Challenges Of Interest Free Banking Window In Ethiopia The Case Of Dashen Bank S.c.

The main goal of this study is to look at the challenges of interest-free banking inrnEthiopia. Interest-free banking was launched in Ethiopia as an alternative to thernbanking industry within the existing conventional bank in window bases, and itrnoperates in accordance with Shari’ ah principles. However, lack of Shari’ ahrngovernance and dispute resolution system, cannibalization with conventional wingrnand lack of ownership, core banking system limitation and segregation of IFB fund,rnscramble in IFB marketing mix and product development have all hampered itsrnactivities. The study employed qualitative methods of analysis, with primary datarncollected through in depth interviews to test research objectives and respond tornresearch questions. To achieve the objectives of the study interviewees were drawnrnfrom Dashen Bank S.C. Data was acquired via a semi structured in depth interviewrnand purposive sampling from a sample of 19 IFB employees, of whom 10 of themrninterviewed. The results were examined using thematic analysis methods. The resultrnshowed that lack of robust Shari’ ah governance framework is the major setback tornthe operation of interest free banking, lack of ownership and commingling of fundsrnlagged the operations of Interest free banking; capacity limitation on core bankingrnsystem and loopholes in IFB organizational structure are also affected the growth ofrnIFB business. Some scrambles in product development and IFB marketing mixrn(charging higher price than conventional price, weak distribution channel in case ofrnclick & Mouse technology and, undiversified IFB products and absence of Shari’ ahrnscreening in IFB promotion) makes very limited provision for the operation of IFB inrnEthiopia; and these key findings show that a major setback to the operation of IFB inrnEthiopia found as institutional drawbacks. Weak and lack of supervisory framework,rnentry of Full fledge IFB banks and expansion of IFB dedicate branches by otherrnbanks, lack of institutional capacity are the major country level constraints found byrnthe study

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