareness about the bank significance.

In order to asses those problems the student researchers was attempt to

address the following questions.
1. What are the contributions of the bank for the economic
development of the town?
2. What are the problems that affect the delivering of bank product or
services?
3. What are the factors that affect the banks contribution on the
customer side?
4. What are the methods that improve the contribution of Dashen
bank of Jimma branch for the development of Jimma town?

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 1.4 OBJECTIVE OF THE STUDY

1.4.1 General objective

The main objective of the study is to identify the contribution of Dashen

bank for the development of Jimma town.

1.4.2 Specific Objective

In addition to the general objective, the study has its own specific
objectives; these are: -

1. To assess the basic contribution of the bank for the economic

development of the town.
2. To investigate the problems that affect the delivering of bank
product or service.
3. To identify the factors that affect the banks contribution on the
customer side.
4. To assess the best methods that improves the contribution of
Dashen bank for the development of Jimma town.

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 1.5 SIGNIFICANCE OF THE STUDY

The study a great significance for both a financial institution and the
society. The bank can get the necessary details about problems that
related to the economic contribution to the development of the town. On
the other hand the society increases their awareness about the bank
services and it may enable the society to capitalize the opportunity the
bank provide to make use of idle resources.

The study plays a great role by informing Dashen banks function for the
society, it will help to eliminate (to reduce) problems regarding to
improper usage of loans, it helps to improve and to increase the over all
development.

In addition to above importances, the study reminds the value of money

to the society and it helps another researchers who are interested to
study on the same area.

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 1.6 SCOPE OF THE STUDY

The Dashen bank of Jimma branch is one of the financial institutions,

which is located in the center of the town.
The study was focuses on this local institution in particular to assess the
contribution of the bank for the development of the town and to evaluate
the local people's awareness especially current customers of the back
about the importance of the bank/ the financial institution.

1.7 LIMITATION OF THE STUDY

While conducted this study the researcher faced different obstacles such
as shortage of reference material because some contents of the bank are
strictly forbidden for external party, shortage of time, the respondents
have less interest to give information, there were careless and emotional
response, managers were busy to give enough information.

1.8 ORGANIZATION OF THE PAPER

This paper includes five chapters, from those chapters chapter one
describes about the introductory part of this research project. Chapter
two states about the review of literature to this study and chapter three
of this research project describe the methodology section. The other two
chapters (chapter four and chapter five) describe the presentation and
analysis of the data and summary, conclusion and recommendation
respectively.

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 CHAPTER TWO
2. LITERATURE REVIEW

2.1: Contribution of Banks for Economic Development

Banks play an important and active rle in the economic development of a
country. If the banking system in a country is effective, efficient and
disciplined it brings about rapid growth in the various sectors of the
economy. Some of the significances of banks in the economic
development of a country are discussed below (www.slideshare.net)
contribution of banks to economic development.

Banks Promote Capital Formation: Banks accept deposits from

individuals and business, these deposits are then made available to the
business which make use of them for productive purposes in the
country. The banks are therefore, not only the store houses of the
country’s wealth, but also, provide financial resources necessary for
economic development (www.slideshare.net/ contribution of bank to
economic development).

Investment in New Enterprises: Business men normally hesitate to invest

their money in risky enterprises. The banks generally provide short and
medium term loans for entrepreneurs to invest in new enterprises and
adopt new methods of production. The provision of timely credit
increases the productive capacity of the economy.

Promotion of Trade and Industry: with the growth of banking, there is

vast expansion in trade and industry. The use of bank draft check, bill of
exchange, credit cards and letters of credit, etc has revolutionized both
national and international trade.

Development of Agriculture: the banks particularly in developing

countries are now providing credit for development of agriculture and

9
small scale industries in rural areas. The provision of credit to
agriculture sector has greatly helped in raising agriculture productivity
and income of the farmers (www.slideshare.net/ contribution of banks to
economic development).

Balanced Development of Different Regions: the banks play an important

role in achieving balanced development in different regions of the
country. They help in transferring surplus capital from developed regions
to less developed regions. The traders, industrialists, etc of less
developed regions are able to get adequate capital for meeting their
business needs. This in turn increases investment, trade and production
in the economy (www.slideshare.net/ contribution of banks to economic
development).

Influencing Economic Activity: the banks can also influence the economic
activity of the country through its influence on availability of credit. The
rate of interest, if the banks are able to increase the amount of money in
circulation through credit creation or by lowering the rate of interest. It
directly affects economic development. A low rate of interest can
encourage investment. The credit creation activity can raise aggregate
demand which leads to more production in the economy
(www.slideshare.net/ contribution of banks to economic development).

2.2. Foreign aid/ loan

The present world order has made different countries to have economic
level of development. The broad classification is developed, transition and
developing countries. The most pressing concern of the governments of
developing countries and their priority objectives is to increase the out
put level of economy, reduce their huge unemployed labor force, balance
their income distribution, develop the level of education and health
facilities, transform the low level of subsistence agriculture to the

10
modern one, faster their industrial development and decrease regional
imbalances.

Foreign aid, as one of the major source of development should be

managed in away that can bring about sustainable development. The
objective of this short article is to examine how foreign aid could be used
to fill the gap of development requirement of the developing world.

2.3. Why foreign aid/ loan

The factors that hinder development are multiple. The most important
factors are in adequate saving because of the low level of income and
unavailability of enough foreign exchange/capital so, in fusion of out side
resources are believed to be a necessary condition for countries to grow
at a relatively faster rate. The question is what type of our side resources
do countries need to obtain? Our focus will be on aid/ loan. Financial
resources as any other resources are limited in supply. For the
developing countries to come out of their low level of development
investment in different sectors of the economy (industry, agriculture,
infrastructure and others) is must.

The shortage, balance of payment deficit, higher rate of population

growth and lack of skilled manpower are problems that hinder the
regions development. Developing countries have little resistance to
external shocks some of them are:

Direct finance: This happens when surplus unit lend directly to the
deficit unit. This type of funding has high risk in the events of
bankruptcy and timely settlement of the debt. Due to these reasons the
scale of accelerating the economic development process by direct
financing is not significant.

11
Indirect finance; intermediaries like domestic bank attract surplus and
lend to deficit unit. This initiates and facilitates the development process
by transferring the risk of maturity. This type of financing has the means
to pool domestic resources and provide the required investment capital
for projects (Economic development 9th edition page 22).

2.4. Functions of Dashen Bank

Dashen bank performing a variety of functions which can be divided as

accepting deposits, advancing loan, credit creation agency services and
miscellaneous services to its customers.

Accepting deposits: Bankers used to charge a commition for keeping the

money in its custody when banking was developing as an institution.

Advancing loans: One of the major functions of Dashen bank is to

advance loans to its customers. A bank lends a certain percentage of the
cash lying in deposit on a higher interest rate than it pays an such
deposits. This is how it earns profit and carried out its business. The
bank advance lanes in the ways of cash credit, over draft and
discounting bill of exchange.

Credit creation: Like other financial institutions Dashen bank aims to

earn profits. For this purpose they accept deposits and advance loans by
keeping small cash in reserve for day to day transactions. When a bank
advances loans, it opens an account in the name of the customer and
does him in cash but allows him to draw the money by cheques
according to his needs. By granting a lone, the bank creates credit.

Agency services: The bank acts as an agent of its customers in collecting

and paying cheques, bill of exchange drafts, dividends, etc.

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Miscellaneous service: In addition to above functions Dashen bank issues
different types of credit instruments such as cheques, drafts and
travelers, which facilitate transaction. The bank also issue letters of
credit and acts as a reference to its clients. It underwrites shares and
debentures of companies and helps in the collection of capital from
different places (loyd B. Thomas, Money, Banking and financial markets,
1996, page 193).

2.5. Investment Policy of Dashen Bank

A bank makes investment for the purpose of earning profits. First it

keeps reserves to meet its liquidity requirements. It is essential to satisfy
the credit needs of the society by granting short term loans to its
customers. After making loans, it is passed to invest for long period to
improve earning capacity.

A bank makes investments on securities and in the stocks of a large

reputed industrial concerns, while in the case of lone the bank advances
money against recognized securities and bills. However the goal of both is
to increase its earnings. The investment policy of the bank consists of
earning high returns and keep in view the safety and liquidity of its
customers.

Since the objective of profitability conflicts with those of safety and

liquidity, the wise investment policy is to strike a judicious balance
among them. There fore a bank should lay down its investment policy in
such manner so as to ensure the safety and liquidity of its funds and at
the same time maximize its profit. (Shekhar, 1961, page 148).

13
 CHAPTER THREE
METHODOLOGY OF THE STUDY

3.1 Source of data

The researcher used both primary and secondary data sources. The
primary data were collected from managers, employees and customers of
Dashen bank of Jimma branch. The secondary data were obtained from
monthly and quarterly progress report and audit report of the bank.

3.2. Method of data collection

Both primary and secondary data were collected systematically to get

realistic information from concerned bodies. In collecting primary data
questionnaires and unstructured interview were used. The
questionnaires had both open ended and close ended, types. The open
ended types help the respondents to express their idea in an unlimited
way and close ended provide actualize questions to the respondent.

3.3 Method of sampling and sample size determination

The data was collected from the current customer and employee of the
bank. The researcher was select samples by using non probability
techniques depending on the range of elements of the target population.
Therefore, the researcher would use judgmental or purposive sampling
technique to obtain both qualitative and quantitative data from the target
population.

14
The reason why this sampling technique was selected is that it is less
complicated to collect the data, less expensive, less time consuming and
enables the researcher to get the required data only from concerned
bodies.

The total target population for this study is 2165, from this population
45 are employees of the bank and the rest are customers. The researcher
was selected 66 of customers and 28 of employees by using the formula:
n= Z2 p.q.N (by Kothar; 2004)
(N-1)e2 + Z2 p.q

Where; n: Sample size

N: Total population
Z: The critical value at 90% confidence (1.64)
e: the error term (precision)
p: Population proportion (which is 0.5) to take large sample size
q: 1-p
Therefore a researcher was select a total of 94 samples and ask a list of
questions to get the necessary data.

3.4. Method of data analysis

After the relevant data was collected descriptive method of data analysis
were used. The analysis was indicate the transformation of raw data in to
a form that makes easy to understand and interpret it.

To interpret the identified data, it was written in the form of tabulations,

and percentages, in order to facilitate the progress of comparison of data.

15
 CHAPTER FOUR
4. DATA PRESENTATION AND ANALYSIS

This section presents and analyses the findings concerning the

contribution of Dashen Bank of Jimma branch for the development of
Jimma town. The data were collected through questionnaires and
unstructured interview. A total of 94 (100%) questionnaires were
distributed to respondents. Out of which 83 (88%) questionnaires
returned to me. The rest 11 (12%) questionnaires are not returned for the
study, because of carelessness to give attention, absenteeism after taking
the questionnaires, work load, lack of willingness and lack of enough
time of the respondents. The secondary data also used to analyze this
result in addition to primary data.

4.1. Presentation and Analysis Primary Data.

Table 1: Sex and Age wise classification of the respondents
Age No of respondents
Percentage
classification Male Female Total
20-35 25 9 34 40.96
36-50 15 6 21 25.30
51-65 11 4 15 18.07
Above 65 10 3 13 15.67
Total 61 22 83 100
Source: Collected questionnaire from respondents

The above table indicates that out of total respondents 34(40.96%),

21(25.30%), 15(18.07%) of the respondents are 20-35, 36-50, 51-65
years old respectively, and the remaining 13(15.67%) are in the age of
above 65 years. As shown in the above table sex wise classification of the
respondents (61) are male and the rest (22) are female.

16
From this the researcher conclude that Dashen bank of Jimma branch is
highly dominated by male customers and most of them are between the
age of 20-35, only few users are above the age of 65.

Table 2: Occupational Status of the Respondents

Occupation No of Percentage
respondents
Merchant 22 26.51
Employee 29 34.94
Farmer 12 14.46
Other 20 24.09
Total 83 100
Source: The Collected primary data

The above table shows that 22 (26.51%) are merchants, 29 (34.94%) are
employees, 12 (14.46%) are farmers and the remaining 20 (24.09%) are
others, like drivers, servants, students, and the like.
From this the researcher conclude that Dashen bank of Jimma branch is
highly dominated by governmental employees followed by merchants and
farmers are the lowest users.

Table 3: Religion of Respondents

Religion No of Percentage
respondents
Orthodox 50 6025
Muslim 20 24.09
Protestant 13 15.66
Other 0 0
Total 83 100
Source: primary data from the respondents
The above table shows the religion of respondents; 50 (60.25%) are
orthodoxians, 20 (24.09%) are muslims, 13 (15.66%) are protestantes
and none of the respondents are others.

17
 From this the researcher concludes that the large number of respondents
(60.25%) are orthodoxians, it indicates that the Dashen bank of Jimma
branch is highly used by orthodox religion followers. The lowest number
of respondents are the followers of protestantesm.

Table 4: Analysis of the Monthly income of Respondents

Respondents 51-100 101-300 301-600 601-1200 1201-2000 2001-3000 >3000 Total (%)
Merchant 0 (0%) 2(2.4%) 1(1.2%) 10(12%) 2(2.4%) 6(7.2%) 1(1.2%) 26.4%
Employee 0 (0%) 1(1.2%) 1(1.2%) 6(7.2%) 12(14.5%) 7(8.5%) 2(2.4%) 35.2%
Farmer 2(2.4%) 0 (0%) 2(2.4%) 5(6%) 1(1.2%) 2(2.4%) 1(1.2%) 15.4%
Other 1(1.2%) 3(3.6%) 6(7.2%) 3(3.7%) 3(3.6%) 2(2.46%) 1(1.2%) 23%
Total in column 3(3.6%) 6(7.2%) 10(12%) 24(28.9%) 18(21.7%) 17(20.6%) 5(6%) 100%
Source: primary data obtained from questionnaire

The above table illustrates the monthly income of the target population
for study. The purpose of this item is to understand the economic status
of the society.

As the above table shows, merchants monthly income covers 26.4%,

employees monthly income covers 35.2%, farmers monthly income
covers 15.4% and other (like drivers and servants) monthly income
covers the rest 23%. As the table shows small number of respondents
monthly income is between the ranges 51-100 followed by greater than
3000.

From above table the researcher concludes that the monthly income of
employees is higher than that of other respondents, which is 35.2%.
Large number of respondent’s monthly income is between 601-1200
ranges, which are 28.9%.

Table 5: The Presentation of the Problem related to the delivering of bank

product/service

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Is there any problem with No of
regulating to the delivering of respondents Percentage
bank service?
Yes 44 53
No 39 47
Total 83 100
Source: primary data from the respondents

As the above table shows that from the total number of respondents
44(53%) are said that there is a problem with regarding to the delivering
of bank service/product. The rest 39(47%) of the respondents are said
there is no problem with regarding to the delivering of bank service.

From this the researcher conclude that out of a total respondents the
highest percentage shows the existence of a problem with regarding to
the delivering of bank service, for example the provided collateral will not
cover the amount of loan, the transaction cost problems, the business
center is not comfortable for follow up activity and the like.

From above information the researcher recommend that the bank should
have appraisal for the purpose of estimating the collateral proportion
with loan amount and the bank give advices for its customers to comfort
its business center for the purpose of follow up activity.

Table 6: The analysis related to the re-payment of loan.

As a customer of the bank, is

19
there any loan that you have not No of Percentage
re-paid? respondents
Yes 24 29
No 59 71
Total 83 100
Source: primary data from the respondents

As the above table shows 24(29%) of respondents have not re-paid their
lone and 59(71%) of the respondents have any their loan to the bank.
From this the researcher conclude that most of the respondents have re-
pay the loan effectively and only small number of respondents have not
re-pay their loan to the bank.

Table 7: Problems that affect banks contribution on the customer side

Is there a problem that affect

banks contribution on the No of Percentage
customer side respondents
Yes 45 54
No 38 46
Total 83 100
Source: Collected questionnaire from the respondent

The above table shows problems on the customers’ side that affect the
banks contribution. Out of the total respondents 45(54%) of the
respondents said that there is a problem and the rest 38 (46%) of the
respondents said there is no problem with regarding to customers. 54%
of respondents said that there is a problem, example the customer not
repay the loan at a time, lack of awareness about the bank service, not
use the lone for specified purpose, risk aversion behavior and so on.

From this the researcher conclude that large number of respondents said
there is the problem on the customer side and lower number of

20
respondents said no problem that affect contribution of the bank on the
customer side.

From the above information the researcher recommended that to reduce

the above problems the bank should create awareness to its customers
before lending the lone.

Table 8: Customer Satisfaction

Response No of Percentage
respondents
Very much/highly 23 28
satisfied
Much/satisfied 49 59
Unsatisfied 11 13
Total 83 100
Source: Primary data

As the above table shows 23(28%) of respondents are highly satisfied,

49(59%), are moderately satisfied and the rest 11(13%) are unsatisfied by
the bank service.

From this the researcher conclude that customers of Dashen bank of

Jimma branch are moderately satisfied or they get much satisfaction by
the bank service, and a few customers did not get the expected
satisfaction from the service rendered by the bank.

From the above information the researcher recommended that the bank
should try to increase the degree of its customer’s satisfaction by brining
modern technology, by training employees, by cooperating with other
branches, by making the interest rate attractive, and so on.

Table 9: Loan Provided by the Respondent

21
 Response No of Percentage
respondents
Borrowed for the purpose of:
 To start new business 20 24.1
 For building house 11 13.2
 To expand the previous 11 13.2
business 4 4.8
 For farming purpose 13 15.8
 For commercial purpose 3 3.6
 For other activities
Sub total 62 74.7
Not borrowed 21 25.3
Total 83 100
Source: Primary data

As the above table indicates out of the total respondents 24.1% are
borrowed money from the bank for the purpose of starting new business,
11 (13.2%) customers borrow for building house, 11 (13.2%) are borrow
to expand the previous business, 4 (4.8%) for farming purpose,
13(15.8%) of customers borrow for commercial purpose, and the rest
borrowed customers for other activities like covering basic needs, to buy
goods and so on. As indicated from above table also 21(25.3%) of
customers have not borrowed money from the bank.
From this the researcher conclude that large number of respondents
borrow money and lowest number of respondents not borrow because of
lack of collateral, lack of knowledge and understanding of the
respondents, by the risk aversion behavior and so on.
From the above information the researcher recommended that the bank
try to create awareness for its customers, comfort its regulatory system
and try to full fill different facilities.

22
Table 10: An overview analysis of the people’s attitude towards the bank
service

Response No of Percentage
respondents
Very good 23 27.7
Good 51 61.5
Poor 9 10.8
Total 83 100
Source: Primary data

The above table shows that out of the total respondents 23(27.7%),
51(61.5%), 9 (10.8%) of the respondents said that very good, good and
poor respectively. When 10.8% of the respondents said poor, they put the
following reasons; the bank not effectively rendered its service, there is
no creation of awareness, money restriction to give lone and so on.
From this the researchers conclude that large number of respondents
have good attitude about the bank service. It indicates that Dashen bank
of Jimma branch is the good mechanism of economic development of the
town.

Table 11: Bank Contribution to the Economic Development of the town

Response No of Percentage
respondents
High/much 50 60.2
Low 33 39.8
None 0 0
Total 83 100
Source: Primary data

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As stated in the above table 50(60.2%) of the respondents said that
Dashen bank of Jimma branch has high contribution and the rest 33
(39.8%) of the respondents said the bank contribution for economic
development is low because the bank not do more in advertizing
importance of its service.
From this the researcher conclude that Dashen bank of Jimma branch is
highly contributed to the society by giving lone for investment and by
giving effective bank service.

Table 12: Ways of the banks contribution to the town

Response No of Percentage
respondents
Building health care 21 25.3
Road construction 28 33.7
Building real state 11 13.3
Others 23 27.7
Total 83 100
Source: Primary data
As it can be seen from the above table out of the total respondents
21(25.3%) of the respondents said that the bank contribute for the
development of the town by the way of building health care, 28(33.7%) of
respondents said by the way of road construction, 11 (13.3%) of
respondents said by the way of building real state, and the rest
23(27.7%) of respondents said the bank contribute to the development of
the town by other means/ways like by giving knowledge to the society, by
giving banking service, by making investment and so on.

From this the researcher concludes that the banks contribution to the
town development is highly lies on road construction followed by other
services. The least contribution is lies on the building of houses.

24
An overview of the bank contribution to the town or society (as per the
result obtained)

The following paragraphs reveals the result and discussion regarding the
bank’s effort made to the society with regarding to its mission that could
contribute to the development of the loyal customers and the different
motives creating method the bank used to attract other non-loyal
customers.

As to the response of the bank’s employee and the authority bodies

concerning the different promotional strategies the bank is following are:
 Advertising
 Different types of incentives
 Moral support
 Prompt and positive replay to customers question
 Priority of service to customers etc.
These mentioned are some of the different methods the bank is currently
using to raise the awareness of the society about the importance of
financial institution as a financial expert. The bank’s employee and
authority bodies supervision to the borrowed money for the benefit of the
borrower and to prevent monetary loss to the bank is interesting. Some
of these supervisions are:
 Advising and supervising the borrower to use the money he
borrowed only for the purpose he mentioned when he borrowed.
 Advising not to use personal consumption
 Advising and helping to minimize expense that means to give
business related advice freely help to examine the different phases
of project cycle of the borrower, etc.
As much as possible encouraging the borrower to reduce the expense is
important. These facts show the strength of the bank’s employees in the
provision of their knowledge as a financial expert.

25
The banks employee supervision of the debtors to repay their lone at a
time without any difficult is very interesting and supportive as to the
response of the employees some of the point given by them concerning
this fact are as flows:
 Conducting and make up keeping regular communication with
borrowers, through remainders and convinent communication
media to accelerate re payments.
 Provision of appropriate and regular advise to customers
concerning and the problems encountered by the borrowers.
 Conducting schedule visits of the customer business sites to asses
repayment ability, etc.

CHAPTER FIVE
SUMMARY, CONCLUSION AND RECOMMENDATION

5.1. Summary
This study was conducted on the “assessment of the contribution of
Dashen Bank of Jimma Branch for the development of Jimma town”. The
study also concerned the societies awareness about the importance of
financial institution/bank, the income level of the target population and
the customers attitude for the bank.

26
Bank is a financial institution, bank employees are financial expertise
and the society have little knowledge (even some have nothing) about
saving and investment, therefore the bank as much as possible took its
effects and knowledge to encourage the society to develop the habit of
saving and investment importance for economic development.

The main objective of the study was to assess/to identify the

contribution of Dashen bank for the development of Jimma town. It
would specially analyses in depth the bank contribution to the local
people’s and the people’s awareness about the importance of financial
institutions.
Awareness about the financial institution May enabling the society
participate in financial institution matter meetings, making how the
society understands the mission of the bank.

In this paper both primary and secondary data sources were used. The
primary data was collected from managers, employees and customers of
Dashen bank of Jimma branch. The secondary data was obtained from
the bank’s written materials and reports of the bank.

As the primary data obtained shows, the bank is making loan grant on
some tangible assets and depository checks for the society in order to
develop the habit of saving. Some ways of saving away from the deposit
and able to make investment and to improve their living standard. After
the data was gathered from the target population through different
methods, it would analyze and discussed qualitatively and quantitatively
to the indicated result.

All the result discussed are regarding the current situation of the bank
(every information in concerning the 2004 customers and bankers
response. The bank’s contribution to the development of the society is
highly contributed by giving loans for investment, increasing per capita

27
income, and by providing effective bank services. Dashen bank of Jimma
branch is highly dominated by male customers and most of them are
between the ages of 20.35, years old.
About 34.94% of the bank customers are governmental employees and
those employees cover the highest portion of the monthly income of
respondents. Most of the respondents have repaid their loan in a timely
manner. The highest number of respondents says that they get much
satisfaction by the bank service. The bank highly contributes to the
economic development of the town in different means; like road
construction, building health care and the like.

5.2. Conclusion
As per the problems identified on “the assessment of contribution of
Dashen bank for the development of Jimma town” the following
conclusions are drown.

From the analyses of the data obtained from different sources the target
population can be confidentially said that Dashen bank of Jimma branch
is highly dominated by male customers and most of them are between
the ages of 20-32 years and also dominated by governmental employee
customers whose monthly income is higher than that of farmers and
merchants. When come to the religion of the respondents the bank is
highly dominated by orthodox religion followers.

The banks contribution to the development of the society is by giving

loan for investment, increasing per capital income and by providing
effective bank services. From this people have good attitude towards the
bank service, it indicates that the bank is a good mechanism for the
economic development of the country.

28
Problems that affect banks contribution; from the number of
respondents in the study area said that there are problems that affect
banks contribution on the customer side. For example the borrowers of
the bank have bad economic condition, lack of awareness about the
bank service, not using the loan for the specified purpose. And also there
is problem with regarding to the delivering of bank service, for example
the provided collateral will not cover the amount of loan, their business
center is not comfort for follow up activity.

 As a general fact the main reason for the society’s out of line to use
the financial institutions service is lack of awareness about the
importance of taking lone.
 In general, the societies. Lower awareness, the bank regulatory
system and other similar factors as contributed to the limited bank
contribution for the society’s development and the societies access
to the service. Therefore for the development in particularly still it
needs the combined effort of the government, the existence of
financial expertise and the like.

5.3. Recommendations

The findings concerning the contribution of Dashen bank of Jimma

branch to the development of local people or the town is discussed,
summarized and concluded. The following are some points of
recommendations for the problems identified from the society.
1. As shown in the result analysis section, the awareness of the
society with regarding to taking of loan is low. This implies the fact
that the contribution of the bank to the society is limited to the

29
 extent that the society is awarded. Therefore the possible
salutation would be:
 Increasing the motivation of the society for saving and credit.
 Providing rules for filling up the loan contract.
 Teaching the society about the resources planning and
utilization.
 Consulting firm arrangement for skill formation, skill
development, identification of resources, production
technique and making systems etc. this and the like
information may increase the society’s efforts towards
generating income and induce the idea of saving and credit.
2. The bank should try to increase the degree of its customer
satisfaction by making the interest rate attractive, by comforting
its regulatory system, brining modern technology, training
employees, cooperating with other branches and by taking other
actions which helps to increase customer satisfaction.
3. The existing credit scheme is not very successful. Credit is not
granted to those who are most in need or to those undertaking the
most profitable activities, due to the bank regulatory system.
Therefore the government has to take the necessary actions like:
 Try to see the reason for the failure of conventional credit
schemes and find solutions.
 Try to integrate new approaches to credit for the society
those having lower income.
4. The government should exploit all domestic possible sources for
mobilization of development finance. However Dashen banks are
the most important financial intermediaries, they still have
problems of capital in adequacy and in efficiency. Therefore the
banks try to work to have adequate and sufficient capital. The

30
 government also and the bank provide real interest rates for savers
and viable investments for the economy.
5. The government should encourage non-governmental organizations
to participate for the development of the society trough addition of
competition to the market to make better society access to credit.
6. As shown in the result analysis section, the service offered by the
bank did not satisfy some customers of the bank with this regard
the bank should try to increase the quality of service by:
 Taking suggestions from customers.
 Training employees about the ways of customer attraction.
 Giving fast service
 Etc.

REFERENCE

 Colin D. Campbell, 1998, Money, Banking and Monetary Policy,

USA, Dryden Press, a division of Holt, Rinehart and Winston Inc.
 Harold Borger, 1962, Money Banking and Public Policy, USA,
Rand McNally and Company Library of Congress Catalogue.

31
 Juliha Haile and Geoffrey Whitehead, 1981, Elements of
Banking. 3rd edition, Great Britain. Richard day Lid.
 Kothari, C.R, 2004, Research methodology, Methods and
Techniques, 2nd edition
 Loyd B. Thomas, 1996, Money, Banking and financial markets,
8th edition.
 ML. Jhingan, 1999, Money, Banking, International Trade and
Public Finance, 7th edition.
 Shekhar. K.C 1961, Banking Theory and practice 18th
received edition.
 Solomon Alemu (PhD.) 2005, Research Methods in Business and
Social Science.
 Whiting. D.P, 1985, Mastering Banking, London Macmillan
Education Ltd.

32
 QUESTIONNAIRE
JIMMA UNIVERSITY
COLLEGE OF BUSINESS & ECONOMICS
DEPARTMENT OF MANAGEMENT

This questionnaire is designed to collect information on the contribution

of Dashen bank Jimma branch for the development of Jimma town.

Your are kindly requested to complete these questionnaire sincerely on

honestly. All information you provided will be kept with strict confidence
and will not be used for any other purpose except for intended academic
research.

Tick the appropriate boxes on applicable to you and fill the relevant
information on the space provided.

I. General background
Age: 20-35 36-50 51-65 >65
Sex Male Female
Occupation: Merchant Employee Farmer
Other
Religion: Orthodox Muslim Protestant
Other
II. Family members (in number) Male Female
1. How much is you monthly income?
0-15 51-100 101-300
301-600 601-1200 1201-2000
2001- 3000 >3000

33
2. Is there any problem with regarding to the delivering
    of bank service/ product/? Yes No
3. If your answer for question 2 is yes please mention some of them:-
1. __________________________
2. __________________________
3. __________________________
4. __________________________
4. If you are customer of the bank, is there any loan that you have not
re- paid? Yes No
5. If your answer for question 4 is yes, why?
________________________________________________________________
________________________________________________________________
________________________________________________________________
6. If your answer for questionnaire “4” is no, did you rapid the lone at a
time? Yes No
7. Is there a problem that affect the banks contribution on the customer
side?
8. If your answer for question 7 is yes please mention some of them
1. __________________________
2. __________________________
3. __________________________
4. __________________________
9. If you are currently using the banks service/product, how much you
are satisfied by the service?
Very much Much Little
10. If your answer for question 9 is little please  mention the
reasons.__________________________________________________________
                 ____________________________________________________________
_                 ___________________________________________________________
__

34
11. Have you ever asked for bank lone previously?
Yes No
12. If your answer for question 11 is yes for what purpose?
To start new business For farming purpose
For building house For commercial purpose
To expand your previous business
For others please specify
13. If your answer for question 11 is no, please specify reasons.
________________________________________________________________
________________________________________________________________
________________________________________________________________
14. What is you attitude to wards the bank service?
Very good Good Poor
15. If your answer for question 14 is poor, please mention reasons
________________________________________________________________
________________________________________________________________
________________________________________________________________
16. How much the bank contribute to the development the town?
Very much Little None
17. In what way the bank contribute to the town development?
Road construction Building real
state Build health care
Other specify_______________

35