Abstract:
The main objective of this study is to examine determinants of Customers intention to use
Interest free banking services in Ethiopia with particular reference to the private bank of
Ethiopia having branches at Burayu City. The study has employed explanatory research based
on survey and the data are of cross sectional type. The study has used both primary and
secondary data which are quantitative and qualitative in nature. The primary data have been
collected through structured and semi structured questionnaire and interview. A total of 280
sample respondents were taken through multistage sampling. Of the total sample interest free
banking customers and staff of the bank constitutes 119 and 161 respectively. The data was
analyzed using both descriptive and inferential statistics using SPSS version 24 software. Based
on the analysis of the obtained data, this research has found out the performance effects to IFB
services as: lack of commitment of the bank, lack of Shariah advisor, lack of supportive
regulatory directives , Problem related to Ethiopian Commodity Exchange (ECX) law, lack of
capacity to deliver IFB product at full rage, lack of awareness of customer about IFB products,
lack of trust and confidence of customers, inadequate marketing and promotion, double
taxation, nature of IFB products, unavailability of IFB products in all of its branches and the
IFB being delivered in a Window model. Accordingly, the following recommendations were
forwarded by the researcher based on the results of the findings revealed that aggressive
promotion and marketing campaign about IFB products, provide sustainable and continuous
training to build the capacity of the manpower, the bank shall increase accessibility of its
products with the expected services attached to the products, the bank has to have Shariah
advisor, give the required attention and focus for the business and the bank has to be
transparent in its IFB business undertaking, in addition to these NBE directives, tax and ECX
law shall include exceptions for IFB business undertaking
