Abstract:
This study aims to investigate the effect of interest-free banking service quality on customers'
satisfaction in Jimma district of the Cooperative Bank of Oromia. With the increasing popularity
and demand for interest-free banking services, it is essential for financial institutions to
understand the factors that contribute to customers' satisfaction in this sector. The study
employed an explanatory research design utilizing a survey questionnaire to collect data from a
sample of 396 customers who have utilized interest-free banking services provided by the
Cooperative Bank of Oromia. From the distributed 396 questionnaires, a 340 of them were
correctly filled and returned with a response rate of 95%. The questionnaire is designed to
measure various dimensions of service quality, including reliability, responsiveness, assurance,
empathy, and tangibility. Additionally, secondary data from IFB department unpublished
materials, working policies and procedures, journal articles and different books that are
reviewed in the area of interest free banking service is used. Data analysis techniques, including
descriptive statistics, correlation analysis, and regression analysis, were employed to examine
the relationship between interest-free banking service quality dimensions and customers'
satisfaction. The correlation analysis result shows that all service quality dimensions
(compliance, tangibility, assurance, empathy, responsiveness and reliability) are positively and
significantly related with customer satisfaction. Furthermore, the finding from the regression
result indicates all the service quality dimensions, except tangibility have a positive and
significant effect on customer satisfaction. Therefore, regular monitoring and evaluation of
service quality, customer feedback, and satisfaction levels are imperative for continuous
improvement. The bank should conduct periodic audits and assessments to identify potential
areas for enhancement. This can help in identifying trends, recognizing areas of weakness, and
implementing suitable strategies to address them effectively.
