Banking Behaviors of Customers in Interest Free Banking. In Case of Selected Commercial Banks in Addis Ababa

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This study investigates the banking behavior of Interest Free Banking customers of commercial banks in Addis Ababa. It investigates three aspects of banking behavior: (I) the social factors influencing customers banking behavior on bank selection, (II) the awareness about the products and services provided (iii) the level of customer’s satisfaction on interest free banking services provided. Ten hypotheses were developed to address the research question of the study. Purposive sampling was employed for this study and Samples of 399 respondents were purposely selected from the customers in eight branches of four banks, namely Commercial Banks of Ethiopia, Cooperative Bank of Oromia, Oromia International Bank and Awash Bank. Logistic regression model analysis was used to examine the relationship between the independent variables (religion, previous relationship with the bank, awareness on IFB products and service provided, influence of friends & family on IFB selection, service quality, branch location, responsive attitude of staff, reputation of the bank and physical facility of the banks) and dependent variable( banking behavior). The findings of the study have shown that, religion, previous relationship with the bank, awareness, and convenient branch location, influence of family and friends, bank reputation, responsive attitude of staff, service quality and physical facility were found to have significant relationship with customers banking behavior. However; except religion all other personal factors (age, sex, income. level of education, occupation, and marital status) found to have no significant relationship with banking behavior of interest free banking customers. Furthermore, the analyzed data using descriptive statistics of mean, frequency and percentage using SPSS shows that customers were satisfied with a number of IFB products and service provided. However, the finding indicates that customers were not satisfied with service quality and responsive attitude of staff. Beside awareness, the study reveals that customers have good awareness on IFB products like Wadia-Amana, Quard and Mudaraba accounts



Interest Free Banking