Final Thesis JAN

St.
Mary`s University
School of Graduate Studies
FACTORS AFFECTING E-BANKING ADOPTION OF CUSTOMERS; AN

INVESTIGATION IN COMMERCIAL BANK OF ETHIOPIA AND FOUR
DIFFERENT PRIVATE BANKS, ADDIS ABABA
BY
ZERAY KAHSAY
January, 2017
Addis Ababa, Ethiopia
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St. Mary`s University

DIFFERENT PRIVATE BANKS , ADDIS ABABA
A Thesis Submitted to St. Mary’s University School of Graduate Studies in

Partial Fulfillment of the Requirement for the Degree of General Masters of
Business Administration
BY
ZERAY KAHSAY
January, 2017
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St. Mary’s University
School of Business
General Master of Business Administration

DIFFERENT PRIVATE BANKS ,ADDIS ABABA
By
Zeray Kahsay
Approved By the Board of Examiners
1. ____________________ _______________ _________________

Dean Signature Date
2. ____________________ _______________ _________________

Advisor Signature Date
3. ____________________ ________________ _________________

Internal Examiner Signature Date
4. _____________________ ________________ ________________

External Examiner Signature Date
January, 2016
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DECLARATION
I, the undersigned, declare that the study permitted “factors affecting e-banking adoption of customers;
an investigation in commercial bank of Ethiopia and four different private banks, Addis Ababa”
proposed for award of general masters of business administration (GMBA) is my original work and
has not been presented for any other award of degree in other university, and all sources of materials
used for the study have been appropriate acknowledged.
Zeray Kahsay
December, 2016 Signature_____________
ID No. (SGS/0245/2007B)
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CERTIFICATION
This is to certify that Zeray Kahsay Weldegebereal has carried out his thesis work on the topic
entitled “factors affecting e-banking adoption of customers; an investigation in commercial bank of
Ethiopia and four different private banks, Addis Ababa”. This submitted in partial fulfillment of the
requirement for the award of general master of business administration (GMBA), St. Mary`s
University and the work is original and new in nature and is appropriate for submitted.
This thesis has been submitted for examination with my approval as a university
advisor.
Advisor
Zemenu Ayneaddis
(Asst. professor):
Date: ________________
Signature_______________

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Acknowledgements
First and for most, I am most grateful to Almighty God. There is no any realization without the help of
him. And also I would like to thank St. Marry for her love and prey for me the son of Adams.
My deeply grateful appreciation goes to my principle advisor, Mr. Zemenu Ayneaddis(Asst. professor)
for his precious comments and constructive suggestions that support me during study. In addition I
also like to thank Dr. Yohannes Belay to his thoughtful contributions to this thesis. Farther more,
grateful appreciation goes to my wife, for her moral and endless support throughout the study. I extend
my heartfelt praise and gratitude for Werede Kidanu and Mesfin Mokennen for their support during
data collection, my heartfelt thanks to Commercial bank of Ethiopia, Wegagen Bank, Dashin bank,
Hibret bank and Awash bank IT managers and workers for their effective support during data
collection process.
Finally, I would like to say my deep gratitude to the people who participated in this thesis which I
cannot state their names here but contributed a lot of doing well to achievement of this study.
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TABLE OF CONTENTS
Contents Page No
ACKNOWLEDGEMENTS ......................................................................................................................................... VI
TABLE OF CONTENTS .................................................................................................................................................. VII
ACCRONYMS ............................................................................................................................................................. IX
LIST OF TABLES ........................................................................................................................................................ X
LIST OF FIGUERS ..................................................................................................................................................... XI
ABSTRACT ................................................................................................................................................................ XII
CHAPTER ONE ........................................................................................................................................................... 1
INTRODUCTION
1.1 BACKGROUND OF THE STUDY ..........................................................................................................................................1
1.2 STATEMENT OF THE PROBLEM ........................................................................................................................................3
1.3 RESEARCH QUESTIONS ....................................................................................................................................................4
1.4 OBJECTIVES OF THE STUDY .............................................................................................................................................4
1.4.1 General objective ..................................................................................................................................................4
1.4.2 Specific objectives ................................................................................................................................................4
1.5 SIGNIFICANCE OF THE STUDY..........................................................................................................................................4
1.6 SCOPE OF THE STUDY ......................................................................................................................................................5
1.7 CONCEPTUAL DEFINITION OF TERMS ..............................................................................................................................5
1.8 ORGANIZATION OF THE STUDY .......................................................................................................................................6
CHAPTER TWO .......................................................................................................................................................... 8
LITERATURE REVIEW
2.1 THEORETICAL LITERATURES ..........................................................................................................................................8
2.1.1 Technology Acceptance Model (TAM) ................................................................................................................8
2.1.2 Technology- organization- Environment (TOE) ...................................................................................................9
2.2 MODES OF E-BANKING ...................................................................................................................................... 9
2.2.1 Automated Teller Machines (ATM) .....................................................................................................................9

2.2.2 Point-of-Sale Transfer Terminals (POS).............................................................................................................10
2.2.3 Internet / extranet banking- .................................................................................................................................10
2.2.4 Mobile banking- ..................................................................................................................................................10
2.2.5 TV based: ............................................................................................................................................................11
2.2.6 Telephone banking: .............................................................................................................................................11
2.2.7 Managed network: ..............................................................................................................................................11
2.3 REVIEW OF EMPIRICAL LITERATURE ............................................................................................................................ 11
2.3.1 Empirical and Conceptual Studies ......................................................................................................................12
2.3.1.1 Demographic characteristics .......................................................................................................................................... 16
2.3.1.2 Customer awareness (CA) .............................................................................................................................................. 17
2.3.1.3 Perceived benefit (PB).................................................................................................................................................... 17
2.3.1.4 Perceived security (PS) .................................................................................................................................................. 18
2.3.1.5 Perceived risk (PR)......................................................................................................................................................... 18
2.3.1.6 Legal framework and ICT infrastructure (LFII) ............................................................................................................. 19
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2.3.1.7 Organizational factor (OF) ............................................................................................................................................. 20
2.3.1.8 Perceived usefulness (PU) .............................................................................................................................................. 20
2.3.1.9 Perceived ease of use (PEOU) ........................................................................................................................................ 21
CHAPTER THREE .................................................................................................................................................... 26
RESEARCH DESIGN AND METHODOLOGY

3.1 RESEARCH DESIGN ......................................................................................................................................................... 26
3.2 TYPES AND SOURCES OF DATA ....................................................................................................................................... 26
3.3 SAMPLING TECHNIQUE .................................................................................................................................................. 26
3.3.1 Sample size and sample determination ...............................................................................................................27
3.4 DATA COLLECTION METHOD ......................................................................................................................................... 27
3.5 DATA COLLECTION AND INSTRUMENTS ........................................................................................................................ 28
3.6 DATA COLLECTION PROCEDURE ................................................................................................................................... 28
3.7 DATA PROCESSING AND ANALYSIS................................................................................................................................. 28
3.8 MODEL SPECIFICATION ................................................................................................................................................. 29
3.9 ORDERED PROBIT REGRESSION MODEL ........................................................................................................................ 30
CHAPTER FOUR ....................................................................................................................................................... 33
DISCUSSION AND RESULTS
4.1 DESCRIPTIVE STATISTICS .............................................................................................................................................. 33
4.2 DEMOGRAPHIC CHARACTERISTICS OF SAMPLE CUSTOMERS ....................................................................................... 34
4.3 DESCRIPTIVE ANALYSIS FOR VARIABLES ...................................................................................................................... 38
4.4 CORRELATION ANALYSIS ............................................................................................................................................... 47
4.5 RESULTS OF ECONOMETRICS REGRESSION ANALYSIS .................................................................................................. 54
4.5.1 Summary of Hypotheses Testing ........................................................................................................................55
4.5.1.1 Demographic characteristics .......................................................................................................................................... 57
4.5.1.2 Customer awareness ....................................................................................................................................................... 58
4.5.1.3 Perceived benefit (PB).................................................................................................................................................... 59
4.5.1.4 Perceived risk (PR)......................................................................................................................................................... 60
4.5.1.5 Perceived security (PS) .................................................................................................................................................. 60
4.5.1.6 Legal framework and ICT infrastructure ........................................................................................................................ 61
4.5.1.7 Organizational factors (OF) ............................................................................................................................................ 61
4.5.1.8 Perceived usefulness (PU) .............................................................................................................................................. 62
4.5.1.9 Perceived ease of use ...................................................................................................................................................... 63
4.5.2 Marginal effect after ordered probit regression ..................................................................................................64
4.5.3 Test for Multicolliniarity.....................................................................................................................................67
CHAPTER FIVE ........................................................................................................................................................ 69

CONCLUSIONS AND RECOMMEDATIONS
5.1 CONCLUSIONS ........................................................................................................................................................... 69
5.2 RECOMMEDATIONS ................................................................................................................................................ 71
REFERENCES ........................................................................................................................................................... 74
APPENDIX ................................................................................................................................................................. 81
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ACCRONYMS
ADEB Adoption Electronic Banking

ATM Automated Teller Machine
CA Customer Awareness
CBE Commercial Bank of Ethiopia
CSF Critical Success Factors

DC Demographic Characteristics
E-Banking Electronic Banking
E-Commerce Electronic Commerce
EFT Electronic Fund Transfer
E-Payment Electronic Payment
ICT Information Communication Technology
LFII Legal Framework and Information Communication Technology And Infrastructure
OF Organizational Factor
PC Personal Computer
PEOU Perceived Ease of Use
PIN Personal Identification Number
POS Point of Sale

PR Perceived Risk
PS Perceived Security
PU Perceived Usefulness
SME Small and Medium Enterprise
SMS Short Message Service
TAM Technology Acceptance Model
TOE Technology Organization Environment
USA United Stated of America
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LIST OF TABLES
Page
Tables Descriptions No
Table 2.1 Experiences of Factors Influencing the Adoption of E-Banking in
different countries 22
Table 4.1.1 The Sample Size Details 32
Table 4.3.1 Descriptive Analysis for Variables other than Demographic Characteristics 38
Table 4.4.1 Correlation Between Dependent Variable and Independent 48
Table 4.4.2 Correlation Between DC and Adoption of E-Banking 50
Table 4.4.3 Correlation Among Customer Awareness and Adoption of E-Banking 51
Table 4.4.4 Correlation Among Perceived Benefit and Adoption of E-Banking 51
Table 4.4.5 Correlation Among Perceived Risk and Adoption of E-Banking 51
Table 4.4.6 Correlation Between Perceived Security and Adoption of E-Banking 52
Table 4.4.7 Correlation Between LF ICT Infrastructure and Adoption of E-Banking 52
Table 4.4.8 Correlation Between Organizational Factor and Adoption of E-Banking 52
Table 4.4.9 Correlation Between Perceived Usefulness and Adoption of E-Banking 53
Table 4.4.10 Correlation Between Perceived Ease of Use and Adoption of E-Banking 53
Table 4.5.2 Ordered Probit Regression Result 55
Table 4.5.3 Hypothesis Testing Proposed 63
Table 4. 5.4 Marginal Effect Outcome 64
Table 4.6 Variable Inflation Factor 66
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LIST OF FIGUERS
Figures Descriptions Page No

Figure 2.1 Conceptual Framework 21
Figure 4.2.1 Gender Graphical Descriptive 33
Figure 4.2.2 Age; Graphical Descriptive 34
Figure 4.2.3 Level of Education Descriptive Analysis 34
Figure 4.2.4 Income Level of Sample Customers 35
Figure 4.2.5 Occupation Back Ground Descriptive Analysis 36
Figure 4.2.6 Adoption of Electronic Banking Descriptive 37
Figure 4.3.1 Customer Awareness 40
Figure 4.3.2 Perceived Benefit 41
Figure 4.3.3 Perceived Risk 42
Figure 4.3.4 Perceived Security 42
Figure 4.3.5 Legal Framework and ICT Infrastructure 43
Figure 4.3.6 Organizational Factor 44
Figure 4.3.7 Perceived Usefulness 45
Figure 4.3.8 Perceived Ease of Use 46
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ABSTRACT
Electronic banking nowadays is becoming a curial technology in the global banking industry for
cashless transaction and effective banking services. In Ethiopia, e-banking was introduced by
commercial Bank of Ethiopia, ATM Service was introduced for local users in 2001, eight ATMs
located in Addis Ababa despite, being the lead the way in introducing ATM based payment system
and acquired Visa membership, CBE lagged behind Dashen Bank, which worked aggressively to
maintain its lead in electronic payment systems in June 2009 Gardachew, W. (2010) and now almost
all banks has introduced. However, the adoption level of this technology is minimal Ayana, G. (2012).
The objective of this research is to identify factors that influencing customer‟s adoption of electronic
banking. To address this objective technology acceptance model (TAM) with technology-
organization-environment (TOE) is employed. The samples were 272 applicable respondents using the
purposive sampling technique from Addis Ababa. Questionnaires were distributed to five banks
officials of e-banking department (commercial bank, wogagen bank, Dashin bank, Awash bank and
Hibret bank) that the electronic banking technology employed, and their currently electronic banking
user customers. The primary data was collected from 272 respondents; an interview was also
conducted to the bank managers and e-banking department managers. Ordered probit regression and
descriptive statistics were used to analyze the primary data which is collected what is more the probit
regression also used to test the hypothesis. Additionally correlation analysis ware exploits their
relationship between variables. Moreover STATA version 11 was engaged to facilitate the ordered
probit regression analysis and the correlation process, Likert scale also used to the descriptive analysis
and for the orbit regression. The research focus on related factors such as, demographic characteristics,
customer awareness, perceived benefit, perceived risk, perceived security, legal framework and ICT
infrastructure , organization factor, perceived usefulness and perceived ease of use. The result of the
study concluded that among the factors, perceived benefit was the strongest significant influencing
factor followed by perceived security. Customer awareness, perceived ease of use and perceived risk
were next more important factors that influence customer‟s intention, to adopt e-banking. To boost the
identified factors the researcher pressured banks to announce (promote) benefit of electronic banking
and give due attention on security and risk features to decrease customer perception towards them.
Key words: Adoption of electronic banking, demographic characteristics, Customer awareness,
perceived benefit, perceived security, perceived risk, Legal framework and ICT infrastructure,
Organization factors, Perceived usefulness and perceived ease use.
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Chapter One
Introduction
1.1 Background of the study

In very simple terms e-banking means the provision of information or services by a bank to its
customers, via a computer, television, telephone, or mobile phone. It as an electronic connection
between bank and customer in order to prepare, manage and control financial transactions
Furthermore, electronic banking is said to have three different means of delivery: telephone, PC,
and the Internet. For example, it introduces four different channels for electronic banking: PC
banking, Internet banking, managed network, and TV-based banking. Electronic banking is the
newest delivery channel in many developed countries and there is a wide agreement that the new
channel will have a significant impact on the bank market (Daniel, 1999) cited in (Shaikh. 2014).
Despite the growth of e-banking worldwide, banks in Ethiopia continue to conduct most of their
banking transactions using traditional teller based methods. Banking operation is still under
developed backed by low level of infrastructural development, lack of suitable legal and
regulatory framework, high rates of illiteracy, frequent power interruption and security issues
(Gardachew, 2010). Moreover, e-banking is a new technology in Ethiopia which needs a lot of
effort and resources to be easily adopted by customers. Hence, in order to help banks improve e-
banking adoption by their customers, it is necessary to examine factors that influence customers‟
intention to adopt e-banking service channels (Yitbarek. and Zeleke. 2013).
The term electronic banking can be described in several ways. In the present world money is
circulated all over the globe. Due to globalization, technological advances and other factors
money is circulating unimaginably fast. Financial Institutions mainly Banks play a pivotal role in
matching a depositor and lenders and channeling money and making the economy more efficient.
Although the history of Banking goes back to the 14th century in Europe but Banks are now
everywhere. Banks play a significant role compared to other financial Institutions (Hoque, 2012).
Many banks are making huge investments in technology to maintain and upgrade their
infrastructure, in order not only to provide new electronic information-based services, but also to
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manage their risk positions and pricing Dwumfuo O., and Dankwah B., (2013). According to
Arunachalam and Sivasubramanian (2007), Internet banking is where a customer can access his or
her bank account via the Internet using personal computer (PC) or mobile phone and web-
browser. In addition, Ongkasuwan and Tantichattanon (2002) further defines Internet banking
service as banking service that allows customers to access and perform financial transactions on
their bank accounts from their web-enabled computers with internet connection to banks' websites
any time they wish. E-banking service also enables bank customers to perform transactions such
as transfer and payments, access of latest balance, statement viewing, account detail viewing,
customization, print, downloading of statements and obtaining of a history statement on all
accounts linked to the bank‟s customers‟ Auto-Bank (ATMs). According to Khan (2007), Internet
banking includes the system that enables financial institution customers, individuals or
businesses, access accounts, transact business, or obtain information on financial products and
services on public or private network including Internet (Musiime and Ramadhan. 2011).
The breakthroughs in information technology occasioned by the introduction of the

telecommunications networks and the computer system persist to shape the way banks and their
corporate relationships are structured worldwide. The pressure of globalization, consolidation,
deregulation and rapidly changing technology has made it necessary for banks to re-examine their
service delivery systems in order to suitably position them within this dynamism of information
technology (Woherem, 2000). In the United States, Most modern banks have deployed Internet
banking capabilities in an attempt to reduce costs while improving customer service. Despite the
potential benefits that online banking offers consumers, the adoption of online banking has been
limited and, in many cases, has fallen short of expectations (Bielski, 2003; Wade, 2003). While
all of the top 50 largest banks in the US offered Internet banking by 2002 and approximately 91%
of US households had a bank account (Kolodinsky, 2004), only 17% of consumers adopted online
banking. At the time, analysts estimated that this online banking penetration would not exceed
30% of all bank households by 2007 (Babej, 2003). This prediction appears to have been realized.
An American Bankers Association survey in the summer of 2007 found that only 23% of U.S.
consumers use online banking as their primary banking method (Fisher, 2007). Prior research on
online banking adoption has principally used survey methods to attribute social and technical
dimensions such as attitudes toward new technology, awareness, access and usability to the
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variation in Internet banking adoption and usage (Karjaluoto, et al., 2001; Gerrard and
Cummingham, 2003; Lee, et al., 2004; Lee et al., 2003; Lichtenstein and Williamson, 2006; and
Tan and Teo, 2000). In Pakistan however, banking organizations have been focused on censure
for not given to their customers with original and suitable banking services. Therefore, the as
outcome some customers, find it suitable to keep their money or reserves at home than the banks.
Manual banking system was performing below standard services to the customers and it may be
affected on the customer‟s support. Transactions of the money from one manual bank to the other
can take five to ten days. Some time, when the purpose of transferring the money has almost
dead. Sometimes businessmen have to cancel their business deals due to the unavailability of the
cash transferring facility in time in traditional banking system where services are as slow as non-
secure, non-satisfactory (Juma. 2013).
1.2 Statement of the Problem

Comparing with the banking industry operated in developed countries, without doubt the banking
industry in Ethiopia is underdeveloped and therefore, there is an immediate need to embark on
capacity building arrangements and modernize the banking system by employing the state of the
art of technology being used anywhere in the world. With a growing number of import-export
businesses, and increased international trades and international relations, the current banking
system is short of providing efficient and dependable services (Gardachew 2010). E-banking
system, such as ATM, mobile banking, internet banking and others are not well adopted by
Ethiopian banking industry. The modern E-banking methods like Automated Teller Machine
(ATM), Debit cards, Credit cards, Tele banking, Internet banking, Mobile banking and others are
new to the Ethiopian banking sector. E-banking which refers to the use of modern technology that
allows customers to access banking services electronically whether it is to withdraw cash, transfer
funds, and to pay bills, or to obtain commercial information and advices are not well known in
Ethiopia (Ayana, 2012). However, some of the barriers such as, lack of competition between local
and foreign bank and lack of social awareness were not addressed (Ayana, 2012).Therefore this
study intends to identify factors that affect adoption of E- banking services among customers of
Commercial bank of Ethiopia and some selected private banks in the case of Addis Ababa,
Ethiopia. The researcher motives to address the influential factors to customers use and accept
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new technology of electronic banking for effective delivery of banking service in Addis Ababa,
there is limit to address other regions on their geographical constraints and related costs to cover.
1.3 Research Questions

1. What are the factors that influence customers for not adopting e-banking services?
1.4 Objectives of the Study
1.4.1 General objective

The purpose of this study is to identify the factors affecting adoption of e-banking services
among customers of Commercial Bank of Ethiopia and some selected private banks operating in
Addis Ababa.
1.4.2 Specific objectives

1. To identify the attitude of customers on the adoption of e-banking services
2. To set sequentially the levels of factors affecting e-banking adoption of customers services
3. To examine factors influencing customers‟ intensions to adopt e-banking services
4. To identify the factors that influence customers for not-adopting e-banking services.
1.5 Significance of the Study

The study attempted that, factors affecting adoption of e-banking services among customers of
some selected banks operating in Addis Ababa. The study indicated that banks executives and
indeed the policy makers of the banks and financial institutions to be aware of the factors
influencing customers from using e-banking services. Good bank policies will help to improve
customer confidence to facilitate more transactions that will stir (or mix) up economic growth in
Ethiopia. It‟s also hoped that the information that was gathered in regards the factor which
influences of e-banking to customer service delivery in the banking industry will be shared to
related financial institutions. This will go a long way, if shared by the relevant teams in the
departments dealing with e-banking, in sensitization and strengthening their product. The
significance of this study is not limited to the bank executives. It is worth including stakeholders
such as;
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1. Customers, E-banking gives users 24-hour access to their accounts. Most banks allow
customers to pay their bills online and provide SMS alerts when there is a withdrawal.
2. Bank employees: Business owners, accounting staff and other approved employees can
access routine banking activity such as deposits, cleared checks and wired funds quickly
through an online banking interface. This ease of review helps ensure the smooth
processing of all banking transactions on a daily basis, rather than waiting for monthly
statements. Errors or delays can be noted and resolved quicker, potentially before any
business impact is felt.
3. Shareholders of banks: Bonus interest will applies to new Premier Investment Accounts
and to existing Premier Investment Accounts reinvested.
1.6 Scope of the Study

The scope of this study is limited to the examination of Factors affecting electronic banking of
customers in commercial bank of Ethiopia, Wegagen bank, Dashin bank, Awash bank and Hibret
bank that found in Addis Ababa, Ethiopia that excludes other financial institutions to explore the
intent of the study and also limited e-banking service example ATM, Mobile, POS and internet
banking. Those banks are selected on the base of their familiarity with technological innovations
in Addis Ababa to e-banking.
1.7 Conceptual definition of terms

E-commerce: is the buying and selling of goods and services over the Internet. E-commerce
refers only to online transactions. E-commerce takes place through the application of electronic
technology and covers outward-facing processes that touch customers, suppliers and external
partners, including sales, marketing, order taking, delivery, customer service, purchasing of raw
materials and supplies for production and procurement of indirect operating-expense items, such
as office supplies. www.computerworld.com
E-banking - is a form of banking service where funds are transferred through an exchange of
electronic signal between financial institutions, rather than exchange of cash, checks, or other
negotiable instruments (Kamrul, 2009).
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1.8 Organization of the Study
This paper is divided into five chapters that covered Introduction, Literature Review,
Research Methodology, Research Results, and Conclusions and Recommendations. The
outlines of the five chapters are as below.
Chapter 1: Introduction
This chapter provides an overview of the study. It contains general introduction to the issues
with which the study is concerned, problem statement, objectives and research questions,
hypothesis and regression model, significance of study, scope of study, limitations and
organization of the study
Chapter 2: Literature Review
The review has four sections. Section 2.1, presents the definition of E-banking and theoretical
literature follow by the modes of E-banking system, in section 2.2, Factors affecting E-banking
adoption to customers is presented in section 2.3, empirical studies and conceptual framework
present in section 2.4
Chapter 3: Research Design and Methodology
This chapter describes and explains the research methodology used in the study. Key
topics of this chapter include description of the study area along with the research
methodology employed, research instrument, sampling design, data collection procedures,
and data analysis techniques.
Chapter 4: Research Result
This chapter describes overall findings. It summarizes the statistics of

respondents‟ demographics, respondents‟ response on their knowledge about factors
affecting adoption of customers, respondents‟ response on motivational factors, content
analysis of open ended questions, result of statistical analysis, and discussion of the
research results. Results and data analysis are presented in the form of text, figures, tables,
etc.
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Chapter 5: Conclusions and Recommendations
And finally conclusions, recommendations and direction for future research are presented
under this chapter.
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Chapter Two
Literature Review
This chapter concerns to review the literatures in the area of E-banking adoption and mainly focus
on the factors and drivers of adopting E-banking system.
2.1 Theoretical Literatures

Electronic banking adoption has gained special attention in academic studies during the past years
to investigate factors of adoption. Two of the most important theories used by researchers in the
study of individual‟s adoption of e-banking is Davis et al, (1989) Technology Acceptance Model
(TAM) (Pikkarainen et al, 2004; Cheng et al, 2006), Theory of Planned Behaviour (TPB) (Shih
and Fang, 2004) originally proposed by Ajzen (1991).
2.1.1 Technology Acceptance Model (TAM)

The Technology Acceptance Model introduced by Davis (1985) is one of the most cited
theoretical frameworks to predict the acceptance and use of new information technology within
organizations. The Technology Acceptance Model hypothesizes that system use is directly
determined by behavioral intention to use, which is in turn influenced by users‟ attitudes toward
using the system and the perceived usefulness of the system. Perceived usefulness was defined as
the degree to which individuals believe that using a particular system would enhance their job
performance (Davis, 1989), whereas perceived ease of use relates to the degree to which
individuals believe that using a particular system would require no effort (Davis, 1989).
According to (Pfeffer, 1982; Vroom, 1964) TAM posits that two particular beliefs, perceived
usefulness (PU) and perceived ease of use (PEOU) are the primary relevance for computer
acceptance behavior. PU is defined as the degree to which a prospective user believes that using a
particular system would enhance his or her job performance. Since its inception, the model has
been tested with various applications in various studies and has become the most widely applied
model of user acceptance and usage (Pikkarainen et al., 2004). Various authors, simply posits that
individuals who are keen to adopt an innovation, would want to believe or made to believe that
they will not find a particular technology difficult to use and it would require no much labor in is
usage. The following researchers Lee (2009) in Finland; Lichtenstein and Williamson (2006) in
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Australia, have utilized TAM variously in their works and some modifications based on
environmental and cultural characteristics have also been included. However, The TAM model
does not account for social influences in the adoption and utilization of new technologies Edwin
A., (2013) According to Masrom and Hussein (2008) the adoption of whether to use an
information system for a particular individual is very much dependent on the perceived usefulness
and perceived ease of use of the information system.
2.1.2 Technology- organization- Environment (TOE)

TOE framework was proposed by Tornatzky and Fleischer; it is designed for studying the
likelihood of adoption success of technology innovations. This framework is a comprehensive and
well received framework in the context of innovation adoption by organizations and has been
used in many studies (Salwani, et al, & Ellis 2009; Chang et al 2007, Zhu & Kraemer 2006).
According to Tornatzky and Fleischer (1990), technology adoption within an organization is
influenced by factors pertaining to the technological context, the organizational context, and the
external environment. Based on this, the researcher adopts the TOE framework to summarize
possible key factors affecting E-banking adoption. The technological factor refers to adopter‟s
perception of E-banking attributes. Typical characteristics of technology considered in technology
adoption studies are based on the assumption of Roger‟s diffusion of innovation (Rogers 2003),
Which include relative advantages (perceived benefits), and relative disadvantages (perceived
risks).While the organizational factor refers to the organization‟s characteristics that influence its
ability to adopt and use of E-banking system. The environmental factor refers to the external
environment in which an organization operates and its condition for supporting the development
of E-banking services. For each context, various factors have been identified from the literature
but only those that are considered relevant for E-banking adoption will include in the framework.
Details of factors that consider in this study are as follows.
2.2 Modes of e-banking

Different forms of E-banking system will discuss as follows.
2.2.1 Automated Teller Machines (ATM)- It is an electronic terminal which gives

consumers the opportunity to get banking service at almost any time. To withdraw cash, make
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deposits or transfer funds between accounts, a consumer needs an ATM card and a personal
identification number (PIN).
2.2.2 Point-of-Sale Transfer Terminals (POS)- The system allows consumers to pay for
retail purchase with a check card, a new name for debit card. This card looks like a credit card but
with a significant difference. The money for the purchase is transferred immediately from account
of debit card holder to the store's account (Malak 2007).
2.2.3 Internet / extranet banking-It is an electronic home banking system using web
technology in which Bank customers are able to conduct their business transactions with the bank
through personal computers. Molla (2002,p.2) defines internet banking as a distinct subset of
electronic/online banking which is more broadly defined as the provision of retail and small
value-added banking products and services through electronic channels. This electronic banking
definition includes several different forms of internet banking, the different types of which are
outlined below.
1. Internet banking via personal computers (PC) using dial-up software. Here, customers make
use of home finance software to link to banks for online banking Internet banking via the World
Wide Web. This form of online banking bypasses subscription based services and allows banks to
interact directly with their customers through the World Wide Web.
2. Internet banking which makes use of a bank‟s proprietary software. This form of online
banking uses the bank as an “electronic gateway” to customer accounts. Customers install this
software on their home computers to enable them to transfer funds and pay bills electronically.
3. Internet banking via online service, banks set up retail branches on subscriber based online
service such as American online
2.2.4 Mobile banking-Mobile banking is a service that enables customers to conduct some
banking services such as account inquiry and funds transfer, by using of short text message
(SMS).
Banks offer Internet banking in two main ways. An existing bank with physical offices can
establish a Web site and offer Internet banking to its customers in addition to its traditional
delivery channels. A second alternative is to establish virtual branchless or Internet-only, Bank
almost without physical offices. Virtual banks may offer their customers the ability to make
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deposits and withdraw funds via ATMs or other remote delivery channels owned by other
institutions (Furst & Nolle 2002, p.5).
2.2.5 TV based: the use of satellite or cable to deliver account information to the TV screen of
customers (it is internet based).
2.2.6 Telephone banking: access their bank via telephone (own personal ID and password
require)
2.2.7 Managed network: the bank makes use of an online service provided by another party.
In the framework of this study E-banking will not only considers as transferring of service by
using internet connection rather it considers as multi-channel service provide through ATM,
internet banking, Mobile banking, and Debit cards.
2.3 Review of empirical literature

Definitions of E–banking
E-banking has a variety of definitions all refer to the same meaning, the following section show
some of these definitions. According to Daniel (1999) Electronic banking is the provision of
banking services to customers through Internet technology (IT). As Kamrul (2009) clearly
described, E-banking is a form of banking service where funds are transferred through an
exchange of electronic signal between financial institutions, rather than exchange of cash, checks,
or other negotiable instruments. Through the use of IT, banks now employ different channels such
as internet technology, video banking technology, telephone banking, Automated Teller Machine,
and WAP technology to deliver their services.
According to Nehmzow (1997) Internet banking offers the traditional players in the financial
services sector the opportunity to add a low cost distribution channel to their numerous different
services. He continues that Internet banking also creates a threat to traditional banks‟ market
share, because it neutralizes so many of their competitive advantages in having a traditional
branch bank network.
Malak (2007) described E-banking, also known as electronic funds transfer (EFT), is simply the
use of electronic means to transfer funds directly from one account to another, rather than by
check or cash. Electronic banking is the newest delivery channel in many developed countries and
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there is a wide agreement that the new channel will have a significant impact on the bank market
(Daniel, 1999; Jayawardhena and Foley, 2000).
The term of E-banking often refers to online banking/Internet banking which is the use of the
Internet as a remote delivery channel for banking services (Furst & Nolle 2002, p.5). With the
help of the internet, banking is no longer bound to time or geography. Consumers all over the
world have relatively easy access to their accounts 24 hours per day, seven days a week. E-
banking is the use of a computer to retrieve and process banking data (statements, transaction
details, etc.) and to initiate transactions (payments, transfers, requests for services, etc.) directly
with a bank or with other financial service provider remotely via a telecommunications network‟‟
(Yang 1997, p.2). Furthermore, electronic banking is said to have three different means of
delivery: telephone, PC, and the Internet. Daniel (1999), for example, introduces four different
channels for electronic banking: PC banking, Internet banking, managed network, and TV-based
banking.
2.3.1 Empirical and Conceptual Studies

Researchers make huge efforts in order to understand the factors that may initiate individuals to
the adoption of electronic banking. The outcomes of these efforts also are not consistent enough
to conclude about the factors that customers initiate to use or not to use e-banking. But there are a
number of empirical literatures that attempted to identify factors that influence individuals to
engage in the adoption of e-banking.
Adoption is the acceptance and continued use of a product, service or idea. According to Rogers
and Shoemaker (1971), consumers go through “a process of knowledge, persuasion, decision and
confirmation” before they are ready to adopt a product or service. Many researchers have been
used different frame works in the study of adopting new technological innovation.
Among frameworks that have been developed based on the past studies includes, the
Technology-organization-Environment framework (TOE) (Tornatzky & Fleischer 1990),which
identifies three basic Factors for the adoption of technological innovation, i.e., technological
factors, organizational and environmental factors. According to Tornatzky and Fleischer (1990),
technology adoption within an organization is influenced by factors pertaining to the
technological context, the organizational context, and the external environment. Based on this, the
researcher adopts the TOE framework to summarize possible key factors affecting E-banking
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adoption. The technological factor refers to adopter‟s perception of E-banking attributes. Typical
characteristics of technology considered in technology adoption studies are based on the
assumption of Roger‟s diffusion of innovation (Rogers 2003), Which include relative advantages
(perceived benefits), and relative disadvantages (perceived risks).While the organizational factor
refers to the organization‟s characteristics that influence its ability to adopt and use of E-banking
system. The environmental factor refers to the external environment in which an organization
operates and its condition for supporting the development of E-banking services.
The Technology Acceptance Model as well introduced by Davis (1985) is one of the most cited
theoretical frameworks to predict the acceptance and use of new information technology within
organizations. The Technology Acceptance Model hypothesizes that system use is directly
determined by behavioral intention to use, which is in turn influenced by users‟ attitudes toward
using the system and the perceived usefulness of the system.
Perceived usefulness was defined as the degree to which individuals believe that using a
particular system would enhance their job performance (Davis, 1989), whereas perceived ease of
use relates to the degree to which individuals believe that using a particular system would require
no effort (Davis, 1989).
From the above different theories that we have, the tendency to recognize the factors that
influence the customers to the adoption on electronic banking, in addition different investigators
obtains different variables to determine the factors that have an influence on the customer purpose
to implement and use the technology of e-banking.
As Davis et al., (1989) clearly states that the external variables in the model refer to a set of
variables that can influence information system adoption indirectly through perceived ease of use
and perceived usefulness. According to Taylor and Todd (1995), constructs of TAM are almost
measured in the same way in every context. Furthermore, TAM is a reliable instrument and
empirically sounds. Several meta-analysis studies have provided sufficient data about TAM to be
highly credible and rationally explain up to 40 percent of the behavioral intention to use (King
and He, 2006; Yousafzai, Foxall, and Pallister, 2007).
On the study Dehbini N.et al. (2015) showed that ease of use and usefulness has a significant effect
on the electronic payment card acceptance in Iran. According to Taeb (2009); Mashreghi (2011)
clearly stated in their research showed that ease of use and usefulness have positive effect on new
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technology acceptance. According to authors Dahlberg and Orni (2007); Lee et al., (2003); Al-
Gahtani (2001); Rose and Straub (1998); and Baniasadi, Sharifi and Poor nabi, (2009) concluded
that ease of use and usefulness has significant relationship with acceptance technology. Warshaw
et al., (1989), indicated that ease of use has low impact on technology acceptance. Also Pan, Sivo
and Brophy (2003), showed that the ease of use and usefulness of technology acceptance have not
significant relationship among in the academic environment.
Salwani (2009) includes technology competence covering existing technology infrastructure and
skills to utilize the technology in his/her context, while other studies (Ellias 2009 & Chang 2007)
consider some relevant characteristics of technology. To avoid overlapping between technology
and organizational contexts, researcher chooses two basic factors related to technology
competence, which have relevant to the organizational factors, i.e. perceived benefits and
perceived risks are considered in the study from the technological factors.
According Nasri (2011) obviously studded perceived risk (PR) that customers perceive and their
own tolerance of risk tacking is factors that influence their purchase decision in Tunisia. A larger
perception of risk will reduce the perceived benefit of the technology (Horst, Kuttschreuter, and
Gutteling, 2007). Previous studies mentioned that perceived risk was a major factor that
influences the adoption of electronic banking services (Polatoglu and Ekin, 2001; Tan and Teo,
2000). According to Loudon and Bitta, (1993) risk regarding the most appropriate purchase
decision or the consequences of the decision is a significant variable influencing the total amount
of information gathered by consumers. Several studies (Bhatnagar et al. 2000; Featherman and
Pavlou 2003; Jarvenpaa et al. 1999; Kolsaker et al. 2004; Liao and Cheung, 2001, Park et al. 2004, Pavlou
2003, and Ruyter et al. 2001) have deemed consumer risk perceptions to be a primary obstacle to
the future growth of online commerce and e-services.
According Odumeru J.,(2012) perceived benefits, perceived ease of use and perceived risk, all
significantly determines acceptance of e-banking by customers in Nigeria. As Howcroft et al.,
(2002) clearly stated that perceived benefits also found that the most important factors
encouraging consumers to use online banking are lower fees followed by reducing paper work
and human error, which subsequently minimize disputes (Kiang et al., 2000). What is more
according Dwumfuo O., and Dankwah B., (2013) That perceived benefits to the bank served as a
motivating factor for adopting the Internet banking product in Ghana. As Mohammed, A.(2014)
Clearly stated that Perceived benefits associated with electronic banking were to be important
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factor in Adama, Ethioia. According to Kamau et al., (2012) From his/her study, it is also
identifies that perceived usefulness, perceived ease of use, perceived self-efficacy, perceived
compatibility, perceived relative advantage and perceived results demonstrability are the key
factors that influence internet banking adoption. The results also show that risk had minimum
influence on Internet banking in Kenya. As Hussein N., (2012) clearly stated on his/her empirical
investigation of factors that could affect internet banking adoption. These factors include
awareness, usefulness, trust and perceived risk. Usefulness was found to have a positive and
direct influence on internet banking adoption. On the other hand, awareness, trust was found to
have positive and not significant influence on Internet banking adoption. However, perceived risk
has negative and not significant influence on internet banking adoption. Usefulness is the only
significant predictor which influences the internet banking adoption in this study. According to
Abubakar A., Younus S. and Bin R.,(2012) studded awareness is the most important factors
influencing adoption of e-banking and security is seen as the least important and ease of use and
reluctant to change are not important factors in influencing their adoption rate in Nigeria. In other
study, Consumers‟ concerns about security, which arise from the use of an open public network,
have been emphasized as being the most important factor inhibiting the adoption and use of
internet banking (Sathye, 1999; Daniel, 1999; Hamlet and Strube, 2000; Tan and Teo, 2000; Cox
and Dale, 2001, Polatoglu and Ekin, 2001, Black et al., 2002, Giglio, 2002; Howcroft et al., 2002
Howcroft et al., 2002). In USA, Thorton Consulting (1996) which conducted a survey focusing on
banks concluded that 67 percent of US banks feel that “security concerns” is the major barriers for
Internet banking. The same results obtained from the study of Booz et al. (1997), reveals that
security concern among customers was the top-ranking obstacle for non-adoption of Internet
banking in Latin America.
According to (Quaddus & Hofmeyer 2007; Gibbs, Kraemer & Dedrick 2003) competitive
pressure can strongly influence any bank to develop and adopt E-banking initiatives and it may
affect the bank‟s perception towards E-banking system. The existence and maturity of E-
commerce legal frameworks within a country influence the diffusion of online transactions
including E-banking as demonstrated in various studies (Tan & Wu 2002; Martinson & Trappey
2001). National ICT infrastructure is a major factor that supports the adoption of E-banking as
the case for other E-commerce initiatives. Without an adequate development level and quality of a
nation‟s ICT infrastructure, E-banking adoption and use cannot do well (Efendioghu 2004 &
15 | P a g e
Scupola 2003). On the other hand Hussein N., Jusoh J., and Abideen A., (2014) that ICT may not
be an issue in the banks however; the relationship between ICT readiness and intention towards
internet banking services adoption was not supported in Yemen.
Organizational factors are different in their preference to adopt technological innovation (Iacovou
1995 & Grover 1993) influenced by a number of factors, like firm size, top management support
and financial and human resources. In the framework for this study, researcher uses one basic
organizational factor. Financial resources are an important factor in facilitating innovation
adoption for any organization and they are often correlated with the firm size (Kuan 2001 &
Iacovou 1995).Therefore, it is expected that the availability of financial resources within the
adopting firms is important for E-banking adoption.
Marketers often segment markets on the basis of demographic information because it is widely
available and often relates to consumers buying and consuming behavior. Only with a clear
understanding of major consumer characteristics can the implications of environmental and
individual determinants of consumer behavior begin to be appreciated (Du Plessis and Rousseau,
1999, p.274). Age, education level, income and occupation are the most influential demographic
variables affecting Internet usage. Typical internet banking users tend to be well educated,
relatively young and are high income earners. According Karjaluoto (2002, p.360) It has been
widely recognized that demographic factors have a great impact on consumer attitudes and
behavior towards internet banking. The consumer demographic factors relevant to this study are
therefore age, education level, income and occupation.
There is a different literature review which argues that many of these factors can be a prior
consideration as a significant to the process of e-banking adoption. That the researcher develops
based on the proposed e-banking adoption can be modeled with variables derived from literatures,
and nine variables referring to customer awareness, perceived ease of use, perceived usefulness,
security perception, legal framework and ICT infrastructure, perceived risk, demographic
characteristics and organization factors.
2.3.1.1 Demographic characteristics

Demography is the study of human population statistics, including age, sex, race, location,
occupation, income, education, and other characteristics. Each of these characteristics influences
the nature of consumer needs and wants; ability to buy products; the perceived importance of
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various attributes or choice criteria used to evaluate alternative brands; and attitudes towards and
preference for different products (Loudon and DellaBitta, 1993, p.35).
Marketers often segment markets on the basis of demographic information because it is widely
available and often relates to consumers buying and consuming behavior. Only with a clear
understanding of major consumer characteristics can the implications of environmental and
individual determinants of consumer behavior begin to be appreciated (Du Plessis and Rousseau,
1999, p.274). Therefore, the following hypothesis proposed
H1demographic characteristics regarding E-banking expected positive effect to adoption e-
banking.
2.3.1.2 Customer awareness (CA)

According to Rogers (1983) study awareness innovation exists and gains some understanding of
how function. While Sathye (1999) has defined awareness of innovation as: understanding
whether the customer is aware or not aware of service itself and its benefits. He also shows that
low level of awareness is a critical factor in causing customers not to adopt online banking.
According to Rogers and Shoemaker (1971), consumers go through “a series of process in
knowledge, confidence, decision and confirmation” before they are ready to adopt a new product
or service. Hence make the customers aware about the availability of such a product and explain
how it adds value relative to other products of its own or that of the competitors. Therefore, the
following hypothesis is proposed;
H2 Awareness has a significant effect on acceptance and use of e-banking.
2.3.1.3 Perceived benefit (PB)

Perceived benefits of E-banking obtain both direct and indirect benefits for the banking industry
as well as for the consumers. Direct benefits include the savings on operational cost, improved
organizational functionality, productivity gain, improved efficiency and increased profitability.
Indirect benefits include the opportunity or intangible benefits such as improved customer‟s
satisfaction through improved services, improved banking experience and fulfillment of their
changing needs and lifestyle (Lu et al. 2005; Kuan &Chau 2001 & Iacovou 1995).
Gerrard and Cunningham (2003) found a positive correlation between convenience and online
banking and remarked that a primary benefit for the bank is cost saving and for the consumers a
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primary benefits is convenience. Multi-functionality of an IT based services may be another
feature that satisfies customer needs (Gerson, 1998).
A reduction in the percentage of customers visiting banks with an increase in alternative channels
of distribution will also minimize the lines in the branches as stated Thornton and White, (2001).
Robinson (2000) argued that the online banking extends the relationship with the customers
through providing financial services right into the home or office of customers. The banks may
also enjoy the benefits in terms of increased customers loyalty and satisfaction (Oumlil and
Williams, 2000). According to Basu and Muylle (2007), described as value creation or value
enhancement for one or more of a company‟s stakeholder groups and cost saving, increased
market share, speed and efficiency of doing business and improvement in customer service.
Consequently, the following hypothesis proposed
H3 perceived benefit has a positive effect on the use of e-banking.
2.3.1.4 Perceived security (PS)

Security is one of the very important factors in determining the decision of consumers to use
internet banking. Walls report (1997) also reported that unless security is improved, more
households would be willing to conduct their transactions over the internet. According to
Polatoglu and Ekin, (2001), security comprises of three dimensions: reliability, safety, and
privacy. Consumers‟ concerns about security, which arise from the use of an open public network,
have been emphasized as being the most important factor inhibiting the adoption and use of
internet banking (Sathye, 1999; Daniel, 1999; Hamlet and Strube, 2000; Tan and Teo, 2000; Cox
and Dale, 2001, Polatoglu and Ekin, 2001, Black et al., 2002, Giglio, 2002; Howcroft et al., 2002
Howcroft et al., 2002). Consequently, the following hypothesis proposed
H4 Perceived security has a positive effect on the use of e-banking.
2.3.1.5 Perceived risk (PR)

Perceived risk defined in terms of the customer's perception of the uncertainty and potential
adverse consequences of buying a product or services.
As different authors (Bauer 1960; Hsi-Peng et al, 2005 and Hsi-Peng et al, 2005) clearly stated
risk in terms of uncertainty and negative consequences associated with consumer‟s actions.
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Consequently the lower the perception of risks involved in using internet banking the more likely
an individual would be prepared to use it. One of the important risks faced by banking institutions
in offering E-banking services is the customers‟ resistance to use the services which significantly
hinder the growth of E-banking (Zhao et al. 2008 & Laforet 2005).
The degrees of risk that customers perceive and their own tolerance (acceptance) of risk tacking
are factors that influence their purchase decision. On the other hand, introducing a new
technology may involve both benefits and risks to the user, and before deciding to adopt the
technology, the individual may want to weigh risks and benefits. Electronic banking services will
not be an exception to this general rule. A larger perception of risk will reduce the perceived
benefit of the technology (Horst, Kuttschreuter, and Gutteling, 2007). Hence, the researcher is
proposed the following hypothesis;
H5: The lower the perceived risk of using e-banking, the more likely that e-banking will be
adopted.
2.3.1.6 Legal framework and ICT infrastructure (LFII)

(Quaddus & Hofmeyer 2007; Gibbs, Kraemer & Dedrick 2003) competitive pressure can strongly
influence any bank to develop and adopt E-banking initiatives and it may affect the bank‟s
perception towards E-banking system. The existence and maturity of E-commerce legal
frameworks within a country influence the diffusion of online transactions including E-banking as
demonstrated in various studies (Tan & Wu 2002; Martinson & Trappey 2001). National ICT
infrastructure is a major factor that supports the adoption of E-banking as the case for other E-
commerce initiatives. Without an adequate development level and quality of a nation‟s ICT
infrastructure, E-banking adoption and use cannot do well (Efendioghu 2004 & Scupola 2003).
Government can either directly or indirectly affect the adoption of E-banking in terms of creating
a favorable environment and impetus for banking institutions and their customers so that the
services can be diffused with the community (Kuan 2001 & Iacovou 1995). Consequently, the
following hypothesis proposed
H6 Legal framework and ICT infrastructure has a positive effect on the use of e-banking.
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2.3.1.7 Organizational factor (OF)
Technology-organization-Environment framework (TOE) (Tornatzky & Fleischer 1990), which
identifies among the three basic Factors for the adoption of technological innovation, i.e.,
organizational factor was the relevant that influence the e-banking.
Organizational factor refers to the organization‟s characteristics that influence its ability to adopt
and use of E-banking system. Organizational factors are different in their preference to adopt
technological innovation (Iacovou 1995 & Grover 1993) influenced by a number of factors, like
firm size, top management support and financial and human resources. These resources enable
banking institutions to obtain human related resources including the required skills and expertise
to develop and support provision of E-banking services. Consequently, the following hypothesis
proposed
H7 organizational factor has an effect on the use of e-banking.
2.3.1.8 Perceived usefulness (PU)

The Technology Acceptance Model introduced by Davis (1985) is one of the most cited
theoretical frameworks to predict the acceptance of new information technology within
organizations. Perceived usefulness was defined as the degree to which individuals believe that
using a particular system would enhance their job performance (Davis, 1989). According (Pfeffer,
1982; Vroom, 1964) TAM posits that perceived usefulness (PU) is the primary relevance for
computer acceptance behavior. PU is defined as the degree to which a prospective user believes
that using a particular system would enhance his or her job performance. Since its inception, the
model has been tested with various applications in various studies and has become the most
widely applied model of user acceptance (Pikkarainen et al., 2004). According to Alsabbagh &
Molla (2004) PU on the other hand is related to users' perception of the degree to which using a
system will be beneficial. As Davis et al., (1989) clearly states that the external variables in the
model refer to a set of variables that can influence information system adoption indirectly through
perceived usefulness. Consequently, the following hypothesis proposed
H8 perceived usefulness has a positive effect on the use of e-banking.
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2.3.1.9 Perceived ease of use (PEOU)
The Technology Acceptance Model as well introduced by Davis (1985) is one of the most cited
theoretical frameworks to predict the use of new information technology within organizations.
Perceived ease of use is Technology Acceptance Model (TAM) concerns to the degree to which
individuals believe that using a particular system would require no effort (Davis, 1989).
According to Alsabbagh & Molla (2004) PEOU refers to the degree to which an individual
believes that using a particular system would be free of physical and mental effort.
According (Pfeffer, 1982; Vroom, 1964) TAM posits perceived ease of use (PEOU) is the
primary relevance for computer acceptance behavior. Since its inception, the model has been
tested with various applications in various studies and has become the most widely applied model
of usage (Pikkarainen et al., 2004). That‟s why, the researcher proposed the following hypothesis;
H9 Perceived ease of use has a positive effect on using e-banking
After assessment of several empirical findings the following conceptual framework is developed
for this study. The conceptual framework of the study is developed by arrangement different
factors from deferent writers related to the specific area and form behavioral aspects. The nine
independent variables that are believed to have an influence on the using of adopted electronic
banking.
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Independent
variables
Demographic factors
Customer Awareness
H1
(CA)
H2
Perceived benefit (PB) Dependent
H3
Perceived Security (PS) Adoption of E-
H4 banking
Perceived risk (PR) H5
Legal framework and

ICT infrastructure (LFI) H6
Organizational factors
H7
(OF)
H8
Perceived usefulness
(PU) H9
Perceived ease of use
(PEOU)
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Table 2.1 Experiences of Factors Influencing the Adoption of E-Banking in different
countries
Table Title Results
Nasri,W. (2011) Factors Influencing the The empirical results show that the perceived
Adoption of Internet convenience, perceived risk, perceived security and
Banking in Tunisia prior internet knowledge all have significant effects on
behavioral intention to use online banking. among
„early adopters‟, convenience was a more important
indicator and among demographic variables, further
significant influences have been found for instruction
and occupation and Information online banking the
only did not affect online banking
Abubakar, An Exploratory Study on The empirical results show that awareness is the most
etal.,(2012) Adoption of Electronic important and security is seen as the least important
Banking: Underlying and ease of use and reluctant to change are not
Consumer Behavior and important factors in influencing their adoption rate.
Critical Success Factors
in Nigeria
AkinyiI R., et al., Factors affecting The results from regression analysis that revealed that
(2012) adoption of mobile PU had a positive significant influence on adoption of
banking technology in mobile banking. The second findings indicate that
Kenya there is no significant relationship between perceived
ease of use and adoption of Mobile banking
technology. Perceived risk inverse significant
influence on adoption of Mobile banking technology.
Yitbarek. T. and Analysis of factors

Findings revealed that the seven factors (attitude,
Zeleke. S. (2013) influencing customers‟
subjective norm, perceived behavioral control,
intention to the adoption
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of e-banking service perceived usefulness, perceived ease of use and
channels in Bahirdar city perceived risk) were significant in affecting users'
Ethiopia. behavioral intention to use e-banking.
Al-Smadi M., Factors Affecting First: the results of the study revealed that perceived
(2012 ) Adoption of Electronic usefulness and perceived ease of use has a positive
Banking: An Analysis of and significant impact on customers' attitude toward
the Perspectives of electronic banking services. The second result showed
Banks' Customers in that one cultural dimension (uncertainty avoidance)
Saudi Arabia has a positive and significant impact on perceived
usefulness and perceived ease of use. Third: the results
revealed a positive and significant impact of perceived
risk on the customers' attitudes to use electronic
banking services. Fourth: the results of the study
showed that subjective norm and perceived behavioral
control have a positive and significant impact on
customers' intention toward using electronic banking
services. Fifth: the results showed that attitude as a
positive and significant influence of attitude on
customers' intention to use electronic banking
services.
Dehbiniet al., Factors influencing the Findings of the research showed that age, gender,
(2015) adoption of electronic education, employment and marital status did not
payment cards in urban significantly related to electronic payment card
micro-payments acceptance. On the other hand the factors like
usefulness, ease of use, satisfaction, compulsion,
norms and network externalities have significant
effect on acceptance of electronic micropayments
card.
Hussein N., (2012) Factors Affecting the The empirical investigation of factors that could affect
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Adoption of Internet Internet banking adoption, Usefulness was found to
Banking Amongst have a positive and direct influence on internet
International Islamic banking adoption.
University Malaysia On the other hand, awareness and trust were found to
(IIUM) students. have positive and not significant influence on Internet
banking adoption. However, perceived risk has
negative and not significant influence on internet
banking adoption.
Odumeru The Acceptance of E- The study shown that age, educational background,
J.,(2012) banking by Customers in perceived benefits, perceived ease of use, income,
Nigeria experience from previous use, perceived risk, peer
influence and perceived enjoyment all significantly
determines acceptance of e-banking by customers in
Nigeria.
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Chapter Three
Research Design and Methodology

Many researchers have written extensively on research methodology. The underlying factor in
most studies on research methodology is that the selection of methodology is based on the
research problem and stated research questions. Methodologies cannot be true or false, only more
or less useful (Silverman, 2001). Nachamias et al. (1996) for instance states that methodologies
are considered to be systems of explicit rules and produced, upon which research is based, and
against which claims for knowledge are evaluated. Conducting any type of research should be
governed by a well-defined research methodology based on scientific principles.
3.1 Research design

The research design was conducted both the qualitative and quantitative method of survey
research and analyzed the factors that affect adoption of e- banking in Addis Ababa. For the
quantitative approach survey design and qualitative approach an in depth interview were utilize.
Since the total population of the e-banking customers in the banks is more than 53,859, a
complete survey is difficult to use for this large number so sampling technique is an essential
(Leedy, 1989)
3.2 Types and sources of data

The types of data that have been used in this research were primary and secondary data. The data
was collected from two sources; from the bank‟s customers that uses electronic banking and from
bank officials. The data is collected from the bank users through questionnaire as well as data
collected from the bank officials, were through questionnaire and interview supported by different
documents obtained from records and reports of the industry, from web site, books, articles and
Journals.
3.3 Sampling technique

Sampling is the process of choosing, from a much large population, a group about which to make
generalized statements, so that the selected part represents the total group, (Leedy, 1989; pp. 158).
The banks have been operating and the additional banks which make an initial public offering to
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begin their operation will take as population and customers who uses currently e-banking, and
purposely draw a sample from the total to get rich evidence. However, to undertake this research,
the researcher purposely selects sample of five banks, which currently adopt and implement some
form of e-banking services. These banks include Commercial bank of Ethiopia, Dashen bank,
Awash bank Hibret Bank and Wegagen bank.
The sampling design included a detail plan of the sample size, sample area and sampling
techniques. Depending on the nature of the respondents, the study utilized purposive method. The
purposive sampling method was used to select officials from the e-banking departments of the
selected banks, and sample customers who utilize e-banking.
3.3.1 Sample size and sample determination

The sample size is the number that selected from the target population to constitute a sample that
fulfills the requirements of representativeness of the target population (Kothari, 2008).
To determine the sample size, the Yamane (1967) formula is used which is n=N/ (1+Ne2)
Where n= require responses
N= Sample size (target population)
e2= sampling error limit
N=53,859
e = 0.06
1= Designates the probability of the event occurring
Placing the formula for Addis Ababa population give up a sample size of;
n=N/ (1+Ne2)
n= 53,859/ (1+53,859*0.062)
n=276.35
n=276
The sample size for Addis Ababa was 276 bank officials in e-banking departments and customers.
For sampling procedure, proportional sampling will be applied.
3.4 Data collection method

Primary data was collected through questionnaire and interview. The questionnaire include close
and open end questions for the bank users as well as bank officials an interview questions was
27 | P a g e
designed for the bank officials. And also in-depth interview was conducted on face-to-face basis
by using structure and unstructured questions.
3.5 Data collection and instruments

The research relied based on the Likert scale structured questionnaire. A five scale likert scale is
used to assess the influence of factors originating from the technology and external environment
on using the technology. Most of the questions adopted from Ayana, G. (2012), Juma, S., (2013)
(Nasri, W. 2011; Guriting and Ndubisi, 2006; Luarn and Lin, 2005; Wang et al., 2003 and
Ramayah et al., 2003) and Abenet, y. (2010) whereas a few questions are designed by the
researcher and adjustment was done with objective of building them effective in the situation of
the study. Then the questionnaires were translated in to Amharic language and prepared English
language too. The questionnaires were distributed to the target respondents at the banks as well as
for customers. In addition to the data extracted using questionnaire an interview is conducted with
e-payment managers of the selected banks to support and cross check gaps.
3.6 Data collection procedure

A letter of authorization was obtained from St. Mary`s University, school of graduate studies.
The researcher used questionnaires to collect primary data from the respondents. A five point
likert scale was used to measure the respondents‟ outlook regarding statements on Demographic
characteristics, perceived benefit, perceived risk, perceived security, Legal framework ICT
infrastructure, organizational factor, perceived usefulness, and perceived ease of use. The
questionnaires were managed by the researcher with the help of three research assistants to bank
officials of the five banks and for the customers that are found in deferent station. The researcher
assistants had completed their undergraduate degree. They were trained by the researcher on how
to control the questionnaires to the target group. The responses were used to address the study
objectives.
3.7 Data processing and analysis

Data analysis consists of examining, categorizing, tabulating, or otherwise recombining the
evidence, to address the initial propositi on of a study (Yin, 1989; pp. 105). The collected data
was coded so as to make it useful and relevant to analysis and the quantitative data that is
28 | P a g e
gathered by the researcher is analyzed by using descriptive statistics such as percentage,
frequency, mean, and was interpreted by using tables, and chart were used. The effects of
electronic technology influence on the banking industry and customers as strongly affecting,
medium or low according to Kessuwan and Muenjohn (2010), the attributes placed between 1.00-
2.49 mean score are seen as low level of influence in which an attribute possess, attributes placed
between 2.50-3.49 mean grade are seen as having moderate level of effect and attributes placed
between 3.50-5.00 mean point designates that the attribute have strong or high level of influence.
in addition to prove or test hypothesis, the p-value of ordered probit regression result was used, at
p<0.1 significant level and ordered probit regression models also used to analyze the data to better
understand and interpret the data gathered through the questionnaires, in addition correlation
matrix was used to know the relationship between each variables. This approach has been widely
employed in the survey - based studies Akinyi R., et al., (2012)(Nasri, W. 2011; Guriting and
Ndubisi, 2006; Luarn and Lin, 2005; Wang et al., 2003 and Ramayah et al., 2003). The interview
and open-ended questions were analyzed by using qualitative data analysis. While doing so,
statistical package for STATA software and Microsoft excel was used to generate the data results.
As indicated above, the purpose of this study was for investigation of factors affecting electronic
banking adoption of customers in the case of Addis Ababa. In order to do this, respondents were
asked to evaluate the attributes of some widely accepted factors that influence customers for
adoption of electronic banking and selected based on Likert scale items from 5 to 1.
3.8 Model specification

To measure the factors that determine the intention rate of individual, model developed by
(Davis, 1989), Technology Acceptance Model (TAM) (Tornatzky & Fleischer 1990)
Technology-organization-Environment framework (TOE), is used according to Nasri, W. (2011)
Considering the outcome from the factor analysis, the items for independent variables and the
dependent variable were aggregated. Once the data were aggregated, the order probit regression
was conducted to reveal how different factors affect intention to use internet banking. This
approach has been widely employed in the survey based studies Nasri, W. (2011) Akinyi R., et
al., (2012) (Guriting and Ndubisi, 2006; Luarn and Lin, 2005; Wang et al., 2003 and Ramayah et
al., 2003). Aggregation of the research results allows combining of all items under one particular
29 | P a g e
heading or label, which thus is easy to analyze using order probit regression analyses Nasri, W.
(2011)
3.9 Ordered probit regression model

An ordered probit model is an appropriate model for this study because the dependent variables,
adoption of e-banking, can result an ordinal value that take on five discrete values. This means
the dependent variable can be specified in a clear ordering of the outcomes using an integer
number as 1, 2, 3, 4, 5, but it may not be ready to assume that the distance between each of the
categories is constant.
Ordered probit regression is often used to analyze things like lickert scales on polls or subjective
scales (Verbeek, 2004). In this case the dependent variable adoption of e-banking was measured
by assigning values as 1= strongly disagree, 2= disagree, 3= neutral, 4= agree, 5= strongly agree.
But it does not assume a constant difference between each category, the permission for the
possibility that it took a bigger change in an independent variable to get over the threshold into
one category than it obtained to get into the next category (Donoghue, et al. 2010). An ordered
probit model estimates both the effects of the independent variables (through the systematic
component) and the thresholds of the dependent variables (through the stochastic-(having a
random probability) component) at the same time (Fox, 2010: Donoghue, et al. 2010).
According to, (Donoghue, et al. 2010) the most straightforward extension of the probit or logit
model is the case where Y takes on several possible values, but where there is a natural order in
the responses. A better application of ordered model is thus the case of ordered qualitative
variables. Frequently, in survey-type research the responses are on a likert-type scale, such as
strongly agree, somewhat or strongly disagree as an ordered variable (Gujarati, 2004).
The correlation between the identified dependent variable (ADOEB) and the independent variable
were analyzed by ordered probit model as framed below:
Assuming a latent (hidden) variable, Y* exist, can be defined Y*=xβ+ε
Where:
Y*=ADOEB and x represents all independent variables.
Y* be divided by some cut points (thresholds): 1(strongly disagree), 2 (disagree), 3 (neutral),
4(agree), 5(strongly agree), and 1<2<3<4<5
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The observed customers‟ intention level to adopt e-banking is the ordinal outcome, y, ranging
from 1 to 5.
It can defined as
Y= 1 if y*<1
2 if 1< y*<2
3 if 2< y*<3
4 if 3< y*<4
5 if y*>5
To compute probability of adoption of e-banking in each cut off point the following formula were
used:
P(y=1) =P(y*<1) =P (xβ+ε<1) =F (1- xβ);
P(y=2) =P (1< y*<2) =F (2- xβ)) =F (2- xβ);
P(y=3) =P (2< y*<3) =F (3- xβ)) =F (3- xβ);
P(y=4) =P (3<y*<4) =F (4- xβ)) =F (4- xβ);
P(y=5) =P(y*>5) =1-F (4- xβ)
To compute the cumulative probabilities using the form: p(y<j) = F (j- xβ) the model was
constructed as:
P(ADOEB)=+β1DC+ β2CA+ β3PB+ β4PK+ β5PS+ β6LFII+ β7OF+ β8PU+ β9PEOU+ ε
In ordered probit model, the marginal effects for continuous independent variables are however,
the sign may be either positive or negative. This makes interpretation of the coefficients
complicated, and necessitates special calculations but the dependent variable was likert scale as it
is, from strongly agree to strongly disagree (1-5) level. The technique on the independent
variables that the level of respondent‟s probabilities of strongly agree and agree should sum to 1,
and level of respondent‟s probabilities of strongly disagree, disagree and neutral marginal effects
should sum to 0.
For example, the marginal effect (0) thus tells us the estimated change in the probability of a
respondent reporting that he is „not too happy, when his adoption e-banking increases one unit.
On the other hand, (1) which would mean that the respondent is more likely to report he is „very
happy‟ otherwise with an increase one unit in adoption of electronic banking. Be either positive or
31 | P a g e
negative and depends on the relative shift in the densities. For dummy variables, the calculation is
even more complicated since the variable is not continuous. In this case, we do not look at the
marginal effect directly. Instead, we must look at the predicted probabilities for each realization of
the dummy variable, the technique described by Greene (1997).
Were
ADOEB-adoption of electronic banking
DC=demographic characteristics
CA- customer awareness
PB- perceived benefit
PK- perceived risk
PS- perceived security
LFII-legal framework and information communication technology infrastructure
OF- organizational factors
PU-perceived usefulness
PEOU- perceive ease of use
ε = error term (absorbs unobserved factors)
= constant (intercept)
β1- β9= coefficients
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Chapter four
Discussion and Results

In this chapter the data that were collected are checked over and examined using different
descriptive statistics and ordered probit regression. Hypothesis testing results also incorporated
with their interpretation and discussions.
4.1 Descriptive statistics

Table 4.1.1 The Sample size details
No Name of Banks and customers The sample number The returned

selected for study for each bank and questionnaire after
customers after distributed
detrained the sample
size by the researcher
1 Dashin Bank Officials 24 23
Commercial Bank of Ethiopia
2 Officials 61 61
3 Wegagen Bank officials 13 13
4 Hibret Bank officials 1 1
5 Awash Bank officials 1 1
6 Customers of the banks 176 173
Total 276 272
Source: developed by the researcher (2016)
The number of questionnaire distributed to the bank officials was, according to their number of
customers that used electronic banking proportionate. The questionnaire distributed purposive
method survey to electronic banking departments of bank officials as well for the customers also,
only that used electronic banking technology innovation. A total 276 questionnaires were
distributed, out of the total forwarded, 272 questionnaires returned which represent 98.55% of the
sample population, statically an accepted number. This result was consistent with Nasri, W.
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(2011); Kamau P., Ritho C., Olweny T., and Wanderi M., (2012); somewhat consistent with
Hussein N., (2012); Yitbarek. T. and Zeleke. S. (2013)
4.2 Demographic characteristics of sample customers

As shown in below 4.2.1 graph 65.81% of respondents were males and the remaining 34.19%
were females. The majority to the electronic banking were males as compare to females. This
indicates that males are more active than females to adoption of electronic technology innovation.
Figure 4.2.1 Gender
70 65.81
60
50
40 34.19
30
20
10
0
Male Female
Source: STAT result (2016)

With regarded to age indicated in below graph 4.2.2, 87.87% of respondents are between 18-32
years old and the remaining 12.13% are between 33-55 years old. This result shown that, from
young to middle class age groups was highly willing to adoption of new technology electronic
banking, than the older age groups which were reluctant to adoption of e-banking. In Addis
Ababa context the middle class age groups are more exposure to new technology so they have the
probability higher adoption of e-banking.
34 | P a g e
Figure 4.2.2 Age; graphical descriptive
60
52.57
50
40
30
25.37
20 18.01
10
3.68
0.37
0
18-24 25-32 33-40 41-48 49-55

As-far-as the level of education background concerned of respondents 68.38% were degree
holders and 8.09% of respondents were master and above holders 16.18% were diploma holders
6.25% were high school and certificate holders 1.1% elementary school holders. This result
indicates that, higher level of education holders adopt the electronic technology innovation more
than the lower education level holders.
80.00%
68.38%
70.00%
60.00%
50.00%
40.00%
30.00%
20.00% 16.18%
6.25% 8.09%
10.00% 1.10%
0.00%
Primary school Secondary Diploma holder First degree Masters degree
and/or holder and above
Certificate holder
Figure 4.2.3 Level of education descriptive analysis
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With regarded to income group, respondents with income of less than 3000 per month 30.51%
(83) of the total respondents and income between 3001-5000 per month 29.78% (81), between
5001-7000 per month, 23.53% (64), between 7001-10000 per month 8.46% (23) and between
10000-15,000 per month 5.88% (16) of respondents have the level of their monthly income. This
result did not mean that the lower income level have an influential for adoption of e-banking
because that the probability of available higher income group individuals are minimal to that of
lower income group individuals.
Figure 4.2.4 Income level of sample customers
35.00% 30.51% 29.78%

30.00%
23.53%
25.00%
20.00%
15.00%
8.46%
10.00% 5.88%
5.00% 1.84%
0.00%

With observed to occupation in below graph 4.2.5 indicates that 14.34% are self-employed
63.97% of the respondents were governmental employee and out of the total respondents 10.66%
are NGOs employees the rest 11.03% are students and others this indicated that government
employees have the higher exposure to electronic banking.
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Figure 4.2.5 Occupation back ground descriptive analysis
70 63.97
60
50
40
30 Series1
20 14.34
10.66 11.03
10
0
Self employed Government NGOs employee students and
employee other

Concerning the adoption of e-banking the dependent variable whether customers are willing to
accept (adopting) e-banking service or not, questions were forwarded to respondents and the
result was as followed below the adoption of e-banking is measured by the range agreement that
the customers responded to the adoption level of e-banking. As indicated in below graph 4.2.6,
adoptions of e-banking ranks from the options strongly agree to strongly disagree alternatives.
The result as indicated below from the total respondents 3.31% response is in the range of
strongly disagree and disagree, which means customers that have not any idea to accept and use e-
banking service, respondents which choose agree and Strongly agree to adoption of electronic
banking were 38.6% and 43.75%, respectively. Implies that, respondents believed that electronic
banking which is an important, new innovative technology and those individuals have willingness
to adoption e-banking. Whereas, 14.35%of the respondents are responds neutral in their idea, for
adoption electronic banking. The below result indicated that most of the respondents believed to
increase the electronic technology in the banking industry.An interview is made with the bank
managers of commercial bank, Wegagen bank, Dashin bank, Awash Bank and Hibret Bank which
had somehow similar results with that of customer‟s decision to accept e-banking and their
willingness is wise and customers are strongly registering to have an account to adopt the
technology.
37 | P a g e
To sum up the results of both questionnaires and interview implied that, the modern technology
have the tendency to drive the paper work to electronic working circumstance, form the strong
expansion of e-banking and customers have wise idea and willing to the adoption of e-banking.
Figure 4.2.6 adoption of electronic banking descriptive
50
43.75
45
40 38.6
35
30
Percent
25
20
14.34
15
10
5 1.1 2.21
0
Strongly Disagree Neutral Agree Strongly agree
Disagree
Source STATA result of 2016
4.3 Descriptive analysis for variables

Table 4.3.1 Descriptive analysis for variables other than demographic characteristics
Freq. Percent Freq. Percent Freq. Percent Freq. Percent

Variables
CA PB. PR. PS.
Strongly Disagree 18.4 6.8 7.60 2.79 21.67 7.96 15.4 5.66
Disagree 36.3 13.4 13.00 4.78 47.17 17.34 32 11.76
Neutral 69.6 25.6 34.80 12.79 77.17 28.37 60.8 22.35
Agree 90 33.1 84.40 31.03 79.67 29.29 94.8 34.85
Strongly agree 57.7 21.2 132.20 48.60 46.33 17.04 69 25.37
Total 272 100 272 100 272 100 272 100
Mean 3.49 4.18 3.30 3.63
38 | P a g e
CA- customer awareness
PB- perceived benefit
PK- perceived risk
PS- perceived security
Freq. Percent Freq. Percent Freq. Percent Freq. Percent

Variables LFII OF PU PEOU
Strongly Disagree 22.5 8.27 23.4 8.6 3.5 1.29 11.4 4.19
Disagree 35.33 12.99 42.2 15.51 13.33 4.9 15.4 5.66
Neutral 75.83 27.88 84 30.88 49 18.01 55.6 20.44
Agree 86.5 31.8 80.8 29.71 94.67 34.81 98.8 36.32
Strongly agree 51.83 19.06 41.6 15.29 111.5 40.99 90.8 33.38
Total 272 100 272 100 272 100 272 100
Mean 3.43 3.28 4.09 3.89
LFII-legal framework and information communication technology infrastructure

OF- organizational factors
PU-perceived usefulness
PEOU- perceive ease of use
Note: Strongly Disagree (has a point =1) Disagree (has a point=2) Neutral (has a point=3) Agree
(has a point=4) Strongly agree (has a point =5)
Customer awareness
Customer awareness helps customers knowledgeable to purchase a service or a product, which

create awareness before they are ready to adopt a new product or service. Awareness is believed
to have appositive serious factor to influencing customers not to adopt e-banking.
As shown in below graph 4.3.1, from the total respondents, 6.78% strongly disagree and 13.36%
disagree respectively the respondents believe that, awareness influence the adoption e-banking
and in oppose 33.09% & 21.20% of respondents agree and Strongly agree respectively who
39 | P a g e
believed that, customer awareness influence the adoption e-banking. On the other hand significant
numbers 25.57% of respondent have neutral concerning customer awareness, that influence
customers adoption of e-banking with mean score of 3.49. Implies that according to Kessuwan
and Muenjohn (2010) moderately influence adoption of e-banking.
Figure 4.3.1 Customer Awareness
33.09
35.00
30.00 25.57
25.00 21.20
20.00
13.36
15.00
10.00 6.78
5.00
0.00
Strongly Disagree Neutral Agree Strongly
Disagree agree
Perceived benefit
Perceived benefit from the adoption e-banking, assists for the banking industry as well as, for the
consumers that includes saving operational cost or efficiency, improves banking industry
operation activities and results over all organizational profitability. On the customer‟s point of
view as well they gain satisfaction from the bank‟s improved service such as time saving, home or
office based service without visiting the bank so as to fulfill customer service needs and
convenience.
Related to this, questionnaires forwarded to respondents, out of the response, as indicated in the
graph 4.3.2 below among the total, 31.03% and 48.60% of most significant respondents, agree
and strongly agree respectively. Thus individuals believe that perceived benefit influence
customers to adopt e-banking and those services that make possible bank industry, from the
implementation of e-banking gained organizational profitability and improved banking activities
more quickly, easily and timely.
40 | P a g e
Those respondents as well believe that influence for adoption of e-banking technology benefit‟s
both the customers and banks it helps the bank industry to reduce the daily operating cost services
that enhance competitive position in the market. This is gained from the adoption of e-banking in
the delivery of service to customers, and customers benefit satisfaction from the improved
service. On the other hand 12.79% of respondents are neutral for the benefits of e-banking for
banks as well to customers. 2.79% and 4.78% respondents strongly disagree and disagree
respectively which means, thus individuals did not have the intention of e-banking ,so as to
benefit‟s banking industry in addition to customers from the adoption of e-banking, that have the
aggregated highest mean score of 4.18.Implies that according to Kessuwan and Muenjohn (2010)
significantly influence adoption of e-banking.
Figure 4.3.2 Perceived benefit
48.60
50.00
45.00
40.00
35.00 31.03
30.00
25.00
20.00
12.79
15.00
10.00 4.78
2.79
5.00
0.00
Disagree agree
Perceived risk
Perceived risk means the provisions of the customer's larger perception of risk that may reduce
the perceived benefit of the technology from the realization, or the uncertainty of negative
happening from the present of the e-banking technology, results the lower the perception of risks
41 | P a g e
involved in using e-banking the more possible an individual would be ready to use the electronic
technology in the banking industry.
As far as concerned to perceived risk, questionnaires advanced, out of them 29.29% of
respondents agree and 17.04% of respondents strongly agree that perceived risk influence
customers for the adoption of electronic banking negatively. 7.96% of respondents strongly
disagree in addition 17.34% significant respondents disagree with the purpose, perceived risk
influence customers for the adoption of e-banking. Furthermore, 28.37% of significant
respondents are neutral with the intention of perceived risk to influence customers for adoption of
electronic banking, which have an aggregated mean score of 3.30 rates. Implies that according to
Kessuwan and Muenjohn (2010) moderately influence adoption of e-banking.
Figure 4.3.3 Perceived risk
35.00
28.37 29.29
30.00
25.00
20.00 17.34 17.04

15.00
10.00 7.96
5.00
0.00
Strongly Disagree Neutral Agree Strongly agree
Disagree
Perceived security
Perceived security is one of the very important factors in determining the decision of consumers
to use e-banking, reliability, safety, fraud, and personal information. Consumers‟ emphasized
about security that inhibit the adoption e-banking. As demonstrate in below graph 4.3.4, that
34.85% and 25.37% of respondents are with ranges agree and strongly agree respectively. Thus,
individuals believe that security perception influences customers to accept or adopt the e-banking
42 | P a g e
technology. In oppose 5.66% of respondents strongly disagree that security radically to influence
of e-banking for adoption of electronic banking. Moreover 11.76% of the respondents disagree;
similarly their concern didn‟t influence the e-banking by security perception. Significant number
22.35% of respondents are neutral that security influence customers for the adoption of electronic
banking, with the aggregated mean score of 3.63 rates. This implies that perceived security have
the probability of affecting adoption of e-banking significantly. This also, implies that according
to Kessuwan and Muenjohn (2010) significantly influence adoption of e-banking.
Figure 4.3.4 Perceived security
34.85
35.00
30.00
25.37
25.00 22.35
20.00
15.00 11.76 Series1
10.00 5.66
5.00
0.00
Disagree agree
Legal framework and ICT infrastructure
An availability legal framework and ICT infrastructure is importantly support customers and
banks for effective telecommunication infrastructure, on the availability of uninterrupted network,
accessibility of internet and extranet to adopt e-banking in advanced technology. Without
government sufficient support and protection of telecommunication infrastructure, banks and
customers cannot adopt advanced technology like electronic banking. Thus, government should
apply regulations to protect banks and customers from unexpected events.
As demonstrate on the graph 4.3.5 below the result shown 31.80% of respondents agree with legal
framework and infrastructure that influences customer adoption of electronic banking
significantly and 19.06% of respondents range strongly agree that most significantly influence
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customers‟ adoption of e-banking. In oppose 8.27% and 12.99% of respondents strongly disagree
and disagree respectively, that respondent‟s intention towards legal framework support and
infrastructure had no influence customers to adoption of e-banking. 27.88% of major respondents
were neutral level of their intention; we can say that, legal framework and infrastructure
conditions of influence customers to adoption of e-banking had a medium meaning, which have
the aggregated mean score of 3.43 rates. Farther more according to Kessuwan and Muenjohn
(2010) moderately influence adoption of e-banking.
Figure 4.3.5 Legal framework and ICT infrastructure
35.00 31.80
27.88
30.00
25.00
19.06
20.00
12.99
15.00
8.27
10.00
5.00
0.00
Disagree agree
Organizational factor
Organizational factor is concern to the bank‟s industry human resources character, on their ability,
government support, mandatory skills and expertise to obtain, that the well operates of e-banking
services, influence to adopt and use of e-banking technology innovation.
Related questionnaire forwarded to respondents as illustrated in below graph 4.3.6, 8.60% and
15.51% of the respondents responded strongly disagree and disagree respectively that believes the
organizational human resource ability, skill, management support did not influence customers to
adoption e-banking in significant. Moreover 30.88% of respondents responded neutral for
organizational factor and 29.71% of respondents agree with the bank‟s industry human resource
ability, required skill, and management support influence the customers to adoption e-banking.
44 | P a g e
Likewise 15.29% of respondents shown that strongly agree human resources capability, ability,
required skill, and management support influence customers to adoption of e-banking. That has
the aggregated mean score of 3.28 rates. This result implies that, according to Kessuwan and
Muenjohn (2010) moderately influence adoption of e-banking.
Figure 4.3.6 Organizational factor
35.00 30.88
29.71
30.00
25.00
20.00
15.51 15.29
15.00 Series1
8.60
10.00
5.00
0.00
Disagree agree
Perceived usefulness
Perceived usefulness is one of the most cited theoretical frameworks to predict the acceptance of
new information technology within organizations. It was defined as the degree to which
individuals believe that using a particular system would enhance their job performance (Davis,
1989).
As stated briefly in the graph 4.3.7 below, that out of the respondents 40.99% and 34.81%
responds strongly agree and agree respectively that using the electronic banking technology
improves the performance of individuals, to operate organizational functions, like customer
service, speed, efficiency, time saving and convenient to customers.
Farther more using e-banking technology performs in a simple way of transaction at lower cost
and the technology helps for competitive position in the market. Thus, respondents believed that
perceived usefulness significantly influence customers to adoption of e-banking positively from
the creativity of effective performance. 1.29% and 4.90% of respondents strongly disagree and
45 | P a g e
disagree respectively the technology that improves of performance. Important number 18.01% of
respondents are neutral for the perceived usefulness of the e-banking technology that enhance
their job performance, which have aggregated mean score of 4.09 rates. Likewise implies that,
significantly influence adoption of e-banking, according to Kessuwan and Muenjohn (2010)
Figure4.3.7 Perceived usefulness
45.00 40.99
40.00 34.81
35.00
30.00
25.00
18.01
20.00
15.00
10.00 4.90
5.00 1.29
0.00
Disagree agree

Perceived ease of use
Perceived ease of use as well introduced by Davis (1985) and defined the degree to which
individuals believe that using a particular system would require no effort.
As indicated in graph below 4.3.8, 33.38% of respondents, responded strongly agree that
perceived ease of use, most significantly influence customer adoption of electronic banking.
Besides that using particular technology required not intellectual and physical efforts like paper
work, and 36.32% of respondents agree that ease of use influence the customer adoption of e-
banking, which requires effortless to operate the e-banking transactions and services.
Among the respondents 20.44% of significant numbers think neutral, on ease of use to influence
customer adoption of e-banking. As-far-as concerned to perceived ease of use, respondents of
4.19% responded strongly disagree ease of use influence customers adoption of e-banking.
Moreover 5.66% of respondents‟ acts in response disagree; ease of use influence customers for
adoption of e-banking, which have aggregated mean score of 3.89 rates. As far as perceived ease
46 | P a g e
of use is concerned, significantly influence adoption of e-banking, according to Kessuwan and
Muenjohn (2010).
Figure 4.3.8 Perceived ease of use
40.00 36.32
33.38
35.00
30.00
25.00 20.44
20.00
15.00
10.00 5.66
4.19
5.00
0.00
Disagree agree
4.4 Correlation analysis

The correlation coefficient represents the linear relationship between two or more variables.
Correlation coefficients should range from -1 to +1. The value of -1 represents a perfect negative
correlation while a value of +1 represents a perfect positive correlation. A value of 0 represents a
lack of correlation. Therefore coefficient of the correlation matrix is the basic measurement to the
degree of linear relationship between the dependent variable and independent variable. The full
information about the individual relationship variables is illustrated in table below.
The table 4.4.1 below of the correlation matrix shows both the correlation coefficient and the
significant level of all variables stated there (adoption of e-banking (ADOEB)) with independent
variables. In this table all p-values of the variables are listed in star on their coefficient value.
47 | P a g e
48 | P a g e
Table 4.4.1 correlation between dependent variable and independent variables
ADOEB G A OCC2 OCC3 OCC4 LE2 LIN3 LIN4 LIN5 LIN6 LE2 LE3 LE5 CA PB PK PS LFII OF PU PEOU
ADOE
B
G 0.0828 1.0000
0.1733
-
A -0.0410 0.2296* 1.0000
0.5003 0.0001
OCC2 -0.0464 0.0243 0.0045 1.0000
0.4461 0.6895 0.9412
-0.1486 -
OCC3 0.0612 ** 0.2461* 0.4603* 1.0000
0.3146 0.0142 0.0000 0.0000
0.1192 - - -0.1216
OCC4 ** 0.0926 0.2922* 0.4692* ** 1.0000
0.0496 0.1276 0.0000 0.0000 0.0450
0.1203 -
LIN2 -0.0604 -0.0118 0.0044 ** -0.0687 0.1780* 1.0000
0.3206 0.8467 0.9427 0.0475 0.2591 0.0032
0.1119 -
LIN3 0.0303 -0.0709 *** 0.0733 0.0611 -0.0570 0.3612* 1.0000
0.6189 0.2436 0.0654 0.2284 0.3152 0.3493 0.0000
-0.1070 - -
LIN4 -0.0321 -0.0798 0.1656* -0.0747 0.3232* *** 0.1979* 0.1686* 1.0000
0.5986 0.1896 0.0062 0.2196 0.0000 0.0781 0.0010 0.0053
-0.1143 - -0.1387 -
LIN5 0.0537 *** 0.2122* 0.0900 0.0149 -0.0381 0.1628* ** 0.0760 1.0000
0.3779 0.0597 0.0004 0.1388 0.8069 0.5311 0.0071 0.0222 0.2116
- -
LIN6 -0.0425 0.0168 0.0333 0.0457 0.0414 -0.0482 -0.0891 -0.0759 0.0416 0.0342 1.0000
0.4854 0.7832 0.5849 0.4530 0.4965 0.4287 0.1427 0.2121 0.4946 0.5743
0.1021 -0.1017 -0.1432 - - -
LE2 0.0506 *** 0.0439 -0.0910 -0.0892 0.0061 *** ** 0.0239 0.0645 0.0353 1.0000
0.4061 0.0930 0.4707 0.1346 0.1423 0.9207 0.0941 0.0181 0.6950 0.2888 0.5618
-0.1228 - - -0.1134
LE3 -0.0463 -0.0009 0.0904 0.0177 -0.0547 ** 0.0414 -0.0789 0.0617 0.0674 0.0142 *** 1.0000
0.4466 0.9878 0.1371 0.7709 0.3688 0.0430 0.4964 0.1944 0.3103 0.2680 0.8155 0.0617
-
-0.1001 - -0.1342 0.1037 - 0.1303
LE5 0.1483** *** 0.0870 0.0822 0.0723 0.1044* ** 0.2487* *** 0.0978 0.0406 -0.0766 ** 1.0000
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0.0144 0.0994 0.1523 0.1765 0.2348 0.0856 0.0269 0.0000 0.0878 0.1077 0.5050 0.2079 0.0317
-
0.1102 -
CA 0.2688* 0.0734 -0.0272 0.0988 -0.0930 -0.0273 0.0076 0.0203 *** 0.0092 0.0674 0.0165 0.0969 -0.0521 1.0000
0.0000 0.2274 0.6547 0.1038 0.1260 0.6541 0.9010 0.7388 0.0696 0.8806 0.2680 0.7859 0.1109 0.3922
-
- 0.1301
PB 0.3782* 0.0230 0.0195 0.0385 -0.0351 0.0075 0.0166 0.0512 0.0235 0.0357 ** -0.0092 0.0871 0.1025* 0.3599* 1.0000
0.0000 0.7058 0.7492 0.5272 0.5649 0.9014 0.7856 0.4002 0.7002 0.5573 0.0320 0.8796 0.1522 0.0916 0.0000
- - 0.1129
PK 0.1782* -0.0532 0.0596 0.0582 -0.0356 -0.0517 0.0650 -0.0336 0.0171 0.0234 0.0201 -0.0767 0.0755 0.0080 *** 0.2128* 1.0000
0.0032 0.3824 0.3275 0.3393 0.5593 0.3955 0.2858 0.5812 0.7784 0.7003 0.7414 0.2075 0.2144 0.8954 0.0631 0.0004
0.1063 -
PS 0.3575* *** 0.0275 0.0153 0.0316 -0.0166 0.0364 0.0757 0.0103 0.0341 0.0147 0.0066 0.0658 0.0444 0.2008* 0.3002* 0.1964* 1.0000
0.0000 0.0802 0.6512 0.8018 0.6037 0.7849 0.5497 0.2131 0.8662 0.5752 0.8091 0.9136 0.2798 0.4657 0.0009 0.0000 0.0011
-0.1038 - 0.1400 0.1437
LFII 0.0988 -0.0409 -0.0148 -0.0347 -0.0001 -0.0191 0.0060 *** 0.0397 0.0843 0.0381 -0.0106 0.0700 -0.0282 ** 0.2133* 0.0732 ** 1.0000
0.1040 0.5021 0.8077 0.5693 0.9987 0.7536 0.9213 0.0875 0.5146 0.1655 0.5320 0.8616 0.2500 0.6436 0.0209 0.0004 0.2292 0.0177
- - 0.1232
OF -0.0574 -0.0764 0.0194 0.0140 -0.0005 -0.0639 0.0443 -0.0673 0.0079 0.0625 0.0504 -0.0176 0.0342 0.0648 0.0976 ** 0.2242* 0.0638 0.2646* 1.0000
0.3453 0.2089 0.7504 0.8176 0.9941 0.2939 0.4668 0.2689 0.8967 0.3042 0.4076 0.7725 0.5743 0.2870 0.1082 0.0423 0.0002 0.2942 0.0000
0.1097 -
PU 0.2240* *** -0.0428 -0.0699 -0.0048 0.0384 -0.0527 0.0682 0.0125 0.0307 0.0461 -0.0667 0.0123 0.0985 0.2614* 0.4032* 0.1585* 0.3809* 0.2629* 0.2478* 1.0000
0.0002 0.0709 0.4824 0.2508 0.9368 0.5285 0.3867 0.2623 0.8373 0.6137 0.4489 0.2732 0.8403 0.1051 0.0000 0.0000 0.0088 0.0000 0.0000 0.0000
- 0.1543
PEOU 0.1716* 0.0633 -0.0583 0.0124 0.0107 -0.0301 -0.0225 -0.0019 0.0879 0.0138 0.0396 -0.0960 0.0226 0.0858 0.0601 0.0340 0.0893 ** 0.1606* 0.0865 0.2725* 1.0000
0.0045 0.2982 0.3381 0.8381 0.8610 0.6215 0.7121 0.9750 0.1482 0.8211 0.5157 0.1141 0.7112 0.1582 0.3231 0.5770 0.1417 0.0108 0.0080 0.1546 0.0000

Note: * significant at 1% significant level
** Significant at 5% significant level
**** Significant at 10% significant level
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As indicated in table above, the correlation of adoption e-banking and perceived benefit is found to be
positive and significant at one percent. This indicates as the adoption of e-banking would improve in
line with an increased the perceived benefit of adoption.
Customer awareness, perceived security, perceived usefulness, perceived ease of use and perceived
risk variables are also positively correlated with adoption of e-banking. The correlation matrix clearly
indicates that occupation and education level was related positively at 5% significant level with
adoption of electronic banking.
On the other hand correlation matrix to adoption e-banking age, income level and gender were
correlated with adoption e-banking but weak association. Moreover, organizational factor negatively
associated with e-banking. What is more legal framework and ICT infrastructure was positively,
correlated with adoption of e-banking.
Correlation matrix analysis
Table 4.4.2 correlation between demographic characteristics and Adoption of e-banking

Demographic characteristics Correlation coefficient (r) p-value
Gender 0.0828 0.1733
Age -0.0410 0.5003
Government employee -0.0464 0.4461
NGOs employee 0.0612 0.3146
students and other 0.1192** 0.0496
Secondary and/or Certificate holders 0.0506 0.4061
Diploma holder -0.0463 0.4466
Master‟s degree and above holder 0.1483** 0.0144
Between 3001-5000 -0.0604 0.3206
Between 5001-7000 0.0303 0.6189
Between 7001-10000 -0.0321 0.5986
Between 10000-15,000 0.0537 0.3779
Above 15000 -0.0425 0.4854
Source; STATA result 2016
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From the above result, there is relationship between students group from occupation variable and
adoption e-banking that positively correlated at 5% significant level, in addition educational level
also correlated positively with adoption e-banking at 5% significant level. However ages, gender and
income level have relationship with adoption of electronic banking but weak association.
Table 4.4.3 Correlation among customer awareness and adoption of e-banking
Customer Awareness (CA) Correlation coefficient (r) p-value
0.2688* 0.0000
The result indicates that, customer awareness is positively related with adoption of e-banking, with
1% significant level (p<0.01). This result consistent other empirical studies Sathye (1999), Rogers
and Shoemaker (1971), and Tiamaru C., (2013) and Abubakar, et al.,(2012). That customer awareness
has relationship with adoption of e-banking.
Table 4.4.4 Correlation among perceived benefit and adoption of e-banking
Perceived benefit(PB) Correlation coefficient (r) p-value
0.3782* 0.0000
As shown in the table 4.4.4 above, perceived benefit is correlated positively with adoption of e-
banking (p<0.01) at 1% significant level. This result is consistent with other empirical studies
conducted by Dwumfuo, G. and Dankwah, B. (2013), Mohammed, A. (2014) that perceived benefit
has direct relationship with adoption of e-banking.
Table 4.4.5 Correlation among perceived risk and adoption of e-banking
Perceived risk Correlation coefficient (r) p-value

0.1782* 0.0032
As shown in the table 4.4.5 above, that perceived risk is related positively with adoption of e-banking
(p<0.1) or at 1% significant level. This result as well, consistent with other researchesAl-Smadi M.,
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(2012 ) and Nasri, W. (2011) their results revealed a positive and significant impact of perceived risk on the
customers' attitudes to use electronic banking services in Saudi Arabia and Tunisia respectively
Table 4.4.6 Correlation between perceived security and adoption of e-banking
Perceived security Correlation coefficient (r) p-value
0.3575* 0.0000
As indicated in the table 4.4.6 above, that perceived security is positively and significantly correlated
with adoption of e-banking (p<0.01) or at 1% significant level. This result as well, consistent with
other researches (Daniel, 1999; Hamlet and Strube, 2000; Tan and Teo, 2000; Cox and Dale, 2001,
Polatoglu and Ekin, 2001, Black et al., 2002, Giglio, 2002; Howcroft et al., 2002) (Kaynak and
Harcar, 2005; Liao and Wong, 2007; Altintas and Gürsakal, 2007; and Laforet and Li, 2005). Liao
and Cheung (2002), Sathye (1999)and Nasri, W. (2011), there is positive and significant relation between
perceived security with adoption electronic banking services.
Table 4.4.7 Correlation between Legal framework and ICT infrastructure and adoption
of e-banking
Legal framework and ICT
infrastructure Correlation coefficient (r) p-value
0.0988 0.1040
As indicated in the table 4.4.7 above, that Legal framework and ICT infrastructure (LFII) is positively
correlated with adoption of e-banking (p>0.1). As indicated in table 4.4.1 above (LFII) have a
relationship with perceived benefit (p=0004 r=2133), p<0.01), the effect had shown that, there is at
1% significant level relationship between, (LFII) and (PB). Furthermore (LFII) also correlated with
(CA) (r=.1400, p=0.0209) and PS (r=0.1437, p=0.0177) at 10% significant level but insignificant
directly with adoption of e-banking (p>.1) indicated in the table 4.4.7 above.
Table 4.4.8 Correlation between organizational factor and adoption of e-banking

organizational factor (OF) Correlation coefficient (r) p-value
-0.0574 0.3453
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With regarded to organizational factor (OF) in the table 4.4.8 above that, there is negatively
correlated with adoption of e-banking (p>0.1). Furthermore as shown in table 4.4.1(OF) correlate
with (PK), (PU) and (LFI) (p=0002, r=2242) (p<0.1), (p=0.2478, p=0.0000) and (p=0000, r=2646)
respectively at significant level. Its level of significant have all at 1% rate of significant, in addition
correlated with PB (r=0.1232, p=0.0423) with 5% significant level. But (OF) not have direct
significant relation with adoption e-banking.
Table 4.4.9 Correlation between perceived usefulness and adoption of e-banking
perceived usefulness (PU) Correlation coefficient (r) p-value
0.2240* 0.0002
The table 4.4.9 above indicated that, perceived usefulness (PU) have a positively correlation with
adoption of e-banking and (p<0.01). The effect had shown that, there is significant relationship
between (PU) and adoption of electronic banking which is at 1% significant level. The research is
consistent with, (Yitbarek. T. and Zeleke. S. 2013, Hussein N., (2012), Pfeffer, 1982; Vroom, 1964,
Pikkarainen et al., 2004, Alsabbagh & Molla ., 2004 and Dehbiniet al., (2015) that usefulness was
found to have a positive and direct influence on e-banking adoption.
Table 4.4.10 Correlation between perceived ease of use and adoption of e-banking
perceived ease of use (PEOU) Correlation coefficient (r) p-value
0.1716* 0.0045
The table 4.4.10 above indicated, that positively and significantly had correlated between adoption of
e-banking and perceived ease of use (p<0.01), means at 1% significant level. Furthermore consistent
with other empirical studies conducted by Odumeru J.,(2012),Yitbarek T. and Zeleke S. (2013),
Dehbiniet al., (2015) and Kamau et al., (2012) shown that, perceived ease of use, positively and
significantly determine acceptance of e-banking.
4.5 Results of econometrics regression analysis

To show the detailed parametric relationship and the factors which have a significant influence on
adoption of electronic banking an order probit regression model has been utilized. Nine independent
variables were identified and the estimation was made to determine to the degree of influence of these
54 | P a g e
variables on the dependent variable (adoption of electronic banking). The independent variables
include demographic characteristics, customer awareness, perceived benefit, perceived security,
perceived risk, legal framework and ICT infrastructure, organizational factor, perceived usefulness
and perceived ease of use. The order probit regression model was used to test the research hypothesis.
Summery result of the regression: the factor that influence customers, adoption of e-banking,
identified by using P-value of the ordered probit regression model that if the p-value of the model is
less than or equal to 1%, it has a significant relationship between dependent variable (adoption of e-
banking) and independent variables with a significant level of 1% , if the p-value is greater than 1%
and less than or equal to 5% the factor is significantly influence customers, adoption of e-banking at
5% significant level, if the variable is greater than 5% and less than or equal to 10% the factor
significantly affects customers, adoption of e-banking at 10% significant level, based on this
influential factors hypothesis test had supported but if the p-value is greater than 10% the variable is
insignificant to influence adoption of electronic banking or it has not relationship between dependent
variable and independent variables significantly to influence adoption of e-banking, the hypothesis
test of the variable had rejected .
The coefficient of ordered probit regression result has also shown that direction of relationship
between adoption of electronic banking and independent variables. Accordingly a coefficient with a
negative sign coefficient has shown that opposite direction between adoption of electronic banking
and the independent variables, meaning, the chance of increase in the independent variables
coefficient value, if the dependent variable decreases. A positive coefficient sign of independent
variables shown that, the independent variable and dependent variables are goes with the some
direction, meaning, if the dependent variable increases the independent variables increases by the
value of the coefficient.
4.5.1 Summary of Hypotheses Testing

In this study ordered probit regression was used to test the research hypotheses. The table below shows
the summarized results of the hypotheses tested.
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Table 4.5.2 Ordered probit regression result
Iteration 0: log likelihood = -340.8426

Ordered probit regression

Number of obs = 272
LR chi2(21) = 96.34
Prob > chi2 = 0.0000
Log likelihood -292.67225 Pseudo R2 = 0.1413
ADOEB Coef. Std. Err. Z P>z [95% Conf. Interval]
G 0.1180532 0.15695 0.75 0.452 -0.1895714 0.42568

A -0.0038005 0.01352 -0.28 0.779 -0.0303049 0.0227
OC2 0.1896482 0.20822 0.91 0.362 -0.2184547 0.59775
OC3 0.7095021 0.30956 2.29 0.022 0.1027831 1.31622
OC4 0.7159043 0.30689 2.33 0.020 0.1144119 1.3174
LE2 0.34072 0.32548 1.05 0.295 -0.2972038 0.97864
LE3 -0.2094945 0.19718 -1.06 0.288 -0.5959685 0.17698
LE5 0.8014405 0.29818 2.69 0.007 0.2170134 1.38587
LIN2 -0.2348986 0.19696 -1.19 0.233 -0.6209386 0.15114
LIN3 -0.2931214 0.22372 -1.31 0.190 -0.7316127 0.14537
LIN4 -0.4910495 0.30792 -1.59 0.111 -1.094558 0.11246
LIN5 -0.0353627 0.36489 -0.1 0.923 -0.7505436 0.67982
LIN6 -0.1966897 0.52097 -0.38 0.706 -1.21777 0.82439
CA 0.4789799 0.18502 2.59 0.010 0.1163541 0.84161
PB 0.8736437 0.25725 3.4 0.001 0.3694472 1.37784
PR 0.3051927 0.1564 1.95 0.051 -0.0013509 0.61174
PS 0.7132379 0.17706 4.03 0.000 0.3662076 1.06027
LFII 0.0692148 0.16957 0.41 0.683 -0.26313 0.40156
OF -0.4367863 0.16047 -2.72 0.006 -0.751293 -0.1223
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PU -0.1766641 0.27835 -0.63 0.526 -0.7222255 0.3689
PEOU 0.5618677 0.26582 2.11 0.035 0.0408661 1.08287
/cut1 -0.5339314 0.56516 -1.641624 0.57376
/cut2 0.2677386 0.54579 -0.8019854 1.33746
/cut3 1.204178 0.55327 0.1197929 2.28856
/cut4 2.387138 0.56386 1.281985 3.49229
Note *, ** and *** are the level of significant at 1%, 5% and 10% respectively.
Source: Ordered probit STATA regression result, 2016
4.5.1.1 Demographic characteristics

As indicated on the above table 4.5.1 from demographic variables that occupation is positively
influencing, customer adoption of e-banking significantly (P=0.022, P=0.020) which (p<0.05). This
result is consistent with previous studies conducted by many researchers Karjaluoto et al., (2002),
Mattila et al., 2003, Al-Ashban and Burney (2001), Stavins (2001) and Sathye, (1999). Nasri, W.
(2011) indicated that, instruction (education) and occupation are having significant relationships with
the usage of internet banking. On the other hand inconsistent with findings of other studies stated by
Dehbiniet al., (2015). The result shown that, occupation (employment) did not significantly
influenced customers for adoption of e-banking.
As point out in the above table that, level of education had positively significant effect on customer‟s
adoption of electronic banking (p=0.007) P<0.01. This fact that more educated a person is the higher
will be his/her degree of acceptance of electronic banking. Likewise the result was consistent with
Edwin A., Okpara A.,Ochia I., and Mike A., (2014) findings, which indicated the study found that
consumers' level of education and ICT knowledge impacts their acceptance of e-banking services.
Donnelly (1970); Lee (2000) in their research concluded that, age, income and education have a
direct impact on technology adoption. Moreover Nasri, W. (2011) indicated that, instruction
(education) and occupation are having significant relationships with the usage of internet banking.
This result is also inconsistent with Dehbiniet al., (2015) findings of their research shown that age,
gender, education, employment and marital status did not significantly related to electronic payment
card acceptance.
Gender as shown in the above table does not influence customers for adoption of electronic banking
significantly (p=0.452) which was p>0.1. This result also consistent with the study of Nasri, W.
(2011) indicated that gender has not significant relationship with customer adoption of e-banking. In
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addition in consistent with findings of Dehbiniet al., (2015) as well clearly stated that empirical
findings of the research showed that age, gender, education, employment (occupation) and marital
status did not significantly related to electronic payment card acceptance. Kamau et al., (2012) study
also gender did not correlate with e-banking, meaning males and females perceived characteristics of
internet banking in a similar way in Kenya. Similarly Donnelly (1970); Lee (2000) in their research
concluded that gender has not direct impact on technology adoption.
Age of customers in this research as shown in the table 4.5.2 above, age did not influence customers
for adoption of e-banking (p=0.779) that is p>0.1, the result is consistent with previous studies
conducted by Nasri, W. (2011) Dehbiniet al., (2015). On the other hand, inconsistent with findings
conducted by Kamau et al., (2012). The results shown that, the younger population are adopting and
using internet banking more than the older generation. In addition, the younger generation has a
higher exposure to internet use. Donnelly (1970); Lee (2000) in their research concluded that age,
have a direct impact on technology adoption.
As indicated in the table 4.5.2 above, income level of customers did not significantly influence
customers to adoption of e-banking p=0.233, 0.190, 0.111, 0.923, 0.706 to each level of income p-
value of LIN2 LIN3 LIN4 LIN5 LIN6 respectively as shown in regression which was p>0.1. This
study is inconsistent with (Du Plessis and Rousseau, 1999, p.274), stated that income is the most
influential demographic variables affecting Internet usage. Typical internet banking users tend
relatively high income earners. Farther inconsistent with Karjaluoto (2002, p.360) It has been widely
recognized that demographic factors have a great impact on consumer attitudes and behavior towards
internet banking. Donnelly (1970); Lee (2000) results concluded that income has a direct impact on
technology adoption.Tiamaru C., (2013) also empirically indicated that there is a significant
relationship between income and customers adoption of electronic banking system. Based on the
result, indicated in the regression analysis demographic characteristics, occupation and level of
education influence customers for adoption e-banking. Hence, based on others researchers finding
Hypothesis1 accepted.
4.5.1.2 Customer awareness

Customer awareness, in many research indicated that it is an important influential factor to customers
for adoption of electronic banking. Similarly in this research as indicated above customer awareness
had the effect positively influence customer adoption for electronic banking significantly with p-
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value of (p=0.010) which means at 1% significant level. This outcome is similar with the study
conducted by other researchers, Sathye (1999), Rogers and Shoemaker (1971), and Tiamaru C.,
(2013). Furthermore Abubakar, et al.,(2012) on their empirical research that awareness is the most
important and security is seen as the least important and ease of use and reluctant to change are not
important factors in influencing their adoption rate. And on the other hand, inconsistent with the
study conducted by Hussein N., (2012) argued that awareness was found to have positive and not
significant influence on internet banking adoption. Therefore, this result shown, an aware about the
new technology, benefits and availability, adds value on the customer acceptance of the new
innovation technology product, so because of such reasons e-banking is affected by customer
awareness significantly to customer adoption of e-banking. Therefore Hypothesis 2 is accepted
4.5.1.3 Perceived benefit (PB)

Many researchers, assert that perceived benefit have a significant role for the adoption e-banking, in
comparable way, this study shown in the above table 4.5.2, perceived benefit positively influence
adoption of e-banking significantly with (p=0.001) that is p<0.01. This result was also consistent with
the studies conducted by (Lu et al. 2005; Kuan &Chau 2001 & Iacovou 1995), Gerrard and
Cunningham (2003), (Gerson, 1998), (Oumlil and Williams, 2000) Howcroft et al., (2002), and Basu
and Muylle (2007). Influence to accept benefits of e-banking in accordance to savings on operational
cost, improvement functionality, gain, efficiency, profitability and customer‟s satisfaction through
improved services, improved banking experience. The result as well consistent with findings
conducted by Odumeru J.,(2012), that clearly shown age, educational background, perceived benefits,
perceived ease of use, income, experience from previous use, perceived risk, peer influence and
perceived enjoyment all significantly determines acceptance of e-banking by customers in Nigeria.
As well steady with Dwumfuo, G. and Dankwah, B. (2013), the study, it is clear that the benefits to
the bank served as a motivating factor for it adopting the Internet banking product. Moreover
consistent with Mohammed, A. (2014) the findings clearly indicated that, it is observed that perceived
benefit as the most important effect on electronic banking in Ethiopia. That‟s why Hypothesis 3 is
accepted
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4.5.1.4 Perceived risk (PR)
To examine if perceived risk variables influence the customer adoption of e-banking using the order
probit regression. The result shown that, perceiver risk is a factor having positively significant
relationships with the customer adoption of e-banking with (p=0.051), p<0.1 or at 10% significant
level. This finding is consistent with the studies done byAl-Smadi M., (2012), the results revealed a
positive and significant impact of perceived risk on the customers' attitudes to use electronic banking
services in Saudi Arabia. Farther moreNasri, W. (2011) stated that on his/her results of regression
equation based on the five independent variables (convenience, security, risk, prior internet
knowledge and information online banking) indicate positive and statistically significant relationship
with dependent variable of internet banking services adoption. (Bauer 1960; Hsi-Peng et al, 2005,
Hsi-Peng et al, 2005 and Zhao et al. 2008 & Laforet 2005). Clearly stated that, risk perceive in terms
of uncertainty and negative consequences, associated with consumer‟s actions. Odumeru J.,(2012)
also perceived usefulness, perceived benefits, Age, educational background, income, perceived risk
and perceived enjoyment as determinants of acceptance of e-banking. His data analysis had shown
the existence of a significant positive relationship between the dependent and independent variables.
On the other hand, consistent with the study conducted by Yitbarek T. and Zeleke S. (2013) but on
their finding the relationship was negatively related risk to adoption of e-banking. The study clearly
stated that perceived risk has negative relationship with intention to adopt e-banking services. In
addition Hussein N., (2012) argued that Perceived risk has negative and not significant influence on
internet banking adoption on his/her study. Moreover Kamau et al., (2012) risk was found not
correlated with most of the research variables suggesting that risk had minimum influence on internet
banking in Kenya, which was not perceived from the literature review. But in this result perceived
risk had an effect significantly on customer adoption of electronic banking. Hence Hypothesis 4 is
supported
4.5.1.5 Perceived security (PS)

Security is one concern of uncertainty of acceptance new e-banking technology and many researchers
claim that perceived security influence customers for adoption of electronic banking. Similarly in this
research (PS) positively influence e-banking significantly (p=0.000), p<0.01) indicates at 1%
significant level. Several researchers show that perceived security plays an important role when bank
customers decide to adopt internet banking services (Daniel, 1999; Hamlet and Strube, 2000; Tan and
60 | P a g e
Teo, 2000; Cox and Dale, 2001, Polatoglu and Ekin, 2001, Black et al., 2002, Giglio, 2002;
Howcroft et al., 2002) (Kaynak and Harcar, 2005; Liao and Wong, 2007; Altintas and Gürsakal,
2007; and Laforet and Li, 2005). Liao and Cheung (2002) and Sathye (1999) show that the more
secure the customer perceive internet banking to be, the more likely it is that customer will use
internet banking. Nasri, W. (2011) study indicated that, among „early adopters‟, convenience was a
more important indicator of intentions to adopt internet banking. Risk, security and prior internet
knowledge is also an important factor influencing customers adopting internet banking after
convenience. Therefore H5 is accepted
4.5.1.6 Legal framework and ICT infrastructure

Researchers claim that ICT infrastructure has influence customers for adoption of e-banking but this
result as shown in the above table 4.5.2 legal framework and ICT infrastructure was not a significant
influential factor, for customer‟s adoption of e-banking which had a p-value (P=0.683, p>0.1 ) which
have above 10% significant rate. This study consists with Hussein et al., (2014) their results indicated
that, the relationship between ICT readiness and intention towards internet banking service adoption
was not supported in Yemen. This result also inconsistent with study conducted by (Efendioghu 2004
& Scupola 2003) that the findings shown on their study the national ICT infrastructure is a major
factor that supports the adoption of e-banking as the case for other e-commerce initiatives. And the
study stated by (Kuan 2001 & Iacovou 1995) that government can either directly or indirectly affect
the adoption of e-banking in terms of creating a favorable environment and impetus for banking
institutions and their customers so that the services can be diffused (soft) with the community. In this
finding, legal framework and ICT infrastructure is not the reason to influences customers to adoption
of electronic banking in case of Addis Ababa city. Hence Hypothesis 6 is rejected
4.5.1.7 Organizational factors (OF)

Organization factor as shown in the table 4.5.2 above has significantly negatively influence
customers, to adoption of e-banking (p=0.006, p<0.01) which is at 1% significant rate. This result
consistent with previous studies conducted by Hussein et al., (2014) Cleary indicated that within the
environmental factors, competitive, pressure from suppliers, supportive regulatory environment for
legal protection and e-business supporting law, financial institution support , had a strong influence
on intention towards internet banking services adoption among small and middle enterprise in
Yemen. Also consistent with (Iacovou 1995 & Grover 1993), as clearly indicted, on their findings
61 | P a g e
from organizational factor, financial resources are an important factor in facilitating innovation
adoption for any organization. Moreover related with (Kuan 2001 & Iacovou 1995), result shown, the
availability of financial resources within the adopting firms is important for e-banking adoption. This
result farther more consistent with Ayana, G. (2012) findings lack of technical and managerial skills
to use and implement the system is considered as barrier for the adoption of e-banking in the
Ethiopia. But inconsistent with Ayana, G. (2012) study, that in the case of organizational factor,
financial cost as well as human resource is not considered, as barrier for the adoption of e-banking in
Ethiopia. Hence hypothesis 7 is accepted
4.5.1.8 Perceived usefulness (PU)

As indicated in the table 4.5.2 above perceived usefulness is not significantly influence customer
adoption of electronic banking (p=0.526, p>0.1) means that greater than 10% significant rate. This
result is consistent with Pan et al., (2003) findings showed that usefulness of technology acceptance
has not significant relationship among e-banking and perceived usefulness. And the result is
contradicts with previous study conducted by many researchers Abdul K. (2013) The empirical
results showed that the perceived convenience, perceived credibility, and perceived usefulness all
have significant effects on behavioral intention to use internet banking. Al-Smadi M., (2012), study
results that perceived usefulness and perceived ease of use has a positive and significant impact on
customers' attitude toward electronic banking services. This also inconformity with previous
empirical studies indicated by, Yitbarek. T. and Zeleke. S. (2013) The findings revealed that the
seven factors included in the models (attitude, subjective norm, perceived behavioral control,
perceived usefulness, perceived ease of use and perceived risk were significant in affecting users'
behavioral intention to use e-banking. Hussein N., (2012) Usefulness was found to have a positive and
direct influence on internet banking adoption. (Pfeffer, 1982; Vroom, 1964, Pikkarainen et al., 2004
and Alsabbagh & Molla ., 2004) PU is related to users' perception of the degree to which using a
system will be beneficial. Dehbiniet al., (2015) Findings of this research showed that the usefulness
has significant effect on the electronic payment card acceptance. Kamau et al., (2012) also evident
conducted that perceived usefulness, perceived ease of use, perceived self-efficacy, perceived
compatibility, perceived relative advantage and perceived results demonstrability are the key factors
that influence internet banking adoption and continued usage in Kenya. Hence hypothesis 8 is
rejected
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4.5.1.9 Perceived ease of use
As shown in the above table 4.5.2 perceived ease of use has the effect for adoption of electronic
banking significantly (p=0.035, p<0.1) implies that it is significant at 1% rate. This empirical finding
is consistent with Al-Smadi M., (2012), study results that, perceived usefulness and perceived ease of
use has a positive and significant impact on customers' attitude toward electronic banking services.
This research outcome is in conformity with previous empirical studies conducted by Taeb (2009);
Mashreghi (2011) Dahlberg and Orni (2007); Lee et al., (2003); Al-Gahtani (2001); Rose and Straub
(1998); Baniasadi, Sharifi and Poor nabi, (2009) that perceived eases of use primary relevance for
computer acceptance behavior. As clearly indicated by Odumeru J.,(2012)shown that, perceived ease
of use, positively and significantly determine acceptance of e-banking by customers in Nigeria.
Moreover, Yitbarek T. and Zeleke S. (2013) revealed that, the seven factors included in their models
(attitude, subjective norm, perceived behavioral control, perceived usefulness, perceived ease of use
and perceived risk were significant in affecting users' behavioral intention to use e-banking. In
addition on Dehbiniet al., (2015) findings, the research showed that the ease of use has a significant
effect on the electronic payment card acceptance. On Kamau et al., (2012) it is also evident that
perceived ease of use, was the key factors that influence internet banking adoption in Kenya. On the
other hand inconsistent with Abubakar, et al.,(2012), their empirical research indicated that, ease of
use and reluctant to change are not important factors in influencing their adoption rate. Likewise the
empirical result of Abdul K. (2013), perceived ease of use was not a significant factor in the intention
to adopt internet banking. Consequently hypothesis 9 is accepted
Based on the above hypothesis testing the table 4.5.3 below was proposed
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Table 4.5.3 hypothesis testing proposed
Hypothesis Accepted rejected
H1 Demographic characteristics have a positive effect of the use of e- 

banking
H2 Customer Awareness have a significant effect on the adoption of e- 

banking
H3 Perceived benefit have a significant effect on the adoption of e- 

banking
H4 Perceived risk significantly affects adoption of e-banking 
H5 Perceived security have a significant effect on adoption of e-banking 
H6 Legal framework and ICT infrastructure does not significantly 

affects adoption of e-banking
H7 organizational factor have a significantly effect on the use adoption 

of e-banking
H8 perceived usefulness have not a significant effect on the adoption of 

e-banking
H9 perceived ease of use have a significant effect on the adoption of e- 

banking
Source: developed by the researcher (2016)
4.5.2 Marginal effect after ordered probit regression

The ordered oprobit regression result, does not interprets its coefficient in terms of degree of effect,
the dependent variable and independent variables. In this specification, the marginal effect of a
change in a regression is not simply the coefficient, so interpretation of the coefficients is not
64 | P a g e
straightforward. In ordered probit model, the marginal effects for continuous independent variables
are however, the sign may be either positive or negative. This makes interpretation of the coefficients
complicated, and necessitates special calculations but the dependent variable was likert scale as it
from strongly agree to strongly disagree (1-5) level. The technique on the independent variables that
the level of respondent‟s probabilities of strongly agree and agree should sum to 1, and level of
respondent‟s probabilities of strongly disagree, disagree and neutral marginal effects should sum to 0.
For example, the marginal effect (0) thus tells us the estimated change in the probability of a
respondent reporting that he is „not too happy, when his adoption e-banking increases one unit. On
the other hand, (1) which would mean that the respondent is more likely to report he is „very happy‟
otherwise with an increase one unit in adoption of electronic banking. Be either positive or negative
and depends on the relative shift in the densities. For dummy variables, the calculation is even more
complicated since the variable is not continuous. In this case, we do not look at the marginal effect
directly. Instead, we must look at the predicted probabilities for each realization of the dummy
variable, the technique described by Greene (1997). Here below shown the marginal effect of
significant variables that were identified by ordered probit regression.
Table,4. 5. 5. Marginal effect outcome

. mfx compute, predict (outcome(5))
Marginal effects after oprobit

y = Pr(adoptioneb==5) (predict, outcome(5))
.= 0.39299017
variable dy/dx Std. Err. Z P>z [ 95% C.I. ] X
G 0.0455897 0.06085 0.75 0.454 -0.07368 0.164858 0.341912

A -0.0014613 0.0052 -0.28 0.779 -0.01165 0.00873 28.75
OCC2 0.0722735 0.07853 0.92 0.357 -0.08165 0.226193 0.639706
OCC3 0.2772163 0.11571 2.4 0.017 0.050423 0.50401 0.106618
OCC4 0.2796134 0.11459 2.44 0.015 0.055017 0.50421 0.110294
LIN2 -0.0888777 0.07313 -1.22 0.224 -0.23221 0.054453 0.297794
LIN3 -0.1096797 0.08101 -1.35 0.176 -0.26845 0.049092 0.235294
LIN4 -0.1736054 0.09705 -1.79 0.074 -0.36382 0.016613 0.084559
LIN5 -0.0135373 0.13905 -0.1 0.922 -0.28606 0.258989 0.058824
LIN6 -0.073275 0.18684 -0.39 0.695 -0.43947 0.292922 0.018382
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LE2 0.134272 0.12936 1.04 0.299 -0.11926 0.387806 0.0625
LE3 -0.078691 0.07207 -1.09 0.275 -0.21995 0.062571 0.161765
LE5 0.3107633 0.10724 2.9 0.004 0.100582 0.520945 0.080882
CA 0.174 0.06234 2.79 0.005 0.051813 0.296187 0.797794
PB 0.2828166 0.06401 4.42 0.000 0.157365 0.408268 0.893382
PK 0.1151599 0.05763 2 0.046 0.002214 0.228106 0.669118
PS 0.2525879 0.05616 4.5 0.000 0.142526 0.36265 0.753676
LFII 0.0264933 0.0646 0.41 0.682 -0.10011 0.1531 0.724265
OF -0.1688614 0.06184 -2.73 0.006 -0.29006 -0.04766 0.621324
PU -0.0689869 0.10996 -0.63 0.530 -0.28451 0.146539 0.900735
PEOU 0.1950057 0.0796 2.45 0.014 0.038984 0.351027 0.922794
(*) dy/dx is for discrete change of dummy variable from 0 to 1
In table 4.6 above the marginal effect after ordered probit regression in occupation variable that,
NGOs employee 27.72% pointes more likely to strongly agree in adopting electronic banking to
accept, if adoption of e-banking increase in one unit. Moreover, students also were 27.96% pointes
more likely to strongly agree adoption of e-banking. As far as concerned to demographic
characteristics, level of education had an effect on the adoption of e-banking (p=0.004) that masters
degree and above holder are 31.078% points more likely to strongly agree adoption of e-banking, in
the chance of a unit increase in adoption e-banking.
Customer awareness also had an effect on customer adoption, as shown in marginal effect regression
outcome (5) that, P=0.005 and the coefficient indicated positively 17.4% points, more likely strongly
agree to increase adoption e-banking, in possibility a unit increase in adoption of e-banking.
Moreover perceived benefit indicated positive coefficient 28.28% points, that more likely strongly
agree to accept e-banking at the rate, possibility a unit increase in ADOEB and (p=0.000).
With regards to perceived risk indicted that 11.52% points, have more likely strongly agree adoption of e-
banking at the level of strongly agree, if likelihood a unit of adoption e-banking increase, (p=0.046). Likewise
perceived security had a positive coefficient of 25.26% points, implies that more likely to acceptance of e-
banking strongly agree in the improvement of probability a unit in adoption of e-banking (P=0.000).
As concerned to organizational factor which had a negative coefficient 16.89% point‟s decreased
strongly agree chance adoption e-banking, if a unit increase in adoption of e-banking with the p-value of
(p=0.006).
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Perceived ease of use is 19.50 percentage points more likely strongly agree to adoption of e-banking, if
chance of a unit increases in adoption of e-banking, with p-value of (p=0.014)
4.5.3 Test for Multicolliniarity

Multicolliniarity is an indication for a linear relationship between independent variables (Gujarathi,
2004). To test the existence or not-existence of multicolliniarity problem, variable inflation factor
(VIF) technique is employed. The variance inflation factor (VIF) is a measure of the reciprocal of the
complement of the inter-correlation among the predictors: VIF=1/(1-r2) Where r2 is the multiple
correlations between the predictor and other predictors. A decision rule for multicolliniarity test of
the model states a variable whose VIF value are greater than 10 indicates the possible problem of
multicolliniarity. Tolerance, defined as 1/VIF is used by many researchers to check on the degree of
co-linearity (Gujarathi, 2004).
Table 4.5.6 variable inflation factor
Variable VIF 1/VIF
OCC2 2.23 0.447979
LIN3 1.94 0.514951
OCC3 1.91 0.524231
OCC4 1.84 0.544193
LIN2 1.77 0.564393
LIN4 1.6 0.624722
PU 1.57 0.637359
LIN5 1.47 0.682091
PB 1.43 0.697669
A 1.39 0.71838
PS 1.3 0.769263
LE2 1.25 0.802441
CA 1.23 0.812543
OF 1.22 0.821356
LFI 1.2 0.830996
LE5 1.18 0.845327
LE3 1.16 0.862194
PK 1.15 0.870971
G 1.15 0.871762
PEOU 1.14 0.875126
LIN6 1.13 0.888052
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Mean VIF 1.44
Source: result of STATA regression 2016
From the above table it is clearly observed that all the VIF factors are below the tolerance level i.e.
below 10.
LE4 had greater than 10 level of tolerance which had a problem of multicolliniarity then dropped
from the list above. Therefore, now there is no problem of multicolliniarity.
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CHAPTER FIVE
CONCLUSIONS AND RECOMMEDATIONS

This chapter includes the conclusion and recommendation of the results analyzed and discussed in the
previous chapters, firstly the conclusion part were cover, secondly possible recommendation
presented for the gaps addressed.
5.1 CONCLUSIONS
The primary objective of this researcher was to investigate the determinants affecting customer‟s
intention to adopt electronic banking. The empirical result shows that the factors that influence
customers to adopt electronic banking include, occupation, level of education, perceived benefit,
perceived security, perceived risk, organizational factor and perceived ease of use, all with significant
effects. The findings from the ordered probit regression analysis shows that from the demographic
characteristics gender, age, and level of income, legal framework and ICT infrastructure have no
significant effect to influence customers for adoption of electronic banking.
This implies that, customers among occupational classification have more important influence on the
intention to adopt electronic banking. Gender and students most likely accept electronic banking than
others. Education level groups are another variable that master degree and above holders had more
influence on the adoption of e-banking. This implies that, the higher level of education have, higher
probability of customers adoption of electronic banking.
Order probit regression analysis and the descriptive analysis shown that customer awareness has a
positive and significant influence. This result is in conformity with previous empirical studies. The
findings revealed that, makes customers knowledgeable to e-banking technology (mobile banking,
internet banking, and post of sales terminal (POS)) benefits, accessibility, on promotion awareness
before they are ready to adopt or making aware to effectively diversify the electronic banking
technology (Sathye 1999), Rogers and Shoemaker (1971), and Tiamaru C., (2013).Abubakar, et
al.,(2012),). Therefore the result of this study indicated that awareness has a positive influencing on e-
banking adoption. This implies that, effective customer awareness about the e-banking perceived
benefit product is, the higher will be acceptance of e-banking.
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With regard to perceived benefit, towards customer‟s adoption of electronic banking, the ordered
probit regression and descriptive analysis result show that, perceived benefit is positively most
significant influential factor, of customer‟s adoption of electronic banking. Majority of customers
believe that their decision of usage of e-banking have a benefit of effective delivery of service, time
saving, reducing operating cost, complete banking activities more quickly and convenient as well as
increases customer‟s satisfaction, so as to influence customers to accept the new technology. This
result is in consistent with previous empirical studiesin Nigeria, Saudi ArabiaTunisia and others
Odumeru J.,(2012), Al-Smadi M., (2012), Nasri, W. (2011)Mohammed, A.(2014)Howcroft et al.,
(2002), (Kiang et al., 2000)Dwumfuo O., and Dankwah B., (2013), andKamau et al., (2012) (Bauer
1960; Hsi-Peng et al, 2005, and Zhao et al. 2008 & Laforet 2005). In this research, perceived benefit
is identified to be an influential factor that the more the perceived benefits of e-banking, the higher
the rate of its customer acceptance of electronic banking.
On the other hand, perceived risk hinders customers to adopt electronic banking. The result of this
finding shows that, adoption of electronic banking and perceived risk are positively related and
statistically significant. This implies that majority customer‟s respondent‟s intention to electronic
banking is influenced by perceived risks such as financial loss, resistance for new technology
acceptance, errors, lack of trust and availability of the technology. This research also indicated that
the higher the perceived risk happening of using an electronic banking, the lower will be its rate of
acceptance. Thus successful uncertainty prevention features, will enhance customer acceptance of e-
banking and the result was consistent with previous empirical studies Al-Smadi M., (2012) and Nasri,
W. (2011).
Concerned to perceived security as shown in the data analysis, the ordered probit regression result
and the descriptive as well indicated that after perceived benefit, perceived security was a major
important factor that influences customers positively, to adoption of electronic banking. This involves
that customers concerned to threat/fraud, personal information, detection, duplicate transaction, and
customer‟s password threats, have the effect to customer intention, not to adopt electronic banking
service. Its implication is, an Effective security attributes will enhance customer confidence and its
rate of acceptance. This research was consistent with other researches (Daniel, 1999; Hamlet and
Strube, 2000; Tan and Teo, 2000; Cox and Dale, 2001, Polatoglu and Ekin, 2001, Black et al., 2002,
Giglio, 2002; Howcroft et al., 2002, Kaynak and Harcar, 2005; Liao and Wong, 2007; Altintas and
70 | P a g e
Gürsakal, 2007; and Laforet and Li, 2005). Liao and Cheung (2002), Sathye (1999) and Nasri, W.
(2011)
Legal framework and ICT infrastructure of electronic banking technology, in this ordered probit
regression analysis result indicated that, there is not significant relationship with customer adoption
for e-banking. This means the legal and government regulation, internet access, lack of computation
between local and foreign banks, and sustainability of internet connection did not affect at significant
rate customers, to adoption electronic banking.
With regards to organization factor, descriptive and regression result has an effect on adoption of e-
banking at significant level. This implies the bank‟s managerial and technical skill, financial resource
and government support for e-banking had affected customer‟s adoption of the new innovative
technology. Concerning to this factor, an interview was made, with the bank managers of the five this
banks had similar results, that a government support have more important issue on the electric power
interruption and related network problems have. This implies that an effective managerial and
technical skill and government support increases adoption e-banking but at decreasing rate, If there is
highly adoption electronic banking, the need bank‟s managerial skill becomes limited because
transactions and other activities are operated by customers themselves.
As far as perceived usefulness is concerned, the result indicates that, the relationship between
adoption of electronic banking and perceived usefulness have not significant effect, to customer
adoption of e-banking.
Perceived ease of use is one essential factor; the data analysis indicated that, there was an existence of
a significant positive relationship between the perceived ease of use and adoption of electronic
banking to influence customers. This implies that customers believed using the technology helps to
perform banking task in an effortless approach, using mobile banking, ATM, internet banking and
post of sale terminal (POS) technology advancement. This result is also consistent with other
empirical studies
5.2 RECOMMEDATIONS
In this sub part, possible actions are recommended for the identified gaps. From this research the outcome
was to improve the use of electronic technology in the banking industry service delivery and to have an
acceptance towards customers. Moreover the recommendation benefits banks, so banks should give due
attention to the following possible proposition.
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 As far as demographic characteristic is concerned among occupation variables students and
NGOs employees ‟attitude and behavior are important factors towards adoption electronic banking at
significant level. Provision effective service to the occupation group, enhance the adoption electronic
banking. Moreover level of education groups also have an effect on the adoption e-banking
significantly, so banks should give due attention on the higher education level to improve level of
acceptance of e-banking effectively. Banks should focus on demographic characteristic and give an
important concern and mechanism to provide quality electronic service to adopt the technology.
 Customer awareness and perceived benefits are essential factors for adoption electronic
banking by customers; hence banks should obtain available information of e-banking system on time
to customers to have an aware of the beneficial technology. If any new approach that had increased e-
banking, and its perceived benefits, and importance of the system, as well as its security concern,
banks should have been providing necessary guidelines, orientation/training on the role of e-banking
technology and on how to use e-banking services. This all banks should perform and exercises
fundamental techniques to improve the technology by creating awareness to customer‟s attitude
towards perceived benefits. Awareness may create through the promotion of website viewed as users
friendly for customers, advertising, SMS network, on monthly statement, or on mail and brochures.
Creation of awareness to customer‟s intention has an implication, to electronic banking of
increasing in customer adoption.
 With regard to perceived benefits, plays an important role to adoption of electronic banking
that positively influences customers significantly, the higher the perceived benefit the higher
customer adoption of electronic banking opportunity establishes. To this point banks should give
appropriate attention to the opportunity of acceptance and announce the advantages to customers,
towards the benefits of time saving, customer satisfaction rate, convenience, lower operational cost
and effective banking transaction from the adoption of electronic banking. The benefits of electronic
banking impose customers of adoption e-banking.
 Perceived security and perceived risk both hindered customers to adopt electronic
banking. Hence banks should give more attention and build advanced strategies and policies to e-
banking. Banks moreover performs concrete encryption, firewall, for interruption detection, regarding
security and risk perception towards customer‟s threat/fraud and uncertainty. In addition bank
managers should make effective orientation/training for customer‟s carelessness, of using passwords,
incurring errors, wrongly transferring money to other accounts and other technical errors. Moreover
72 | P a g e
bank managers support customers how to handle and protect to the existing likely customers and
maintain substantial answers to security systems and expected uncertainty risk. Besides banks create
an awareness concerned on personal information security improvement, guarantee and safeguard for
detect for unconditional loss and related advantages and also minimize customer reluctant for new
innovative e-banking technology. An improved of security and risk of electronic banking technology
services, boost customers accept for electronic banking.
 Organization factor has an effect on adoption of e-banking at significant level. This
implies the bank‟s managerial and technical skill, financial resource and government support for e-
banking had affected customer‟s adoption of the new innovative technology. So-far banks should
build the capacity of managerial and technical skill of banks officials on e-banking. Likewise deeply
collaborate with government sectors to get support on electric power and related network interruption
problems.
 Perceived ease of use is a crucial factor that influencing customers of adoption electronic
banking. Consequently banks should to insure that e-banking provides in a clear and uncomplicated
approaches, easier to customers to perform banking transactions and task in a simple way on their
own. In addition concerning to technical operation, banks should prepare guidelines, and orient/train
customers in advance through promotion or other effective mechanisms.
Implications for further study
Further research will therefore be desirable in investigating influence of customer adoption of e-

banking on customer perception towards subjective norm of customer behavior to use e-banking with
customers‟ perspectives.
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Appendix
St. Mary’s University

Department management
Post graduate study for General Master of Business Administration
A: Questionnaires
Dear Sir/Madam
My name is Zeray Kahsay Weldegeberal, I am student of Genera lMaster of business
Administration (GMBA) in St. Mary‟s University. First of all I would like to forward my heartily
gratitude for administrating this questionnaire honestly and responsibly .The questionnaire is
designed to identify the factors that influence consumers for adopting or dis-adopting e-banking
services in the case of Addis Ababa. The study is likely to provide and understand the basic
challenges and benefits of adopting new technology in delivering of service to customers in
commercial bank of Ethiopia and private banks. I would like to assure you that the information
you provide will be used only for the purpose of achieving academic award. Your participation is
considered as a great input to the quality of the research results. Hence, I believe that you will
enlarge your assistance by contributing in the study. Your truthful and attentive response is
significant.
Thank you in advance, yours sincerely,
Zeray Kahsay
GMBA student in St. Mary‟s University
December, 2016
General Instruction
This questionnaire contains two sections and 6 pages that will be expected to take approximately
15 to 20 minutes to complete. Please provide your responses to the questions based on the
instructions under each section. If you have comments or if you want to provide further
explanations, please use the space provided at the end of the questionnaire.
81 | P a g e
Section I: Demographic profile of respondents
Please indicate the following by ticking (√) on the spaces in front of the response options:
1. Gender: Male Female
2. Age: __________
3. Educational level:
Primary school Secondary and/or Certificate
Diploma holder First degree holder
Master‟s degree and above holder
4. Occupation
Self employed
Government employee
NGOs employee
If students and other specify_______________
5. Income States (in Eth. Birr): ___________________(if possible)
 Less than 3000 per month
 Between 3001-5000
 Between 5001-7000
 Between 7001-10000
 Between 10000-15,000
 Above 15000
6. I am customer of _______ you can tick more than one.
 Commercial bank of Ethiopia
 Wegagen bank
 Dashin Bank
 Awash Bank
 Hibret bank
Section II: Questionnaires relate d with factors influencing of adopting E-banking system.
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Instruction: Below are lists of statements being relevant to Adoption of E-banking. Please
indicate whether you agree or disagree with each statement by ticking (√) on the spaces that
specify your choice from the options that range from ‟‟strongly agree‟ to „‟strongly
disagree‟ .Each choice will identify by numbers ranged from 1 to 5.
Note: SA- Strongly Agree, A- Agree, DA- Disagree, N- Neutral, SD- Strongly Disagree
The f o l l o w i n g a r e s o m e f a c t o r s t h a t a f f e c t the banks SA A N D SD

official‟s and customer‟s faces when adopting E-banking system,
please indicate level of your choice.
1 2 3 4 5
Adoption of e-banking
1 Customers are willing to accept E-banking service
Customer Awareness
1 Bank‟s website viewed for users friendly for customers overall

(information available)
2 Banks provide guidelines for customers that use of e-banking
facility to have the awareness and to adopt for e-banking
3 Lack of awareness for technical skill to use on the operation of

e-banking service provided.
4 The bank adopted (or plans to adopt) any new approach that
had increased e-banking, customers on promotion for new
user, one very monthly statement, or on mail out brochures to
customers that do not use e-banking and others
5 Bank believe more customer training/customer education is
needed in promoting e-banking services
6 There is procedures for verifying of customer requests for
changes to their accounts or customer information
7 Frequently does your bank update your services and websites
8 Banks provides necessary orientation/training on how to use e-

banking services provided to customers
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9 Relatively using of Mobile to get banking service is not
expensive for customers
Perceived benefits of e-banking
1 The benefits your bank gained from the adoption of ATM,
internet banking and mobile banking system in the delivery of
service to customers.
2 The bank believe that e-banking services will enhance
competitive position in the market
3 Banks believes That e-banking services have helped to reduce
the daily operating cost and can benefits.
4 Banks for e-banking such as, Internet banking, Mobile
banking, ATM and POS services enables users to complete
banking activities more quickly, easily and timely that can
profit both as well.
5 Banks that provides the e-banking service increased the degree

of customer satisfaction
Perceived risk to e-banking
1 Lack of trust by customers to new technology provided by
banks
2 Lack of trust is considered as barriers for the adoption of E-
banking system in Addis Ababa.
3 In using e-banking at banks there is guarantee for financial loss
4 Using e-banking, I was not confused and incurred errors feel of

risk
5 Customers have phobia for new innovation technology
6 E-banking is more expensive to provide by banks
Security
1 Bank employees don‟t have access to customer passwords
2 Your bank believe that the customers‟ personal information
security is better now than it was before
3 Banks are secured from any threat/fraud using e-banking
services
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4 Safeguards in place to detect and prevent duplicate
transactions
5 Using e-banking service transactions are certainly operated
Infrastructure and legal framework
1 There is unstable and slow internet and interrupted power
connection to access e-banking of banking services
Lack of available ICT infrastructure

2 Mobile banking services may not perform well because of
bad network access
3 Lack of legal frameworks that enforce banking industries to
adopt technological innovation
4 Using e- banking is difficult, due to low internet access in
Addis Ababa
5 Cross-country legal and regulatory differences will have
impact on the adoption of new technological innovation in the
banking sector like, ATM, internet banking, mobile banking
and Point of sale terminals (POS).
6 Lack of competition among local bank and foreign banks can
be factor that influences adoption of e-banking
Organizational factors
1 Using e-banking decrease costs to do banking task
2 Lack of sufficient government support will affect
customers willingness to use technological innovation
3 Customers of our bank are not familiar with service

provided though ATM, Internet banking, telephone and
mobile phone
4 Lack of technical and managerial skills on the use of
technological innovation in banks employees.
5 Lack of skills to implement E-banking system
Perceived Usefulness
1 Bank established e-banking into banks future strategic
planning
85 | P a g e
2 E-banking improves my performance of banking activities or
transactions
3 E-banking such as, Internet banking ,Mobile banking, ATM
and POS are convenient, in terms of time saving
4 E-banking such as, Internet banking ,Mobile banking, ATM
and POS helps to perform, improve customer service, speed
and efficiency
5 Using technological tools like ATM helps to perform
transaction at lower cost.
6 E-banking is more accessible to users than visiting a bank
Perceived Ease of Use
1 My intention with using e-banking is clear and
understandable
2 E- banking makes it easier for me to do banking activities
3 In the case of mobile banking, our customers can simply use
banking service by using their cell phone
4 The management of the bank provides training courses for its
staff when introducing new services.
5 E-banking system helps to perform banking task in a simple
Way
If any other benefits? Please specify____________________________________________

______________________________________________________________________________
______________________________________________________________________________
______________________________________________________________________________
_____
if any other barriers? Please specify below._____________________________________
86 | P a g e
The f o l l o w i n g a r e s o m e q u e s t i o n t h a t a f f e c t the banks manager‟s faces when adopting
E-banking system, please indicate level of your choice and explain that you believes or considers
that solves the influences of adoption of e-banking.
1. What type of Electronic banking service do you provide? You can tick more than one
A, ATM
B, Internet banking
C, Mobile banking
D, Point of sale terminals (POS)
E, If others Please specify___________________________________________
2. Are the following factors considered in your institution as impediments that influences for the
adoption of technological innovation? Tick more than one,
A. Security risk
D. Customers reluctance for new technology
C. lack of social and customer awareness
D. cost incurred in the purchase of technological instruments E-banking.
E. lack of competition
F. inadequate ICT infrastructure
Please Add if other____________________________________________________
3. In your opinion what are the key factors that delay your institution to adopt automated teller
machine (ATM) internet banking and mobile banking system?_______________________
______________________________________________________________________________
________________________________________________________________________
4. Do you see any social, Economic and legal factors that influence adopting ATM, internet
banking or mobile banking in your bank?____________________________
______________________________________________________________________________
___________________________________________________________________________
5. Do you think that government policy have impact on the adoption of E-banking system?
(Please Specify/explain)______________________________________________________
87 | P a g e
______________________________________________________________________________
________________________________________________________________________
6. What sort of support would you expect from the government in relation to the E-banking
improvement inAddisAbaba,Ethiopia?_______________________________________________
______________________________________________________________________________
___________________________________________________________________________
7. Why Ethiopian government did not allow foreign banks to operate in the country? Do you
think it discourage Ethiopian banking industry from adopting technological innovation and
compete with foreign banks?______________________________________________
_________________________________________________________________________
8. What kind of help or assistance do you offer to your customers for them adopting e-banking
services?
a) Brochures
b) Training
c) Online banking demo
d) Others (e.g., employee assistance, personal service over the telephone, e-mailed instructions,
website „help‟ capabilities)
f) Nothing or any other specify any__________________________________________
9. What major challenges and difficulties has your bank faced when dealing with e- banking?
More than one can choice
a) Lack of in-house IT professionals
b) Lack of interest from customers
c) Extra workload from processing online banking services
d) Need for employment training in IT technology
e) The innovative nature of e-banking
f) Others (expenses, customers‟ computer skill, extra workload, user friendliness, user
passwords updates)
88 | P a g e

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FACTORS AFFECTING E-BANKING ADOPTION OF CUSTOMERS; AN

School of Graduate Studies

FACTORS AFFECTING E-BANKING ADOPTION OF CUSTOMERS; AN

A Thesis Submitted to St. Mary’s University School of Graduate Studies in

General Master of Business Administration

FACTORS AFFECTING E-BANKING ADOPTION OF CUSTOMERS; AN

Approved By the Board of Examiners

1. ____________________ _______________ _________________

2. ____________________ _______________ _________________

3. ____________________ ________________ _________________

4. _____________________ ________________ ________________

St. Mary`s University

St. Mary`s University

LIST OF TABLES ........................................................................................................................................................ X

LIST OF FIGUERS ..................................................................................................................................................... XI

ABSTRACT ................................................................................................................................................................ XII

CHAPTER ONE ........................................................................................................................................................... 1

2.2 MODES OF E-BANKING ...................................................................................................................................... 9

2.2.1 Automated Teller Machines (ATM) .....................................................................................................................9

CHAPTER THREE .................................................................................................................................................... 26

RESEARCH DESIGN AND METHODOLOGY

CHAPTER FIVE ........................................................................................................................................................ 69

ADEB Adoption Electronic Banking

CSF Critical Success Factors

POS Point of Sale

Figures Descriptions Page No

1.1 Background of the study

The breakthroughs in information technology occasioned by the introduction of the

1.2 Statement of the Problem

1.3 Research Questions

1.4 Objectives of the Study

1.4.1 General objective

1.4.2 Specific objectives

3. To examine factors influencing customers‟ intensions to adopt e-banking services

1.5 Significance of the Study

1.6 Scope of the Study

1.7 Conceptual definition of terms

Chapter 2: Literature Review

Chapter 3: Research Design and Methodology

Chapter 4: Research Result

This chapter describes overall findings. It summarizes the statistics of

2.1 Theoretical Literatures

2.1.1 Technology Acceptance Model (TAM)

2.1.2 Technology- organization- Environment (TOE)

2.2 Modes of e-banking

2.2.1 Automated Teller Machines (ATM)- It is an electronic terminal which gives

2.3 Review of empirical literature

2.3.1 Empirical and Conceptual Studies

2.3.1.1 Demographic characteristics

2.3.1.2 Customer awareness (CA)

2.3.1.3 Perceived benefit (PB)

H3 perceived benefit has a positive effect on the use of e-banking.

2.3.1.4 Perceived security (PS)

H4 Perceived security has a positive effect on the use of e-banking.

2.3.1.5 Perceived risk (PR)

2.3.1.6 Legal framework and ICT infrastructure (LFII)

H7 organizational factor has an effect on the use of e-banking.

2.3.1.8 Perceived usefulness (PU)

H8 perceived usefulness has a positive effect on the use of e-banking.

1. ____________ _ ___________

2. ____________ _ ___________

3. ____ _

4. _____