Determinants of Customers Intention to Use Interest Free Banking in Private Banks of Ethiopia

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