Factors Affecting Customers’ Intention To Adopt Interest-Free Banking Services In Ethiopia: The Case Of Cooperative Bank Of Oromia

Abstract

The advent of an interest-free financial system has added a new dimension to Ethiopia's current economic models and financial developments. Therefore, even though its implementations depend on the consumers' intents, using such a financial system is highly valued. Henceforth, the objective of this study is to identify the major factors affecting the adoption of Interest free banking services in Ethiopia in case of Cooperative Bank of Oromia. The research employs Decomposed theory of planned behaviour to investigate the influence of customer’s intention towards adoption of interest-free banking services by using the customer’ Attitude attribute, social influence and perceived behavioural control. Both qualitative and quantitative research approach were applied in the study. A purposive sampling technique was applied. A total of 216 respondents properly responds the questionary. Primary and secondary data were used with five-point likert scales to collect data from respondents. And the data analysed through descriptive and inferential statistics using logit regression. The result of the study confirms that Awareness of customers, Valued Person opinion, and Facilitating conditions have a positive and significant impact, whereas, Media influence and self-efficiency have a negative effect but Relative Advantage, Compatibility, Complexity, and Trust have an insignificant impact on customer intention to adopt interest-free banking services. Accordingly, Attitude, Subjective norm and Perceived behavioral control were found to have a significant positive impact on the customers ’intention toward adoption of interest-free banking services. Therefore, policy makers need to apply better strategies and create an acceptable understanding of the services, whereas government support is vital and should consider the perceived behavioral control by facility condition while banks should use business intelligence and finally aggressive promotion and marketing campaign to create awareness about the services is important to enhance customer’s intention to adopt interest free banking services