This paper presents major factors affecting the implementation of interest free banking services among customers in recognizing factors that need consideration in implimenting IFB service in Commercial Bank of Ethiopia, Addis Ababa, Ethiopia. It suggests the importance for bank providers to understand factors influencing implementation of IFB service, customers’ preference and view from the customers’ perspective, in order to attract and retain customers, as well as leop forward.
The empirical evidence shows that interest free banking have rapidly spreading and developing across the world. But almost half of Ethiopian banking commercial industry out of eithteen banks has commenced interest free banking service within less than three years while some others banks are also showed initiation to commence it.
Table of Contents
CHAPTER ONE
1. INTRODUCTION
1.1 Background of the study
1.2 Statement of the Problem
1.3 Objectives of the study
1.3.1 General objective
1.3.2 Specific objective
1.4 Research Questions
1.5 Scope of the study
1.6 Significance of the study
1.7 Limitation of the Study
1.8 Operational Definitions
1.9 Organization of the Study
CHAPTER TWO
2. REVIEW OF RELATED LITERATURE
2.1 Theoretical literature Review
2.1.1 General concepts and definition
2.1.2 Evolution of Theories and Models of Adoption
2.1.2.1 Fishbein`s multiattribute model
2.1.2.2 Theory of Reasoned Action
2.1.2.3 The Social Cognitive Theory
2.1.2.4 Technical Adoption Model
2.1.2.5 Theory of Planned Behavior
2.1.2.6 The Model of PC Utilization
2.1.2.7 The Motivation Model
2.1.2.8 Task-technology Fit
2.1.2.9 Decomposed Theory of Planned Behavior
2.1.2.10 Innovation Diffusion Theory
2.1.2.11 Extended TAM2 model
2.1.2.12 Unified Theory of Acceptance and Use of Technology
2.1.3 Comparison of the Models
2.1.4 Justification of model selected
2.2 Empirical Literature Review
2.2.1 Origin, Evolution and Growth of Islamic Banking
2.2.2 Underlying Principles of Interest-free Banking
2.2.2.1 The IFB Business is based on Islamic (Sharia) Law
2.2.2.2 Paying or Receiving Interest (Riba) Is Forbidden (Haram)
2.2.2.3 Utmost Fairness in All Business Dealings
2.2.2.4 Transparency, Consensus and Contractual Agreement between Parties in All Business Dealings
2.2.2.5 Profit-and-loss Sharing
2.2.2.6 Forbidden (Haram) Business Activities
2.2.3 Islamic and Conventional Banking
2.2.4 Empirical Review at International Level
2.2.5 Empirical Review at National level
2.3 Research Gap
2.4 Conceptual Framework and Hypothesis Development
2.4.1 Conceptual Framework
2.4.2 Hypothesis Development
2.4.2.1 The Proposed Research Model
CHAPTER THREE
3. RESEARCH METHODOLOGY
3.1 Research Purpose
3.2 Research Design
3.3 Data Source
3.4 Study Area/Organization
3.5 Target population
3.6 Sampling methods and sample size
3.6.1 Sampling Methods
3.6.2 Sample Size Determination
3.6.3 Branch Sample Size
3.7 Data Collection Method
3.7.1 Primary Data Collection
3.7.2 Secondary Information
3.8 Data Analysis
3.9 Model Specification
3.10 Measurement of Constructs
3.11 Ethical Considerations
CHAPTER FOUR
4. RESEARCH FINDINGS AND DISCUSSIONS
4.1 sample and response rate
4.2 Questionnaire Pilot Testing
4.2.1 Validity
4.2.2 Reliability
4.3 Descriptive Analysis
4.4 Demographic Information of the Respondents
4.5 Data Analysis: Assessing the Quality of Data
4.5.1 Assessing the Sample Size
4.5.2 Assessing Common Method Bias
4.5.3 Assessing Missing Data
4.5.4 Assessing the Outliers
4.5.5 Assessing Linearity Assumption
4.5.6 Assessing Multicolinearity Assumption
4.5.7 Assessing Normality Assumption
4.6 Data Analysis: Factor Analysis
4.6.1 Exploratory Factor Analysis (EFA)
4.6.2 Confirmatory Factor Analysis
4.6.2.1 Measurement Model
4.6.2.1.1 Construct Validity
4.6.2.1.2 Convergent Validity
4.6.2.1.3 Discriminant validity
4.6.2.1.4 Nomological Validity
4.6.2.1.5 Goodness of Fit
4.6.2.1.6 Final Reliability
4.6.2.2 Structural Model
4.7 Discussions Of Empirical Findings
CHAPTER FIVE
5. SUMMARY OF THE FINDINGS, CONCLUSIONS AND Implication of the study
5.2 Summary of the study
5.3 Conclusion
5.4 Implications of the Study
5.5 Contribution
5.6 Limitation & Future Area of the Study
Research Objectives and Themes
This research investigates the critical factors influencing the implementation of Interest Free Banking (IFB) services at the Commercial Bank of Ethiopia. The primary goal is to identify and model the drivers of IFB adoption, specifically examining the mediating role of customer involvement and the moderating impact of religious beliefs within the theoretical framework of the Innovation Diffusion Theory.
- Implementation challenges and prospects of IFB in Ethiopia
- Application of the Innovation Diffusion Theory (IDT) to financial services
- The mediating influence of customer involvement in banking adoption
- The moderating role of religious beliefs on consumer perception
Excerpt from the Book
2.1.2 EVOLUTION OF THEORIES AND MODELS OF ADOPTION
Theories provide a set of explanatory variables which can be used to predict a particular phenomenon. A model, on the other hand, is defined as a systematic description of a system, a theory or a phenomenon that accounts for its known or inferred properties which may be used for further study of its characteristics. Also a model is any abstract representation of some portion of the real world, constructed for the purpose of understanding, explaining, predicting or controlling a phenomenon being investigated (Burch 2003). A number of theories have proposed to explain consumers’ acceptance of new technologies and their intention to use. These included, but were not restricted to, the Fishbein`s multiattribute model (Fishbein's 1967), also called learning theory (Kassarjian & Robertson 1991), the Theory of Reasonable Action (TRA) (Fishbein and Ajzen, 1975), The Social Cognitive Theory (Bandura, 1986), Technical Adoption Model (Fred D Davis 1989), Theory of Planned Behavior (Ajzen, 1991), The Model of PC Utilization (Thompson et. al. 1991), Task-technology Fit ( Goodhue et al. 1995), Decomposed Theory of Planned Behavior (Taylor and Todd 1995), Extended TAM2 model (Venkatesh and Davis, 2000), Unified Theory of Acceptance and Use of Technology (Venkatesh, 2003).
Summary of Chapters
CHAPTER ONE: Provides an overview of the global growth of Islamic banking, introduces the research context in Ethiopia, and defines the core research objectives and questions.
CHAPTER TWO: Reviews relevant literature on adoption theories, provides empirical insights into Islamic banking principles, and details the conceptual framework based on Innovation Diffusion Theory.
CHAPTER THREE: Outlines the research methodology, including the quantitative design, data collection methods, and model specification for analyzing factors affecting IFB implementation.
CHAPTER FOUR: Presents the empirical findings, including questionnaire validation, factor analysis, structural equation modeling results, and a detailed discussion of the research hypotheses.
CHAPTER FIVE: Summarizes the key findings, draws conclusions regarding the impact of the identified factors, and offers implications for policy makers and bank management.
Keywords
IFB, Interest Free Banking, Innovation Diffusion Theory, IDT, customer involvement, religious beliefs, Commercial Bank of Ethiopia, structural equation modeling, SEM, financial services, consumer adoption, Addis Ababa, Islamic banking principles, banking implementation, Ethiopia
Frequently Asked Questions
What is the core focus of this research?
The research focuses on investigating the major factors that affect the implementation of Interest Free Banking (IFB) services at the Commercial Bank of Ethiopia in Addis Ababa.
What are the primary thematic areas covered?
The study covers innovation diffusion, Islamic banking principles, consumer adoption behavior, the role of customer involvement, and the influence of religious beliefs on banking choices.
What is the primary research objective?
The primary objective is to investigate which factors need to be considered by the Commercial Bank of Ethiopia to develop and improve its IFB services effectively.
Which scientific methodology does the study employ?
The study uses a quantitative research approach, employing both exploratory and confirmatory factor analysis (EFA/CFA) and Structural Equation Modeling (SEM) to test the proposed research model.
What topics are discussed in the main body?
The main body discusses existing adoption theories, principles of Islamic finance (like the prohibition of Riba), and empirical research on factors such as awareness, relative advantage, compatibility, complexity, and perceived risk.
Which keywords characterize the work?
The work is characterized by keywords such as IFB, Innovation Diffusion Theory (IDT), customer involvement, religious belief, and structural equation modeling.
How does customer involvement function in the model?
Customer involvement is analyzed both as an independent variable and as a mediating variable that influences the relationship between perceived innovation attributes and the successful implementation of IFB services.
What is the significance of the religious belief variable?
Religious belief is examined as both an independent factor and a moderating variable, as the study tests whether it alters the relationship between other variables (such as compatibility or complexity) and the actual implementation/usage of IFB services.
- Arbeit zitieren
- Nobel Aragaw (Autor:in), 2019, Implementation of interest free banking services in Ethiopia. The mediating role of customer involvement, München, GRIN Verlag, https://www.grin.com/document/500995
