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

Abstract

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.