An assessment of interest rate policy communication on influencing depositor behavior in banking: a case study of Fortis Microfinance Bank
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Background of the Study
Effective communication of interest rate policies is essential in shaping depositor behavior in the banking sector. Fortis Microfinance Bank has placed significant emphasis on transparent and timely communication regarding its interest rate adjustments to help depositors make informed decisions. The bank uses multiple channels—such as mobile banking notifications, SMS alerts, and branch communications—to disseminate information about rate changes, explaining the rationale behind adjustments and their expected impact on savings and loan products (Igbinedion, 2023).
This proactive communication strategy is designed to reduce uncertainty and build depositor confidence, particularly in a fluctuating economic environment. By clearly outlining the factors influencing interest rate decisions and providing real-time updates, the bank ensures that customers are well-informed and better able to plan their financial activities (Akinola, 2024). Furthermore, effective communication enhances trust and loyalty, as depositors feel that the bank is transparent and responsive to market dynamics. Advanced digital platforms facilitate this process by enabling personalized communication based on depositor profiles, thereby increasing engagement and satisfaction (Chinwe, 2025).
This study examines how the communication of interest rate policies affects depositor behavior at Fortis Microfinance Bank, exploring whether clear, consistent messaging can lead to increased deposit mobilization and improved customer retention.
Statement of the Problem
Despite robust communication efforts, Fortis Microfinance Bank continues to face challenges in effectively influencing depositor behavior through interest rate policy messaging. One key issue is the complexity of interest rate information, which can overwhelm customers and lead to misinterpretation (Ibrahim, 2023). Inconsistencies in messaging across different communication channels further compound this problem, resulting in depositor confusion and suboptimal financial decisions.
Additionally, rapid changes in economic conditions sometimes necessitate frequent rate adjustments, which can lead to information overload and diminish depositor confidence. Variability in depositor financial literacy also means that not all customers are able to fully grasp the nuances of rate adjustments, thus limiting the effectiveness of the communication strategy (Nwankwo, 2024). These challenges hinder the bank’s ability to attract and retain deposits, ultimately affecting its liquidity and overall financial performance. This study aims to analyze these communication barriers and propose strategies to improve depositor understanding and response to interest rate policies.
Objectives of the Study
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To assess the impact of interest rate policy communication on depositor behavior at Fortis Microfinance Bank.
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To identify challenges related to the clarity and consistency of rate information dissemination.
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To recommend strategies for enhancing depositor comprehension and engagement.
Research Questions
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How does interest rate policy communication influence depositor behavior at Fortis Microfinance Bank?
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What challenges affect the clarity of interest rate information delivered to customers?
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What measures can improve the effectiveness of interest rate communication in influencing depositor decisions?
Research Hypotheses
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H1: Clear and consistent interest rate policy communication significantly influences depositor behavior at Fortis Microfinance Bank.
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H2: Complex and inconsistent messaging negatively impacts depositor decision-making.
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H3: Enhanced digital communication strategies are positively correlated with improved depositor engagement.
Scope and Limitations of the Study
This study focuses on Fortis Microfinance Bank’s interest rate communication strategies, using depositor surveys, transaction data, and communication audits. Limitations include differences in depositor financial literacy and external economic volatility.
Definitions of Terms
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Interest Rate Policy Communication: The methods and effectiveness of disseminating information about interest rate changes.
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Depositor Behavior: The actions of customers regarding depositing, withdrawing, and managing funds.
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Financial Literacy: The ability of individuals to understand financial information.
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Digital Communication: The use of electronic channels to transmit information.
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