A Comparative Study of Interest Free Banking Practices in Ethiopia Private Commercial Banks Between Oromia International Bank and Oromia Cooperative Bank in Dire Dawa Districts

Abstract

The purpose of the study was to assess interest free banking practices in Ethiopia private commercial banks Oromia International Bank and Oromia Cooperative Bank in Dire Dawa. The researcher was used descriptive survey research design and multistage sampling techniques (both probability and non-probability techniques) to reach at the specific respondents. In this study was employed a descriptive and also inferential statistics such as such as independent-samples t-test and ordinal logistic (O logit) regression to see the effects of independent variables on dependent variable by using Statistical Packages for Social Sciences (SPSS) version 26 software. More specifically five interest free banking practices factors identified in the study; which are Awareness, Compatibility, Complexity, Perceived trust and Relative advantage with implementation of interest free banking (IFB) practices in private commercial banks.  The Nagelkereke R² indicates the model can for 63.3% of the variance in the implementation of interest free banking practices. The survey findings also revealed that interest free banking service it shows that “Complexity” have statistically insignificant and negative relationship with the implementation of interest free banking service. Thus, banks need to take these factors into account when developing their interest free banking services to ensure the success of their Islamic banking products and services. Banks need to enhance accessibility, profitability and service quality factors.

Keywords: Awareness, Compatibility, Perceived trust, Complexity, Relative Advantage, Implementation of IFB

DOI: 10.7176/EJBM/13-19-05

Publication date:October 31^st 2021