Assessment on Practical Challenges and Opportunities of Islamic Banking in Ethiopia: In case Hijra Bank S.C

Abstract

The topic of this paper is assessment of practical challenges and opportunities of Islamic banking in Ethiopia in case of Hijra bank S.C. The objective of this paper is to make an assessment on practical challenges and opportunities impact on the sustainability of Islamic banking. In order to do so, the researcher employed descriptive research design method. This thesis also applied qualitative research approach to accomplish the purpose of the study. Closed ended Questionnaire and semi-structured interview were utilized. The target respondents for the study were managers of different department at head quarter and also branch managers and supervisors of Hijra bank S.C. Total Number of the population for the study were 80. Purposive Sampling technique was used to investigate the entire population. Statistical package for social science (SPSS) used to analyse the data collected. Among 80 distributed questionnaires, 73 were completely filled and returned which have 91.25% response rate. The result of the study reveals that potential market share and availability of customers are practical opportunities for the sustainability of Islamic banking. Islamic banks can capture potential opportunity in financing SMEs for future sustainability. The findings of this study also indicate that there are practical challenges which harm the sustainability of Islamic banking. The major recommendations forwarded by the researcher are regulatory bodies should modify the current interest-based rules and regulations specific for Islamic banking and also Islamic banks should promote and create awareness about Islamic banking to the public. This can able Islamic banks to compete globally and sustainable on the banking industry.