Perceptions and motivating elements of bank customers for adoption of interest-free banking services: commercial bank of Ethiopia case

The study explored perceptions and motivating factors for adoption of interest-free banking in Ethiopia. To achieve this objective, a multi-stage sample of 357 interest-free window customers with a questionnaire survey was conducted in 32 Ethiopia Commercial Bank branches in Addis Ababa, for the year 2023. Both descriptive and quantitative methods of analysis were used. The study was driven by the decomposed theory of planned behaviour and tested using a structural equation model. The findings reveal that all exogenous variables were statistically significant and positively predicted the endogenous variables. Perceived Compatibility, Peer-influence, and Self-efficacy were the highest predictors of Attitude, Subjective Norm, and Perceived Behavioural Control, respectively. Likewise, Attitude, Subjective Norm, and Perceived Behavioural Control were found to have a positive significant influence on the customers’ intention to use, and the mediation analysis shown in this study was partial mediation among attitude, subjective norm, and perceived behaviour and behavioural intention to use keeping thus managers in interest-free banking should exert their strateigic effort on the most important factors. Moreover, policymakers and interest-free bank managers must apply improved schemes and make suitable product and service features to gain customers’ intention to use. The government on its side should realize the wider demands of its citizens’ cry for financial services compatible with their religion. Future research should extend the decomposed theory of planned behaviour to other settings to catch up on the unexplained factors by this study.