Determinants of Demand for Interest Free Banking Products and Services: An Application of Innovation Diffusion Theory (IDT) the Case of Commercial Bank of Ethiopia in Addis Ababa

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The purpose of the study is to examine the demand for interest free Banking products and services in Ethiopia by giving emphasis to implementing IFB service in Commercial Bank of Ethiopia. The sample consisted of 384 customers of CBE found in four districts of Addis Ababa city branches. Data were obtained through structured questionnaire. Among the returned 360 respondents response 354 were used for further analysis. The study used primary and secondary data, the primary data was collected through structured questionnaire having Likert Scale using standardized questionnaire collected from randomly chosen 50 CBE branches found in Addis Ababa, Ethiopia while secondary data was collected from reports, directives and working documents. The collected data was analyzed using descriptive analysis like tables, figures and charts using SPSS version 23 and Structural Equation Modeling of Amos Software. The finding of the study depicts Awareness, relative Advantage, Compatibility and Customer Involvement have a significant impact, whereas Trialability and Complexity do not have a significant effect on determining the demand of Interest Free Banking products and services . The results would be useful for CBE interest free banking sector in strategically addresses the demand of Interest Free Banking products and services on the target market. In addition, the concerned policy makers, regulators and other concerned stakeholders shall contribute for the growth of sector aiming towards promoting the enhancement of the market share of Interest Free Banking.


Thesis submitted to Addis Ababa University Department of Accounting and Finance in Partial Fulfillment of the Requirements for the Award of Masters of Science Degree in Accounting and Finance


Customers, Rogers, Diffusion of Innovation Theory, Interest Free banking