Abstract:
This study is undertaken to investigate the’ Factors Affecting Interest Free Banking Service in
Commercial Bank of Ethiopia: In Case of Harar City Branches. To achieve the aim of the
study the primary data was collected through standard questionnaires. For measurement
purpose, the Likert scale method was used to range of responses. The sample size was made
up of 172 respondents. Purposive sampling technique was applied in sample selection.
Analysis was done using inferential statistics using SPSS software. To determine existing
relationship between the variables of study the researcher used correlation and regression
analysis. The study result reveal that, all independent variables that are Lack of Customer
Level Awareness on Islamic finance products, The challenge of Legal and regulatory
framework, Lack of Islamic finance experts and scholars, Lack of standardization, Lack of
Shariah advisory, Lack of Service quality, Lack of IFB products, and Lack of Institutional
arrangement and market linkage have positive relationship and statistically significant
correlation with dependent variable that is both in use of Islamic banking financial service
and deposit mobilization in IFB. To conclude, the independent variables have serious effect
on both in use of Islamic banking financial service and deposit mobilization in IFB of CBE
branches in Harar town. National banks, CEB Head office, CEB district, and CEB branch
levels should develop market-friendly legal and regulatory frameworks, strengthen the Sharia
advisory board, develop and deliveries of new IFB products, improve product quality, and
gate more customer deposits, and it prepare different awareness creation programs and
advertisement packages to create good awareness regarding Islamic banks operation and
their services
