Challenges And Prospects of Interest Free Banking: Case Study on Bank of Abyssinia
No Thumbnail Available
Date
2023-12-28
Authors
Journal Title
Journal ISSN
Volume Title
Publisher
AAU
Abstract
This research explores the challenges and prospects of interest-free banking services in Ethiopia,
specifically focusing on the Bank of Abyssinia East Addis Ababa District. Employing descriptive
research through a survey, the study gathered data from a total sample of 355 interest-free banking
customers and 60 bank staff. The collected data underwent analysis using descriptive statistics,
including mean, frequency, and percentage, through SPSS version 26 software. The study identifies
challenges such as awareness, manpower, legal framework, social beliefs, and resource needs. In
contrast, economic progress, attraction of investors, and fostering investment are highlighted as
potential prospects for the banks. The analysis reveals that the prospects of interest-free banking lie
in the presence of potential customers and diplomatic advantages.
To achieve the study's objectives, respondents were selected through multistage sampling. The study
concludes that interest-free banking services have the potential to enhance the economy by providing
additional resources for banks, investment opportunities, reaching unbanked customers, and creating
employment opportunities through effective mobilization. Based on these conclusions,
recommendations include creating awareness for public acceptance, providing training for staff,
employing effective marketing techniques, establishing a clear legal framework, and ensuring
compliance with Sharia law. The researcher suggests aggressive promotion and marketing
campaigns for interest-free banking products, continuous training to enhance manpower capacity,
focused attention on the business, transparent operations in interest-free banking, and the
government's preparation of a compatible regulatory framework.