Determinants Of Customers Intention To Use Interest Free Banking Products And Factors Affecting Employees Product Knowledge The Case Of Commercial Bank Of Ethiopia

The capacity of Interest Free Banks to gain substantial market share in a challenging financialrnenvironment, particularly in a dual-banking system like Ethiopia, will primarily hinge on the ability ofrnIFB’s to formulate and implement successful marketing strategies. This will require a clearrnunderstanding of the attitudes of the potential consumers. On the other hand, in coping withrncustomers need, it is always questionable whether the employees of the bank are having adequaterntraining and knowledge on Islamic banking practices. In addressing the stated problems, this thesis,rntherefore, examines the determinants of customers’ intention to use interest free banking products andrnfactors affecting employees’ product knowledge, in the context of Commercial Bank of Ethiopia. Arnsurvey approach was used to investigate intention to use and products knowledge of IFB customersrnand employees respectively. Unstructured questionnaire was used to collect qualitative data onrncustomers’ use intention. In general, eight and three hypotheses were developed and tested onrncustomers’ intention and employees’ product knowledge of the CBE with a sample size of 369 and 77rnindividuals respectively. Both descriptive and inferential analytical techniques were used. To analyzernthe relationships among the variables, on the other hand, multiple regression and structural equationrnmodeling (SEM) were employed. The findings of the study on customers’ intention showed that, exceptrnfor Knowledge, all the other variables: Attitude, Social Influence, Perceived Financial Cost andrnReligious Belief have significant effect on IFB use intention. Moreover, except for Underlying ArabicrnTerminology, the other two variables: Underlying Sharia’ Principles and Training have significantrneffect on Product Knowledge of employees. Furthermore, chi-square test was used to analyze thernassociation between selected demographic factors and IFB usage intention. The findings of this studyrnhave shown that, except for educational level, all other demographic factors found to have anrninsignificant effect on IFB adoption intention. To sum up, the study on customers’ intention contributesrntowards a better understanding of the customers’ expectation. The management of the bank can nowrncomprehend better the factors that influence customers’ decision in adopting IFB in order to deviserneffective marketing strategies to attract customers. Not to mention, the findings of this study should be ofrnvalue to IFBs in terms of expanding customer base. On the other hand, the study on employees’ productrnknowledge suggests that the bank should train well its employees in order to cope with the currentrndynamics of the banking industry.rnKeywords: Intention to Use, Product Knowledge, Commercial Bank of Ethiopia, Interest FreernBanking

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