The main objective of this study is to identify the major factors influencing the adoption of Interest free banking products and services among customers in Bale Robe town. The research employs decomposed theory of planned behavior to investigate the influence of customer’s behavior towards adoption of interest-free banking product and services by using customers attitude attribute social influence and perceived behavioral control. Both qualitative and quantitative research approach were applied in the study. The target populations were 13050 customers of four banks in Robe town and the total sample size were 388. A purposive sampling technique was applied. Primary and secondary data were used with five point liker scales to collect data from respondents. Both descriptive and inferential statistics analysis were employed to analyze the data.
Interest free banking is inseparable of Islamic economics which aimed at realization of a greater justice in human endeavor, which is achievable only with participation of all human institution inclusive of financial system. On the principle that prohibits interest and other unethical and non shariah compliant activities, Islamic banking set to achieve this gigantic objective. In addition, it strive on increasing all Halal aspect of business through provision of products and services base on shariah principle with implementation of legitimate profit and loss sharing, paying Zakah, prohibition of interest, monopoly and other forms of unethical trade and transaction such as dealing with pork, alcohol and gambling. Hence, Islamic banking method of financing and or products structure is based on the tract to redress the inherent injustice tied with interest based dealing.
Table of Contents
1 INTRODUCTION
1.1 Background of the study
1.2. Statement of the Problem
1.3. Objective of the Study
1.3.1 General Objective of the Study
1.3.2 Specific Objective of the Study
1.4. Basic Research Questions
1.5. Scope of the Study
1.6 Significance of the Study
1.7 Limitations of the Study
1.8 Delimitations of the Study
2. LITERATURE REVIEW
2.1. Chapter Overview
2.1.1. Development of Interest Free Banking
2.1.2. Major Products of IFB
2.2. Theoretical Review
2.2.1. Theory of Planned Behavior (TPB)
2.1.1. Decomposed Theory of Planned Behavior (DTPB)
2.3. Empirical Review
2.4. Conceptual Framework
3. RESEARCH METHOD AND MATERIAL
3.1 Introduction to Research Methodology
3.2 Research Design
3.3 Study Area
3.4 Target Population
3.5 Sampling Frame
3.5.1. Sampling Techniques
3.5.2 Sampling Size
3.6 Source of Data
3.7 Data Collection Method
3.8 Data Collection Instrument
3.9 Data Presentation and Analysis
3.11. Ethical Consideration
4. Results and Discussion
4 .1 Demographic characteristics
4.2. Descriptive Summary of Each variable characters
4.3 Regression Analysis
4.4 Common Assumption Test
4.4.1 Multicollinearity Test
4.4.2 Linearity Test
4.4.3 Normality test
4.4.4 Autocorrelation/Durbin Watson Test
4.5 Linear regression interpretation
4.5.1 Beta Coefficients and variables result definition.
5 Conclusion& Recommendation
5.1 Summary of Findings
5.2 Conclusion
5.3 Contribution of the study
5.4 Limitation and Future Area of the Study
5.5 Recommendation of the Study
Research Objectives and Core Themes
The main objective of this research is to identify the primary factors influencing the adoption of interest-free banking products and services among customers in Bale Robe town, Ethiopia, utilizing the Decomposed Theory of Planned Behavior (DTPB) to analyze behavioral intentions.
- Analysis of customer attitudes towards interest-free banking based on relative advantage, complexity, compatibility, perceived trust, and perceived risk.
- Investigation of social influences, specifically valued group opinions and media effects, on subjective norms.
- Evaluation of perceived behavioral control through self-efficacy and facilitating conditions.
- Assessment of demographic factors and their influence on the adoption and usage of interest-free banking products.
Excerpt from the Book
Customers Attitude
According to Fishbein and Ajzen (1991) attitude is defined as evaluative effect of individuals‟negative or positive feelings in a specific behavior performing. Actually, attitude is related tobehavioral intention of individuals considering the fact that they shape their intentions to do a specific behavior in the direction of which they have positive outcome (Tan & Teo, 2000). Likewise, Attitude toward behavior is the degree to which an individual has unfavorable or favorable appraisal or evaluation of behavior in the question (Ajzen & Fishbein, 1991). There is a tendency to think that Interest free banking is preserved for people of Islamic religion. But, Islamic institutions and instruments have developed in countries where Muslims are minority like United States, United Kingdom and South Africa. The attitude towards the behavior is determined by the sum five perceived attributes of attitudinal belief toward an innovation i.e. trust, relative advantage, compatibility, complexity and perceived risk which may influence customers’ perception to adopt Interest free financial products and services.
Relative advantage has been designed to reflect perceptions of customers which all or certain qualities of the proposed innovation can offer incremental value to its potential adopter comparing with present available options (Rogers, 2003; Flight et al., 2011). Rogers (1995,2003) have indicated that relative advantage can be explained as economic profitability, discomfort decreasing, saving in time and effort, low initial cost, social prestige, and/or other potential benefits that possible user would receive by applying the current innovation. Potential adopters want to know, if the new idea is better than an existing one. Besides, several scholars have found relative advantage to be one of the best predictors of an innovations rate of adoption (Brown et al., 2003; Tan and Teo, 2000; Hsu et al., 2007; Tung & Rieck, 2005; Thambiah et al.,2011b; Gerrard and Cunningham, 2003). Roger, 2003 and Gerard, 2003 argued that adopters invariably perceived relative advantage in terms of the economic benefits and the costs resulting from the adoption of an innovation and improvements that are afforded to their social status.
Summary of Chapters
1 INTRODUCTION: This chapter provides the background of the study, the problem statement regarding the adoption of interest-free banking in Ethiopia, and the objectives and scope of the research.
2. LITERATURE REVIEW: This chapter reviews relevant literature on interest-free banking, details theoretical models like the Theory of Planned Behavior and its decomposed version (DTPB), and establishes the conceptual framework and hypotheses for the study.
3. RESEARCH METHOD AND MATERIAL: This chapter describes the research design, study area, target population, sampling techniques, and data collection instruments used to conduct the study.
4. Results and Discussion: This chapter presents the analysis of demographic data, descriptive summaries, and the findings from regression analyses regarding factors influencing customer intentions.
5 Conclusion& Recommendation: This chapter summarizes the research findings, draws conclusions, discusses contributions, notes limitations, and provides recommendations for stakeholders and future researchers.
Keywords
Interest free, banking, product, attitude, perceived, behavioral control, intension, Bale Robe, Ethiopia, DTPB, Islamic finance, adoption, customer behavior, Sharia, financial services
Frequently Asked Questions
What is the core focus of this research?
The research focuses on identifying the major factors that influence the adoption of interest-free banking products and services among bank customers in Bale Robe town, Ethiopia.
What are the primary themes addressed in the work?
The central themes include customer attitude (trust, complexity, compatibility), subjective norms (valued people opinions, media influence), and perceived behavioral control (self-efficacy, facilitating conditions) in the context of banking.
What is the primary objective of this study?
The study aims to investigate and identify the specific factors that influence customer intention toward the adoption of interest-free banking products, thereby helping service providers understand the current low market share.
Which scientific methodology is utilized?
The study employs a descriptive and inferential research approach, specifically using the Decomposed Theory of Planned Behavior (DTPB) and linear regression models to analyze primary data collected via questionnaires and interviews.
What does the main body of the work cover?
The main body covers the theoretical background of interest-free banking, the development of the DTPB conceptual model, empirical reviews, data analysis, and an interpretation of the findings regarding adoption factors.
What are the key terms that characterize this work?
The key terms include Interest free, banking, product, attitude, perceived, behavioral control, intension, DTPB, Sharia compliance, and adoption.
Why was the Bale Robe town selected for this case study?
Bale Robe was selected because it has a high Muslim population, is suitable for the researcher's logistical needs, and offers an opportunity to observe the challenges and adoption patterns of interest-free banking services in that specific context.
How does this study contribute to practical banking strategies?
The study provides managerially relevant insights by highlighting that factors like trust, social influence, and facilitating conditions are critical for improving marketing strategies and making banking principles clearer and more accessible for customers.
- Quote paper
- Beyan Kedir (Author), 2020, Factors Influencing Adoption of Interest Free Banking Products and Services in Ethiopia, Munich, GRIN Verlag, https://www.grin.com/document/1005608
