An assessment of interest rate policy impacts on savings mobilization in banking: a case study of Fortis Microfinance Bank
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Background of the Study
Interest rate policies play a pivotal role in shaping the savings behavior of customers in the banking sector. Fortis Microfinance Bank, operating in a dynamic economic environment, has periodically adjusted its interest rate policies to stimulate savings mobilization. These policies influence the attractiveness of saving accounts, deposit schemes, and other investment products. Recent adjustments, driven by regulatory reforms and market competition, are aimed at providing competitive yields while maintaining financial stability (Adeyemi, 2023). In theory, when interest rates are set at attractive levels, customers are more likely to deposit their funds, thereby increasing the bank’s deposit base and liquidity. Conversely, lower interest rates might discourage saving and prompt customers to seek alternative investment vehicles. Fortis Microfinance Bank’s strategic approach integrates macroeconomic forecasting, customer behavior analytics, and regulatory compliance to determine optimal rate levels that encourage savings without compromising profitability (Chinwe, 2024).
The bank’s approach also incorporates digital communication channels to educate customers on the benefits of saving, aligning its interest rate announcements with targeted marketing strategies. This integration of monetary policy with customer outreach is rooted in behavioral finance theories, which posit that clear, consistent communication of interest rate benefits can significantly influence consumer saving behavior. Moreover, empirical studies have demonstrated that transparent interest rate policies enhance customer trust and financial planning, thereby fostering higher levels of savings mobilization (Okoro, 2025). As Fortis Microfinance Bank continues to refine its interest rate framework, it faces the challenge of balancing competitive rate offerings with the need to sustain long-term financial performance. The current study aims to evaluate how these policy adjustments translate into increased savings mobilization, examining both the direct effects on deposit volumes and the indirect influence on customer confidence and retention.
Statement of the Problem
Despite periodic revisions in interest rate policies, Fortis Microfinance Bank has observed mixed outcomes in savings mobilization. While certain customer segments respond positively to attractive rates, others remain indifferent due to a perceived lack of transparency or short-lived promotional rates (Babatunde, 2023). Moreover, there are concerns that frequent policy adjustments may create uncertainty among depositors, leading to erratic saving behavior. The communication of interest rate changes is sometimes viewed as overly technical, resulting in a gap between the intended stimulus and actual customer response. In addition, external factors such as inflation and economic instability further complicate the relationship between interest rate policy and savings behavior. These issues raise questions about whether the current rate-setting mechanisms and communication strategies effectively mobilize savings. The study seeks to assess the impact of these policies on savings mobilization and to identify operational and communication barriers that may undermine their effectiveness, thereby providing actionable recommendations for policy refinement (Emeka, 2024).
Objectives of the Study
To evaluate the impact of interest rate policy adjustments on savings mobilization at Fortis Microfinance Bank.
To identify customer perceptions and behavioral responses to changes in interest rate policies.
To recommend strategies for enhancing the transparency and effectiveness of interest rate communications.
Research Questions
How do interest rate policy changes influence savings mobilization at Fortis Microfinance Bank?
What customer factors mediate the relationship between interest rate policies and saving behavior?
How can communication strategies be improved to maximize savings mobilization?
Research Hypotheses
Attractive interest rate policies are positively correlated with increased savings mobilization.
Inconsistent communication of interest rate changes negatively impacts customer saving behavior.
Enhanced customer education on interest rate benefits leads to higher savings deposits.
Scope and Limitations of the Study
This study focuses on Fortis Microfinance Bank’s interest rate policy adjustments and their effects on savings mobilization over the past three years. Limitations include potential biases in customer survey responses and external economic variables influencing saving decisions.
Definitions of Terms
• Interest Rate Policy: Guidelines set by the bank determining the yield on deposit products.
• Savings Mobilization: The process of attracting customer deposits to a bank.
• Financial Stability: The ability of a bank to maintain consistent performance amid market fluctuations.
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