EFFECTS OF BANK CHARGES ON HOUSEHOLD INCOME AND SAVINGS BEHAVIOUR IN SIERRA LEONE.

Abstract

Bank charges are a growing concern for commercial bank customers in Sierra Leone, given their impact on household income, savings behaviour, and financial inclusion. This study investigated how excessive bank charges affect customers’ savings habits and household income. It specifically assessed the influence of these charges on savings culture, disposable income, customer satisfaction, and participation in the formal banking system. Using a quantitative cross-sectional survey, data were collected from 180 customers of selected commercial banks in Freetown, Bo, Kenema, and Makeni through structured questionnaires. Analysis with IBM SPSS Version 27 included both descriptive and inferential statistics. Results showed that excessive bank charges significantly reduce disposable income and negatively affect savings behaviour, especially among low-income earners, students, traders, and informal-sector workers. Many respondents expressed dissatisfaction with charges related to ATM withdrawals, account maintenance, electronic transfers, and mobile banking services. Regression analysis confirmed a significant negative relationship between bank charges and savings behaviour. The study concludes that excessive bank charges undermine financial inclusion, erode public confidence in the banking sector, and discourage formal savings. Recommendations include stronger regulatory oversight, greater transparency, reduced banking charges, enhanced consumer protection, and further research on financial inclusion and digital banking in Sierra Leone.