HINDRANCES OF INTEREST FREE BANKING ADOPTION IN ETHIOPIAN BANKING INDUSTRY AND ITS CUSTOMER’S INTENTION TOWARDS USAGE AND SATISFACTION

Main Article Content

DEBEBE ALEMU KEBEDE
WADAJO WAMI BEGNA

Abstract

This study is undertaken to identify the hindrances of Interest free banking adoption, usage and customer satisfaction in Ethiopian banking industry with specific reference to commercial banks. To achieve the aim of the study, the primary data were collected from managers of some selected commercial banks through un-structured interview as well as from customers by using convenience method through standard questionnaires. While secondary data were collected from documents of banks and Journals to triangulate with response obtained from primary data sources. The collected data were analyzed in descriptive and inferential analysis. The findings depicted as the Economic factors like unemployment and saving habits affecting the adoption of Interest free financial products and services by banks. Further, the obsoleting of technological environments, Inflexibility of government policies, Educational background of the customers and diverse cultures of the societies are the other factors that affecting adoption of financial products. In addition, the Interest free financial products and services are not properly used by the customers as the result of their low level of awareness, the perceived relative advantage, perceived compatibility and perceived complexity and perceived trust of existing banking system. Based on the result it is recommended as the banks should properly adopt the Interest free financial products and services with taking into account of the external factors. Further, the banks should participate on aggressive promotion to aware the customers about their Interest free products and services, the government should formulate policies and regulations that minimizing bureaucracy of adopting technology by banks.

Keywords:
Interest free, bank, hindrance, Ethiopia, adoption, usage, satisfaction

Article Details

How to Cite
KEBEDE, D. A., & BEGNA, W. W. (2020). HINDRANCES OF INTEREST FREE BANKING ADOPTION IN ETHIOPIAN BANKING INDUSTRY AND ITS CUSTOMER’S INTENTION TOWARDS USAGE AND SATISFACTION. Journal of Economics and Trade, 5(1), 29-38. Retrieved from https://ikprress.org/index.php/JET/article/view/5124
Section
Original Research Article

References

Khan MM, Bhatti MI. Islamic banking and finance: On its way to globalization. Managerial finance. Emerald Group Publishing Limited; 2008.

Karbhari Y, Naser K, Shahin Z. Problems and challenges facing the Islamic banking system in the west: The case of the UK. Thunderbird International Business Review. Wiley Online Library. 2004;46(5):521–543.

Iravani MJ, Ghazali A, Ghazali ALI. Ranking of banking facilities based on islamic contracts, with the policy approach. Islamic Finance Researches; 2012.

Agbolade OK. Information and communication technology and banks profitability in Nigeria. Australian Journal of Business and Management Research. Australian Journal of Business and Management Research (AJBMR). 2011;1(4):102.

Singh S. Cultural differences in, and influences on, consumers’ propensity to adopt innovations. International Marketing Review. Emerald Group Publishing Limited; 2006.

Im S, Bayus BL, Mason CH. An empirical study of innate consumer innovativeness, personal characteristics, and new-product adoption behavior. Journal of the academy of marketing science. Sage Publications Sage CA: Los Angeles, CA. 2003;31(1):61–73.

Damanpour F, Walker RM, Avellaneda CN. Combinative effects of innovation types and organizational performance: A longitudinal study of service organizations. Journal of management studies. Wiley Online Library. 2009;46(4):650–675.

Reinartz W, et al. Retailing innovations in a globalizing retail market environment. Journal of Retailing. Elsevier. 2011;87:S53–S66.

Dusuki AW, Abdullah NI. Why do Malaysian customers patronise Islamic banks? International Journal of Bank Marketing. Emerald Group Publishing Limited; 2007.

Creswell J. Qualitative inquiry and research design: Five different approaches. Thousand Oaks, CA: Sage; 2013.

Hair JF, et al. Multivariate data analysis. Prentice hall Upper Saddle River, NJ; 1998.

Neuman WL, Kreuger L. Social work research methods: Qualitative and quantitative approaches. Allyn and Bacon; 2003.

Anol B. Social science research: Principles, methods, and practices. Scholar Commons, University of Florida; 2012.

Brown TA. Confirmatory factor analysis for applied research. Guilford publications; 2015.

DeCoster J. Overview of factor analysis; 1998.

[Retrieved April, 2009]

Voorhees CM, et al. Discriminant validity testing in marketing: an analysis, causes for concern, and proposed remedies. Journal of the Academy of Marketing Science. Springer. 2016;44(1):119–134.

George D, Malley P. Calculating, interpreting, and Reporting Cronbatch’s Alpha Reliability Coefficient for Likert Scales. Middle West Research to Practice Conference in Adult, continuing and Community Education. 2003; 87–88.

Field A. Discovering statics using SPSS. Los Angles. CA: Sage Publications; 2009.