CHALLENGES AND PROSPECTS OF INTERST FREE BANKING, THE CASE OF COMMERCIAL BANK OF ETHIOPIA

Abstract

This study examines challenges and prospect of Interest free banking services in Ethiopia with particular reference to the commercial bank of Ethiopia East Addis District. The study has employed descriptive research based on survey. Of the total sample interest free banking customers and staffs of the bank constitutes 355 and 60 respectively. The data was analyzed using descriptive statistics of mean, frequency and percentage using SPSS version 26software. The study focuses that awareness, manpower, legal framework, social belief, resource needs as a number of the challenges whereas economic process, attraction of investors, and fostering investment square measure the probably prospects of the banks. Based on the analysis of the obtained data, this research has found out the prospect of IFB are the existence of Potential customer and the diplomatic advantages. To attain the objectives of the study respondents were drawn through multistage sampling were applied. The study concludes that Islamic banking service can bring extra capability within the economy in reference to extra resource for banks, investment chance, reaching unbanked customers and employment opportunities within the country through effective mobilization. supported the higher than conclusions it's suggested that banks ought to produce awareness for public acceptance and coaching of staffs, use sensible selling techniques, governance ought to establish clear set of legal framework, and compliance with sharia law problems ought to be adhered. Accordingly, the following recommendations were forwarded by the researcher based on the results of the findings in conjunction with literature review reflections: aggressive promotion and marketing campaign about IFB products, provide sustainable and continuous training to build the capacity of the manpower, the bank should give the required attention and focus for the business and the bank has to be transparent in its IFB business undertaking, in addition government should prepare compatible regulatory framework.