DETERMINANTS OF INTEREST FREE BANKING ACCEPTANCE IN ETHIOPIA

Abstract

The basic objective of the study is to identify potential determinant factors affecting customers to accept Interest Free Banking in Ethiopia by considering 5 independents variables; perceived relative advantage, perceived Compatibility, perceived complexity, Trust and Attitude towards use of Islamic Branding. The study was performed in Quantitative Descriptive Analysis (QDA) methodology. To reveal the determinant factors, explanatory (Causal) research design was used. For selecting sample respondents Multistage sampling technique was used. The sample size was 380. Moreover, structured questionnaires are tools used to gather relevant information and both descriptive and inferential analysis method were applied. The data analysis was processed by IBM SPSS 20. All determinant factors have a positive correlation with the predicted variable. A linear combination of all the independent variables considered under the study predicts the variance in the dependent variable Acceptance. The ANOVA test result showed that, the value of R and R2 obtained under the model summary part was statistically significant. The multiple linear regression analysis revealed perceived relative advantage, perceived complexity and trust have a significant positive impact on acceptance of interest free banking Ethiopia. However, perceived compatibility does not have any significant influence on acceptance of interest free banking in Ethiopia and attitude towards using Islamic branding has a negative influence. The study also extends the Decomposed Innovation Diffusion Theory a different setting and also to a different area of study.