The Influence of Ethnicity on Customers’ Choice of Banks: The Case of Selected Banks in Shashemene Town, Oromia, Ethiopia

Abstract

The objective of this research was to explore the influence of ethnicity on customers’ selection of banks in Shashemene town. A survey method was used in which quantitative data were gathered from 237 respondents selected based on convenient sampling technique. Data collected through a structured questionnaire were coded and entered in to SPSS version 20 where the analyzed data were presented using both descriptive and inferential statistical tools. It was found that 79.3% of respondents belong to the ethnic group (Oromo) to which the name of the banks (Oromia International Bank and Cooperative Bank of Oromia) is associated. Moreover, 25.7% of respondents answered that they were attracted to the bank because its name has something to do with their ethnic identity. Furthermore, 52.3% of respondents replied that the name of the bank and its association to their ethnic identity is a very necessary criterion to choose it at the beginning. Results of linear regression analysis also confirmed that people are increasingly attracted to the bank the name of which is associated to their ethnic identity (0.312, P<0.05). The role played by language in terms of motivating people to become customers of a given bank has also been pronounced in the current study. 5.1% of survey participants replied that they were motivated to become customers of their present bank considering that their mother-tongue language is being commonly spoken among employees of the bank. Furthermore, ethnic-identity driven nomenclature of banks has also been found to influence the trust that people make on a given bank. Above all, it was found that about 25% of respondents revealed that they trust their current bank mainly because its name expresses their ethnic identity. Ethnicity influences customers’ bank selection and the trust they bestow on it. The findings of the present study suggest that ethnicity affects individuals’ economic behavior by making them to develop positive utility towards goods and services that belong to their own ethnic group.

Keywords: - economic behavior, ethnicity, bank, selection criteria, Shashemene

DOI: 10.7176/JMCR/60-01

Publication date:September 30^th 2019