FACTORS AFFECTING ADOPTION OF INTEREST FREE BANKING AT UNITED BANK S.C

Abstract

The objective of this study was to investigate the major factors that affect adoption of interest free banking at united bank S.C. Addis Ababa. This study has analyzed the effect of Shariah compliance, awareness, advertisement, perceived relative advantage and accessibility of the service on adoption of interest free banking intensity. Descriptive and Explanatory (cause effect relationship) research design was used. Both qualitative and quantitative research approach were applied in this particular study. The target populations of the study were 8000 IFB customers of eight branches in Addis Ababa and the total sample size of this study were 367 customers of United bank Share company. Convenience sampling techniques was applied. Primary and secondary data were used for this study. Adopted Questionnaires using five point likert scales were used to collect data from respondents. Both descriptive and inferential statistics (correlation and regression) analysis were used to analyze the data. The analysis confirms there were significant positive relationships of sharia compliance, perceived relative advantages, accessibility of the services, advertisement and awareness of the services with adoption of interest free banking. These factors are expected to have great role for influencing customers mind. The findings of the study showed that customers can derive a better understanding of the activities that are undertaken by bank and how the way these activities are being dealt with and the mentioned variables have significant positive impact on the attitude towards interest free banking at United Bank S.C . In conclusions, there are need to work on about over all mentioned variables, on awareness of interest free banking service. The limitation of this study was that it has conducted in specific geographical area and could not be generalized.