FACTORS AFFECTING INTEREST FREE BANKING SERVICE: IN CASE OF COMMERCIAL BANK IN ETHIOPIA HARAR BRANCH

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