Downloads

https://doi.org/10.62836/emi.v3i1.63
Stephen, K. (2024). Factors for Reluctance of Individuals and Business Firms in Investing on Fixed Deposits in Tanzania. Economics & Management Information, 3(1), 1–10. https://doi.org/10.62836/emi.v3i1.63
Volume 3, Issue 1, March 2024
Copyright (c) 2023 Kaula Stephen
Creative Commons License

This work is licensed under a Creative Commons Attribution 4.0 International License.

Factors for Reluctance of Individuals and Business Firms in Investing on Fixed Deposits in Tanzania

This study assess on the factors for reluctance of public in investing on fixed deposits. Either to reveal the facts three main hypotheses were formulated that is i) investing on fixed deposits in covenants borne with financial services is the reason for reluctance ii) the liquidity risks associated with investing on the fixed deposits is the factor that count for reluctance and iii) the risk sharing unawareness is the factor that count for public being reluctant in investing on fixed deposits account. Using a quantitative approach, explanatory research design and simple random sampling techniques the facts were gathered from (96) Bankers, Banking specialists and Investors in Financial services/products. The facts being collected by employing structured questionnaires and the cleaned through use of multiple imputations, the Augmented Dicker Fuller Unit root test, the Runs test, incremental fit index, absolute fit index were applied in analyzing data. Either the results were as follows: the covenants and more other requirements in investing on the fixed deposits accounts count for the reason over public reluctance. Moreover long cash conversion cycle that lead into liquidity risks was another reason found to be influencing factor for reluctance. Furthermore unawareness over risk sharing portfolio and maturity of fund invested opportunities was revealed to be another reason why there was reluctance. The study therefore recommends that Banks should act leanly and responsively towards meeting the need of investors.

Tanzanians; investment; fixed deposits capital

References

  1. Ambika Pd. Security Analysis and Portfolio Management (Paperback), Second Edition; I. K. International Pvt Ltd: New Delhi, India 2009; 55.
  2. Bai J, Krishnamurthy A, Weymuller C. Measuring Liquidity Mismatch in the Banking Sector. Journal of Finance Forthcoming 2016; 73: 51–93. DOI: https://doi.org/10.1111/jofi.12591
  3. Berlin M, MesterLj. Deposits and Relationship Lending. Review of Financial Studies 2000; 12: 579–607. DOI: https://doi.org/10.1093/rfs/12.3.579
  4. Browne MW. When Fit Indices and Residuals Are Incompatible. Psychological Methods 2002; 7(4): 403–421. DOI: https://doi.org/10.1037//1082-989X.7.4.403
  5. Brunnermeier MK, Gary G, Krishnamurthy A. Risk Topography. Nber Macroeconomics Annual 2012; 26: 149–176. DOI: https://doi.org/10.1086/663991
  6. Brunnermeier MK, Yuliy S. A Macroeconomic Model With A Financial Sector. American Economic Review 2014; 104: 379–421. DOI: https://doi.org/10.1257/aer.104.2.379
  7. Diamond DW, Raghuram GR. Liquidity Risk, Liquidity Creation, and Financial Fragility: a Theory of Banking. Journal of Political Economy 2001; 109: 287–327. DOI: https://doi.org/10.1086/319552
  8. Di-Tella S, Kurlat P. Why Are Banks Exposed to Monetary Policy?.American Economic Journal: Macroeconomics 2017; 13: 295–340. DOI: https://doi.org/10.1257/mac.20180379
  9. Drechsler I, Savov A, Philipp S. A Model of Monetary Policy and Risk Premia. Journal of Finance Forthcoming 2015; 73: 317–373. DOI: https://doi.org/10.1111/jofi.12539
  10. Flannery M. Market Interest Rates and Commercial Bank Profitability: an Empirical Investigation. The Journal of Finance 2001; 36: 1085–1101. DOI: https://doi.org/10.1111/j.1540-6261.1981.tb01078.x
  11. Gorton G, Pennacchi G. Financial Intermediaries and Liquidity Creation. Journal of Finance 1990; 45: 49–71. DOI: https://doi.org/10.1111/j.1540-6261.1990.tb05080.x
  12. Hanson S, Shleifer A, Jeremy Cs, VishnyRw. Banks As Patient Fixed-Income Investors. Journal of Financial Economics 2015; 117: 449–469. DOI: https://doi.org/10.1016/j.jfineco.2015.06.015
  13. Hu L, Bentler P.M. Cutt off Criteria for Fit Indices in Covariance Structural Analysis: Conventional Criteria Versus New Alternatives. Equation Modeling 1999; 6(1), 1-55. DOI: https://doi.org/10.1080/10705519909540118
  14. Jackson Dl. Rivisiting Sample Size and Number of Parameter Estimates: Some Support for the N: q Hypothesis. Structural Equation Modeling 2003; 10(1): 128–141. DOI: https://doi.org/10.1207/S15328007SEM1001_6
  15. Kenny Da, Mccoach Bd. Effect of the Number of Variables on Measures of Fit in Structural Equation Modeling. Structural Equation Modeling 2003; 10(3): 333–351. DOI: https://doi.org/10.1207/S15328007SEM1003_1
  16. Maheshwari RP. A Complete Course in Isc Commerce; Pitambar Publishing: New Delhi, India, 2000;102.
  17. Muralidharan K. Modern Banking: Theory and Practice; Phi Learning Pvt. Ltd: Delhi, India, 2012; 274.
  18. Muranjan SK. Modern Banking in India; Kamala Publishing House: Kanpur, India, 2004; 80.
  19. Raj K, Uma K. India's Banking and Financial Sector in The New Millennium; Academic Foundation: New Delhi, India, 2001; 199.
  20. Swart N. Personal Financial; Learn to Earn Money. Management; Juta and Company Ltd: Cape town, South Africa, 2004; 338.
  21. Ullman Jb. Structural Equational Modeling, 4th Ed.; TabachnickBg, Fidell Ls, Eds.; Pearson Education: Boston, MA, USA, 2001; 653–771.

Supporting Agencies

  1. Funding: Not applicable.