“FACTORS INFLUENCING THE ADOPTION OF MOBILE

BANKING SERVICE”
Case of selected commercial banks in Asella Town

Research proposal summated for partial fulfillment of masters in

business administration.

By ZEMZEM KASIM

Research Advisor DR. ABDI H.

March, 2021

ADAMA, ETHIOPIA
Table of Contents
Table of Content..........................................................................................................................................3
List of Table.................................................................................................................................................4
List of Figure................................................................................................................................................4
Abbreviations..............................................................................................................................................5
Abstract.......................................................................................................................................................6
Chapter 1: Introduction...............................................................................................................................7
1.1 Background of the Study..............................................................................................................7
1.2 Statement of the Problem...........................................................................................................8
1.3 Basic Research Questions............................................................................................................9
1.4 Objective of the Study.....................................................................................................................10
1.4.1 General Objective of the Study.................................................................................................10
1.4.2 Specific Objective of the Study.................................................................................................10
1.5 Significance of the Study..................................................................................................................10
1.6 Scope of the Study...........................................................................................................................11
1.7 Operational Definition of Terms......................................................................................................11
Chapter 2 Literature Review......................................................................................................................12
2.1 Theoretical Review..........................................................................................................................12
2.1.1 Mobile banking.........................................................................................................................12
2.1.2 Perceived Usefulness................................................................................................................12
2.1.3 Perceived Ease of Use...............................................................................................................12
2.1.4 Self-efficacy...............................................................................................................................12
2.1.5 Facilitating conditions...............................................................................................................13
2.1.6 Security and Privacy..................................................................................................................13
2.1.7 Demographic Characteristics....................................................................................................13
2.2 Review of Relevant Theories...........................................................................................................14
2.2.1 The Unified Theory of Acceptance and Use of Technology (UTAUT) Model.............................14
2.2.2 Theory of Reasoned Action.......................................................................................................15
2.2.3 Theory of Planned Behavior......................................................................................................15
2.2.4 Technology Acceptance Model.................................................................................................16
 2.2.5 TAM 2.......................................................................................................................................18
2.3 Empirical Review..............................................................................................................................18
2.4 Conceptual Framework....................................................................................................................19
2.5 Research Hypotheses.......................................................................................................................20
Chapter 3 Research Methodology.............................................................................................................22
3.1 Research Approach..........................................................................................................................22
3.2 Research Design...............................................................................................................................22
3.3 Population and Sample....................................................................................................................22
3.4 Sample Size......................................................................................................................................22
3.5 Sampling Techniques.......................................................................................................................23
3.5 Data Sources and Types...................................................................................................................24
3.6 Data Collection Procedures.............................................................................................................24
3.7 Data Analysis...................................................................................................................................24
3.8 Reliability and Validity.....................................................................................................................24
3.8.1 Reliability..................................................................................................................................24
3.8.2 Validity......................................................................................................................................25
3.9 Ethical Consideration.......................................................................................................................25
Chapter Four..............................................................................................................................................26
Budget and Work Schedule.......................................................................................................................26
4.1 Time Schedule.................................................................................................................................26
4.2 Budget.............................................................................................................................................27
Reference..................................................................................................................................................28
Appendix...................................................................................................................................................32

List of Figure
Figure 1 UTAUT model...........................................................................................................................15
Figure 2 Theory of reasoned action...........................................................................................................16
Figure 3 Theory of Planned Behavior.......................................................................................................17
Figure 4 the original technology acceptance model...................................................................................18
Figure 5 Extension of the technology acceptance model..........................................................................19
Figure 6 conceptual model........................................................................................................................21
Abbreviations
PU - Perceived Usefulness

PEOU - Perceived Ease of Use

DOI - Diffusion of Innovation

HTML - Hyper Text Mark-up Language

TRA - Theory of Reason Action

BI - behavioral Intention

SIM - Subscriber Identity Module

M-Banking - Mobile Banking

NBE - National Bank of Ethiopia

CBE - Commercial Bank of Ethiopia

WAP - Wireless Application Protocol

TAM - Technology Acceptance Mode

AW- Awash Bank

DB-Dashen Bank

BOA-Bank of Abyssinia

CBO-Cooperative Bank of Oromia

OIB-International Bank of Oromia

Abstract
This study is aimed to investigate Factor influencing adoption of mobile banking service in case
of commercial banks in Asella ( CBE,DB, AB,BOA,CBO and OIB). By taking the research
objectives and questions into considerations, only quantitative research approach and both
descriptive and explanatory research design will be used. The study will be delimited to
convenience and purposive sampling techniques.
 CHAPTER ONE

INTRODUCTION
1.1 Background of the Study
Globalization is a political, social, cultural and economic phenomenon that is revolutionizing the
way we live. In particular, the convergence of computer and telecommunications technologies
has totally changed the way we receive, store, transmit and share information. The rapid
diffusion of the Internet created a new host of opportunities for business worldwide (Nehmzow,
1997).

The electronic technology is playing a major role for the world in a numerous variety of business
activities. Rapid development of internet and information technology has also affected the
banking industry world widely in different form. Banks seek always to achieve competitive
advantage to be first in market; so, they keep looking for new technology which can improve the
bank services. For this mater “A clear and emerging new channel in the space of banking and
payments is mobile.” (Vanessa, 2012, abstract).

According to Petrova K. (2002) M-banking can be defined as the ability to conduct bank
transactions via a mobile device, or more broadly to conduct financial transactions via a mobile
terminal. This definition is a suitable working one as it includes not only basic services such as
bank account statements and funds transfer but also electronic payment options as well as
information based financial services (e.g. alerts on account limit or account balance, access to
stock broking). M-banking is an invaluable and powerful tool driving development, supporting
growth, promoting innovation, and enhancing competitiveness (Nath, R. 2001).

Mobile Banking has gained non-negligible relevance for banks today. Developments in the
banking sector which is increased competition on account of technological developments
coupled with the process of globalization have produced new challenges for banks. Mobile
Banking presents an opportunity for banks to retain their existing, technology-savvy customer
base by offering value-added and innovative services. It might even help attracting new
customers (Krueger, 2001).
Further, Mobile Banking presents a chance to generate additional revenues. Though many of
such people argue that internet and other technology-based transaction is not safe, not practical
and would lead to fraud, a lot of people think it safer, flexible in time and can be done anywhere
and anytime (Chowdhury and Ahmmad 2011). Cost and availability are the other factors which
might influence the adoption of mobile banking. Thus, it is necessary to have an in-depth
analysis for the mobile banking service provider to identify the factors influencing the adoption
of mobile banking. A clear understanding of these factors will enable mobile banking service
providers to develop suitable marketing strategies, business models, processes, awareness
programmers and pilot projects (GSMA 2009).

1.2 Statement of the Problem

Although mobile banking yields enormous benefits, some scholars found that mobile banking
adoption among banks customers remains small (Donner and Tellez, 2008 and Laukkanen,
2007). Despite the fact that numerous mobile banking adoption studies have been investigated by
Luam and Lin (2005), Mattila(2003) and Zhou(2010), most of them were conducted in countries
such as Korea (Chung and Kwon, 2009), Singapore (Riquelmeand Rios, 2010), Brazil
(Laukkanen 2010), Taiwan (Luam and Lin, 2005), and China (Wang 2010). Only a few numbers
of studies have been undertaken in developing countries.

As, compared to other African countries like Kenya where the mobile banking services
accessibility reach higher level, the level of adoption in Ethiopia is very low. For instance,
Commercial Bank of Ethiopia has around 1.7 million users as of June 30, 2018 (CBE, website).
Kenya stands out in several respects, according to the Safaricom’s half year results for 2017-
2018, M-PESA was reported to have 21 million active customers (CNBC KENYA, 2018). M-
PESA started operating in Kenya in 2007, and has taken the lead in terms of innovation for
providing more inclusive access to finance for a large part of the population (KARIUKI
NYAGA, 2014).

When we look at the growth in mobile phone penetration in Africa in general and particularly in
Ethiopia it is moving up at higher rate. In Ethiopia the number of mobile phone subscribers has
now reached, more than 51 million as of March 2017 as per the 2017/2018 kpmg survey report.
Based on the research article entitled “Mobile Banking in Ethiopia: Challenges and Prospects”
that is published on the quarterly NBE Bulletin of Birritu Number 119, of February 2015, the
mobile banking development in Ethiopia is at its starting stage. Currently mobile banking
practice in Ethiopia can be considered as accessing the core banking system within the bank.
Hence, only a customer of a given bank can access some banking services via his/her mobile
phone. Looking past research studies, it is evident that not much research has been carried out in
Ethiopia regarding factors that influence the adoption of adoption of mobile banking. Traditional
branch-based retail banking remains the most widespread method for conducting banking
transactions in Ethiopia. Internet technology is rapidly changing the way personal financial
services are being designed and delivered. Now most of the commercial banks in Ethiopia are
trying to introduce internet based electronic banking systems to improve their operations and to
reduce costs. Despite all their efforts aimed at developing better and easier internet banking
systems, these systems remain largely unnoticed by the customers and certainly is seriously
under-used in spite of their availability.

Even though some of the commercial banks in Ethiopia start introducing mobile banking service,
the acceptance of this technology is very low. Coupled with the low number of undertaken
researches in the adoption of mobile banking service in Ethiopia there is a need to carry out this
research in order to help financial institutions understand the factors affecting the adoption of
mobile banking service. Also, most of the research studies are based on TRA (theory of reasoned
action) and TAM (Technology acceptance model) theories, which consist of two constructs;
perceived ease of use and perceived usefulness which are not sufficient to explain factors
affecting adoption of M-Banking. there is a need to adopt more theories in this study such as
innovation diffusion theory, the revised unified theory of use and acceptance of technology and
Extension of Technology Acceptance Model (ETAM) in order to include more variables. Finally,
based on the issues stated on the problem statement, this research has been undertaken to study
factors influencing the adoption of mobile banking services in Ethiopia. This study varies from
pervious related studies in such a way that it tries to study whether there is a statistical significant
difference in demographic factors which are Gender, Age and Education while considering
Adoption of mobile banking service.

1.3 Basic Research Questions

 How Does perceived usefulness affect customer adoption of mobile banking?
 How does perceived ease of use affect customer adoption of mobile banking?
  Dose security and privacy has an influence in adoption of mobile banking?
 How does self-efficacy affect customer adoption of mobile banking?
 How Dose facilitating conditions (bank support) influence customer adoption of mobile
banking?
 Is there a significant difference in adoption of mobile banking while taking demographics
(Gender, age and education) as a basis?

1.4 Objective of the Study

1.4.1 General Objective of the Study

 To identify different factors influencing the adoption of Mobile banking, in the case of
commercial banks in Asella, Ethiopia.

1.4.2 Specific Objective of the Study

 To determine whether perceived usefulness have an effect on the adoption of mobile
banking.
 To determine whether perceives ease of use have an influence on the adoption of mobile
banking.
 To examine the influence of security and privacy on the adoption of mobile banking.
 To evaluate the effect of self-efficacy on the adoption of mobile banking.
 To determine whether facilitating conditions (in terms of bank support) have an effect on
the adoption of mobile banking.
 To determine the existence of statistical difference in demographic factors (Gender, Age
and education level) while considering Adoption of mobile banking service.

1.5 Significance of the Study

This research contributes to the financial services sector, in that it brings an understanding of
consumer behavior with regards to the adoption of mobile banking services. It also contributes to
active academic research and adds to the understanding of technology adoption and mobile
banking services in the case of commercial banks' in Asella, Ethiopia.

In addition, it will assist players in the mobile banking market to understand the factors
influencing adoption of mobile banking. Hence, it enables them to come up with better services
than the existing ones and assist researchers and students in gaining an understanding of the
current trends in mobile technologies and their impact. This study will also add to the foundation
of knowledge being laid for research which related to mobile banking technologies.

1.6 Scope of the Study

The scope of this study is geographically limited to commercial banks operated in Asella city
and its surrounding and this study will uses the banking industry to examine factors affecting the
adoption of mobile banking service.

The study aims to cover the main constructs derived from the extension of TAM with the
integration of bank support, security and privacy and self-efficacy. After critically reviewing the
literature that pertain the developments in Ethiopia’s mobile banking situation some important
information gathered, which is the context of this study. The variables Perceived useful,
perceived ease of use, self-efficacy, security and privacy and facilitating conditions (in terms of
banks support) are considered to as factors which influence the adoption of mobile banking.

The study will be based on TAM and integration of security and privacy, bank support and self
efficacy in predicting factors influencing adoption of mobile banking in Ethiopia, thus, further
studies can be conducted in an attempt to explore other additional factors including
Compatibility and perceived trust that have not been identified in the model but that might also
have significant impact on adoption of mobile banking in Ethiopia. The researcher therefore
believes there is further scope for research to be carried out on this topic.
1.7 Operational Definition of Terms
Terms Definition
Perceived It is defined as the degree to which a person believes that using a particular
usefulness technology will enhance his or her job performance. This idea derived from
TAM model by Davis (1989) and is considered a significant factor
affecting acceptance of an information system.

Perceived ease of Perceived ease of use refers to the degree to which a person believes that
use using a particular application will be free of effort (Davis, 1989). Perceived
usefulness and Perceived Ease of Use are significantly correlated with
system usage as this has been proven by TAM application. Users believe
that a given technology is useful but at the same time believe that the
technology is too hard to use and the benefits of usage are outweighed by
the effort of using the application (Davis and Arbor, 1989).
Security and A common and widely recognized obstacle of mobile banking adoption has
Privacy been the lack of security and privacy over the Web Sites and cellphones.
(Bhimani, 1996; Quelch and Klein, 1996; Rhee and Riggins, 1997). Also,
Sathye (1999) noted that security and privacy were significant major
obstacles to the adoption of online banking in Australia. It should be noted
that security issues are confronted by users and developers of internet
security especially concerning e-banking, e-commerce and e-government.

Self Efficacy The component of self-efficacy is defined as the level of confidence a

person has in his or her abilities to perform a task. If a person character or
believes do not allow him to have confidence in his skills when using an
application, this will probably have a reverse influence on technology
usage.

Facilitating By capturing the concepts of perceived behavioral control (TPB/DTPB, C-

Conditions (Bank TAM-TPB), facilitating conditions (MPCU), and compatibility such as
Support) work style (IDT), Venkatesh. [2003] defined facilitating conditions as the
degree to which an individual believes that an organizational and technical
infrastructure exists to support technology use.
 Chapter 2 Literature Review
2.1 Theoretical Review

2.1.1 Mobile banking

The term ‘mobile banking' is defined as ‘the exploitation of mobile terminals, like mobile phones
to connect with networks of a bank via the wireless application protocol (WPA)’ (Zhou 2010).
As the number of smart phones along with their users increase continuously, banks took the
opportunity to make their services easier and developed the new service, the ‘mobile banking.

Using the mobile banking, banking transactions can take place in every place and time that is
desired, given that there is access to the internet services. Thus, it can be said that mobile
banking gives flexibility (more degrees of freedom) to banks’ customers.

2.1.2 Perceived Usefulness

It is defined as the degree to which a person believes that using a particular technology will
enhance his or her job performance. This idea derived from TAM model by Davis (1989) and is
considered a significant factor affecting acceptance of an information system.

For the user of mobile banking this means: how useful does the user find the application, how
can he improve his job tasks, decrease the time of doing his job and contributing to more
accurate and efficient results.

2.1.3 Perceived Ease of Use

Perceived ease of use refers to the degree to which a person believes that using a particular
application will be free of effort (Davis, 1989). Perceived usefulness and Perceived Ease of Use
are significantly correlated with system usage as this has been proven by TAM application.
Users believe that a given technology is useful but at the same time believe that the technology is
too hard to use and the benefits of usage are outweighed by the effort of using the application
(Davis and Arbor, 1989).

If an online service is difficult to use, the customer is more likely to quit this service and chose
another way of doing transactions that will be easier.
2.1.4 Self-efficacy
The component of self-efficacy is defined as the level of confidence a person has in his or her
abilities to perform a task. If a person character or believes do not allow him to have confidence
in his skills when using an application, this will probably have a reverse influence on technology
usage.

The wide range of technological advances, the invention of Internet and evolvement of mobile
banking requires individuals with willingness to adopt the new technological environment. Thus,
when an individual is confident in his skills is more likely to be comfortable in using new
technologies.

2.1.5 Facilitating conditions

Refers to the extent to which an individual believes that an organizational and technical
infrastructure exists to support use of the system (Venkatesh 2003).

By capturing the concepts of perceived behavioral control (TPB/DTPB, C-TAM-TPB),

facilitating conditions (MPCU), and compatibility such as work style (IDT), Venkatesh. [2003]
defined facilitating conditions as the degree to which an individual believes that an
organizational and technical infrastructure exists to support technology use. In UTAUT,
Venkatesh. [2003] integrated 32 factors used in eight competing models into five constructs and
empirically identified that behavioral intention and facilitating conditions were two direct
determinants of adoption behavior. In the mobile banking adoption literature, Joshua and Koshy
[2011] illustrated that the more convenient the access of respondents to computer and Internet,
the more proficient their use of the computer and Internet, which results in a higher adoption rate
of respondents using electronic banking.

2.1.5.1 Bank Support

Support by the bank to the users of Mobile banking is considered as an important factor
influencing their behavior toward conducting online transactions. Customers need to know that
their bank provides a well-educated help desk that will be able to guide and train them in case
they need it. Problems may occur when using Internet banking and users might need bank
support to complete their transactions. The issue for a bank is its clients to feel secure for their
money transferred and confident for their bank superiority. It is important for the customers to
contact directly with bankers when is required because this probably stimulate them more in
using bank mobile services.

2.1.6 Security and Privacy

A common and widely recognized obstacle of mobile banking adoption has been the lack of
security and privacy over the Web Sites and cellphones. (Bhimani, 1996; Quelch and Klein,
1996; Rhee and Riggins, 1997). Also, Sathye (1999) noted that security and privacy were
significant major obstacles to the adoption of online banking in Australia. It should be noted that
security issues are confronted by users and developers of internet security especially concerning
e-banking, e-commerce and e-government.

It is expected that only people who perceive Mobile banking as a low risk activity would be
available to use it. It also seems that users misunderstand the Internet technology and this leads
to resistance on adopting it. Many users want to control the data that is collected through
Internet.

2.1.7 Demographic Characteristics

Adopter categories give an insight for explaining the innovation diffusion rate and accordingly
innovativeness of people (Rogers 1995). When the different aspects of early adopters are
examined, it is claimed by Rogers that “relatively earlier adopters in a social system are no
different from later adopters in age” (Hoffmann 2011, p.44). On the other hand, Venkatesh&
Morris (2000) state the different adoption behaviors of older and younger adopters. So, age is
perceived as an influential factor in this dissertation. Another claim of Rogers is presented about
the education level, occupations and status. It is stated that “the relatively early adopters have
more years of formal education, are more likely to be literate, and have higher social status and
occupations” (Hoffmann 2011, p.44). So, education level, occupation and income level have also
considered as influential on adoption of mobile banking services in this research.

2.2 Review of Relevant Theories

2.2.1 The Unified Theory of Acceptance and Use of Technology (UTAUT) Model
Venkatesh (2003) proposed and tested a unified information technology acceptance and use
research model, called the Unified Theory of Acceptance and Use of Technology (UTAUT). The
model integrates significant elements across eight prominent user acceptance models and
formulates a unique measure with core determinants of user behavioral intention and usage. In
this model the original UTAUT aims to explain user intentions to use an IS and subsequent usage
behavior. Furthermore, UTAUT model suggests that there are a set of factors that influence the
intention of the individual user acceptance (Feras, Mohammad, 2012). Venkatesh 2003, pp 446,
in their research article theorized that, four constructs play a significant role as direct
determinants of user acceptance and usage behavior: Performance expectancy, Effort
expectancy, Social influence, and Facilitating conditions. Gender, age, experience, and
voluntariness of use are said to mediate the impact of the four key constructs on usage intention
and behavior. Venkatesh (2003).

Figure 1 UTAUT model

2.2.2 Theory of Reasoned Action

Theory of Reasoned Action introduced by Ajzen & Fishbein in 1975, is a model that predicts and
explains the behavior across a wide variety of domains. Development of TRA started in 1950s
and the first research concerning TRA was published in 1967 (Ajzen & Fishbein). It is based on
the assumption that consumers behave rationally and that they collect and evaluate
systematically all of the available information. Furthermore, it is assumed that people take into
account the effects of their possible actions and based on this reasoning make decision whether
or not to take action (Ajzen & Fishbein, 1980).
 Figure 2 Theory of reasoned action

The conceptual framework of TRA is provided by the distinction between beliefs, attitudes,
intentions and behaviors. According to TRA, Behavioral Intention (BI), Person’s Attitude (A)
and Subjective Norms (SN) determine a person’s behavior.

2.2.3 Theory of Planned Behavior

The Theory of Planned Behavior adapted from Mathieson, identify that behavior is determined
by intention while intention is predicted by sixfactors: attitude (A), Subjective Norms (SN), and
Perceived Behavior Control (PBC).

Theory of Reasoned Action (TRA) and Theory of Planned Behavior (TPB) became the base of
the Technology Acceptance Model (TAM), the most popular model in information systems
theory.

Figure 3 Theory of Planned Behavior

2.2.4 Technology Acceptance Model
One of the most utilized and influential model in studying information system acceptance is the
Technology Acceptance Model or TAM (Davis 1989: Mathieson, 1991: Davis and Venkatesh,
1996: Gefen and Straub, 2000: Al-Gahntani, 2001). Although various articles for this model
were written almost two decades ago, the model continues to be used extensively and the topic
remains of high interest in the research area.

TAM has been tested in many studies (Davis, 1989; Mathieson, 1991; Adams , 1992; Segars and
Grover, 1993; Taylor and Todd, 1995) and its ability to explain attitude toward using an
information system is better than other model’s (TRA and TPB) (Mathieson, 1991). Adopting
constructs from the Theory of Reasoned Action and the Theory of Planned Behavior the original
TAM (Davis, 1989) addresses the reasons why users accept or reject particular pieces of
information technology and identifies perceived usefulness and (PU) and perceived ease of use
(PEOU) as major determinants of intention to use technology. A third construct, attitude, was
included as a mediating factor between these two determinants and behavioral intent. According
to Davis perceived usefulness was defined as “the degree to which a person believes that using a
particular system would enhance his or her job performance” whereas perceived ease of use was
defined as “the degree to which a person believes that using a particular system would be free of
effort”. The TAM model supports that these two beliefs are the major determinants of computer
usage.

Figure 4 the original technology acceptance model

The main idea of the theory as shown in Figure 4 was that perceived usefulness and perceived
ease of use influence user’s wheeling to use information system either directly or mediating via
attitude towards and behavior, leading to actual usage of the technology. Attitude Towards (AT)
and Behavioral Intention (BI) are common with the Theory of Reasoned Action. Perceived Ease
of Use (PEOU) and Perceived Usefulness have a strong direct influence on AT while Perceived
Usefulness (PU) has a strong direct influence on AT and BI. Davis (1989) conducted numerous
experiments to validate TAM by using PEOU and PU as two independent variables and system
usage as the dependent variable. He found that PEOU and PU were significantly correlated with
actual system usage and also that PU had a greater correlation with system usage than PEOU.
This result was explained by arguing that regardless of how easy the technology was to use if it
was not perceived as beneficial or did not help job performance, ease of use was considered
irrelevant by the user. So, the first priority for the users is usefulness followed by ease of use.

The original TAM was revised by Davis and Venkatesh (1991) excluding attitude construct from
the model. The empirical studies proved that intention to use technology is only partly mediated
by attitude. On the other hand, Perceived Usefulness and Perceived Ease of Use continued to be
significant to intention, with PU showing a stronger influence on technology acceptance than
PEOU, and with PEOU being a significant determinant of perceived usefulness.

With the development of research in technology usage, Davis and Venkatesh added multiple
variables to the TAM trying to show their effect on perceived usefulness and perceived ease of
use. Therefore, examined the effect of computer self-efficacy and objective usability on
perceived usefulness (1996) and in another research examined the effect of other antecedents on
perceived ease of use (2000). These antecedents included: perceptions of external control such as
availability of support staff; computer anxiety, fear of or apprehension toward information
technology; computer playfulness; the desire to explore the technology and perceived enjoyment.
The results of these studies were not clear, sometimes the above variables influenced the two
major determinants of technology usage and sometimes not.

2.2.5 TAM 2
Although TAM has been tested widely with different samples in different situations and proved
to be a valid model explaining information system acceptance many extensions to the original
TAM have been proposed (e.g. Venkatesh and Speier, 1999; Venkatesh and Davis, 2000;
Venkatesh, 2003; Henderson and Divett, 2003; Lu, 2003). Recently Venkatesh and Davis (2000)
extended the original TAM by introducing a new model referred to, as TAM2 trying to identify
how external variables influencing perceived usefulness and intention. These external variables
included subjective norm, the degree of influence of others on user decision towards technology;
image, the user desire of been favorable to others; job relevance, the degree to which the
technology was applicable; output quality, the performance of technology when doing a
specified job; and result demonstrability, the production of tangible results. Experience and
voluntariness were tested as moderating factors of subjective norm.

The TAM2 was tested both in voluntary and involuntary environments and the results across
studies revealed that subjective norm; image, job relevance and result demonstrability were
significant determinants of perceived usefulness. Additionally, was shown that subjective norm,
perceived usefulness and perceived ease of use were direct determinants of intention to use. Both
models, original TAM and TAM2 support that perceived ease of use is a significant determinant
of perceived usefulness. The only two-way relationship shown to be significant was between
output quality and job relevance while the two-way relationship between subjective norm and
experience and subjective norm and voluntariness were not significant to intention (Venkatesh
and Davis, 2000).

Figure 5 Extension of the technology acceptance model

2.3 Empirical Review
Luarn and Lin [2005] employed the extended technology acceptance model (TAM) to explore
human behavioral intention to use mobile banking. They collected 180 respondents in Taiwan
and discovered that perceived self-efficacy, financial cost, credibility, easy-of-use and usefulness
had positive effects on the behavioral intention to use mobile banking. Likewise, due to the
parsimony and predictive power of TAM, Amin [2008] used an extended TAM containing five
constructs - perceived usefulness, perceived ease-of-use, perceived credibility, the amount of
information, and normative pressure - to explore the adoption of mobile banking. They gathered
158 valid questionnaires in Malaysia and supported that perceived ease-of-use markedly
influenced perceived usefulness and credibility, and human intentions to adopt mobile banking
was significantly affected by perceived usefulness, perceived ease-of-use, perceived credibility,
the amount of information, and normative pressure.

Drawing from the theory of innovation resistance proposed by Ram and Sheth [1989],
Laukkanen [2007] summarized 18 factors into five barriers, namely Usage, Value, Risk,
Tradition, and Image barriers. The theory of innovation resistance, adapted from the psychology
and the IDT of Rogers [Rogers 2003], aims to explain why customers resist innovations even
though these innovations were considered necessary and desirable. Through investigating 1525
usable respondents from a large Scandinavian bank, Laukkanen[2007] uncovered that the value
and usage barriers were the most intense barriers to mobile banking adoption, while tradition
barriers (such as preferring to chat with the teller and patronizing the banking office) were not an
obstacle to mobile banking adoption.

Based on TAM and TPB research structure, Sripalawat [2011] collected 195 respondents and
found subject norms to be the most influential factor, perceived usefulness to be the second
influential factor, and self-efficacy to be the third influential factor in mobile banking adoption.
Based on the extended TAM and through collecting 325 valid responses from MBA students in
India, Dasgupta [2011] first employed the exploratory factor analysis to identify seven
antecedents to behavioral intention toward the adoption of mobile banking. Thereafter, they
utilized the regression technique to examine the effects of these antecedents on behavioral
intention. Their empirical results supported six of seven antecedents, except for risk. The six
antecedents were perceived image, perceived usefulness, perceived ease-of-use, perceived value,
self-efficacy, perceived credibility, and tradition, which significantly influenced the behavioral
intent to use mobile banking. Recently by using interpretive structure modeling and mapping of
mobile banking influences in India, Ketkar [2012] systematically plotted key mobile banking
barriers and enablers on the two-dimensional map. By treating driving power of enablers as
positive and that of barriers as negative, their work identified “facility to get quick updates”,
“time and cost saving”, “reach of telecom distribution” and “need for telecoms to improve
customer retention” as the crucial drivers for the adoption of mobile banking.

2.4 Conceptual Framework

This paper aims to ascertain what factors considerably influence people to adopt mobile banking.
Therefore, some important constructs selected from mobile banking literature are taken into the
research structure. Based on revising different scholarly literature review the following proposed
model is adopted. Thus Figure 6 shows the proposed model in which examine the relationship
between dependent and independent variable.

In the context of this framework, Adoption of mobile banking is the dependent variable while the
independent variables comprise Perceived Usefulness, Perceived Ease of Use, Security and
Privacy, Self-Efficacy and Facilitating condition (in terms of bank support).

Independent variable Dependent Variable

Perceived Usefulness

Perceived Ease Of Use

Mobile banking
Adoption
Security and Privacy

SelfEfficacy

Facilitating Conditions

(Bank Support)

Demographics
 Figure 6 conceptual model

2.5 Research Hypotheses

In line with the stated research questions and objectives in chapter one, the theoretical and
empirical works reviewed in the second chapter and the conceptual framework provided in the
above figure, the research proposed the following hypotheses to be tested with the aim of finding
factors that influence the effectiveness of mobile banking adoption.

H1: Perceived Usefulness has a positive impact on mobile banking adoption in Ethiopia.

H2: Perceived Ease of Use has a positive impact on mobile banking adoption in Ethiopia.

H3: There is a positive relationship between (Security and Privacy) and mobile banking
adoption.

H4: Self-efficacy has a positive impact on mobile banking adoption in Ethiopia.

H5: Facilitating condition (In terms of Bank support) has a positive effect on mobile banking
adoption in Ethiopia.

H6: There is a significant difference in adoption of mobile banking while taking demographics
(Gender, age and education) as a basis.
 Chapter 3 Research Methodology
3.1 Research Approach
Basically, there are six types of research approach; the first one is Qualitative research which
involves studies that do not attempt to quantify their results through statistical summary or
analysis. In qualitative research data are often in the form of descriptions not in numbers. The
other one is Quantitative research, which engages in systematic and scientific investigation of
quantitative properties and phenomenon and their relationships. The objective of quantitative
research is to develop and employee mathematical models, theories and hypothesis pertaining to
natural phenomena. The process of measurement is central to quantitative research because it
provides the fundamental connection between empirical observation and mathematical
expression of an attribute (Abiy, 2009). The third one is mixed type which consisted of both
qualitative and quantitative approach.

This particular research will peruse quantitative research approach hence it involves hypothesis
testing and other quantitative methods.

3.2 Research Design

The nature of this research is both descriptive and explanatory type. The descriptive method is
uses study the general characteristics of respondents and their intention of adopting mobile
banking service. Kothari (2004) describes as; descriptive research studies are those studies which
are concerned with describing the characteristics of a particular individual, or of a group.
Explanatory is used to study the relationship between the independent and dependent variable.
Kothari (2004) further discussed as, explanatory analysis studies, the joint variation of two or
more variables for determining the amount of correlation between two or more variables.

This research will be employed a causal research design which involves studying variations in
the dependent and independent variables, without any intervention of the researcher. Causality
refers to the relationship between events where one set of events, the effects is a direct
consequence of another set of events, which is the causes (Bobbie, 1990).

3.3 Population and Sample

A population can be defined as all people or items (unit of analysis) with the characteristics that
one wishes to study. The unit of analysis may be a person, individual, organization, country,
object, or any other entity that researchers wish to draw scientific inferences about (Kelley,
Clark, Brown, & Sitzia, 2003). Accordingly, the target populations of the study will the
customer of six commercial banks (Commercial bank of Ethiopia, Awash bank, International
Bank of Oromia, Cooperative Bank of Oromia , Bank of Abyssinia and Dashen bank) that are
located in Asella town.

3.4 Sample Size

The basic idea of sampling is that by selecting some of the elements in a population, conclusions
can be drawn about the entire population (Zikmund, `2003). And hence, this study will be focus
on commercial banks customers within Asella town (Commercial bank of Ethiopia, Awash bank,
International Bank of Oromia, Cooperative Bank of Oromia , Bank of Abyssinia and Dashen
bank). Focusing on these pioneer banks in the study with an assumption of they have been
serving these new platform for their customers relatively longer period of time than others and
the proposed constructs have been able to fully determined their customers’ behavioral intention.

The total sample size was determined by using the following sample size determination formula
developed by Taro Yamane (1967)

N
n=
1+ N e2

87705
n=
1+ 87705 ¿¿ ¿

n = 398

Where: n; The sample size

e; The sampling error (0.05) which is 95% of level of confidence

N; The population size, the researcher carried out own survey to find out the total number of
mobile banking customer in this six commercial banks in Asella town ,Asella branches
No Name of the bank Total number mobile banking customer at Asella
Main branch
1 Commercial bank of Ethiopia 23941
2 Awash 12103
3 Abysinnia 6560
4 Dashen 2396
5 OCB 4106
6 OIB 3859
Total 87705
Source own survey2021

After the total sample size is determined the researcher allocate the total number of samples
proportionately for each branches of commercial banks based on their respective total number of
customers by using the following formula.

Where; n = total number of samples=398

N= total number of customers from each branches

N1= total number of customers at each Branch

n1= sample size at each branch

sample list at each branch

Commercial banks Total number of customer from each Sample size at each branch
name branches
Commercial bank of 23941 398*23941/87705 = 108
Ethiopia
Awash 12103 398*12103/87705 = 86
BOA 6560 398*6560/87705 = 61
Dashen 2396 398*2396/87705 = 42
CBO 4106 398*4106/87705= 55
OIB 3859 3859*398/87705 = 46
Total 398

3.5 Sampling Techniques

Developing a sampling frame was difficult as it requires banks to make available confidential
information about their customers. This is something they would not do. Since there is no
sampling frame, non-probability sampling was used. In other word, limited resources or the
inability to specify a sampling frame may dictate the use of one or a number of non probability
sampling techniques (Saunders Mark, 2009).

Purposive/judgment sampling technique was used to select those pioneer banks in implementing
the technology. Being pioneer in the technology means it has a ground for the researcher to claim
why peoples resist to this technology. The reason behind this assumption is that those pioneer
banks have sufficient time to create awareness and able to change their customer attitude in order
to flourish the technology. Respective branches were selected based on convenience sampling
technique. Proportional sample respondents will be selected from each banks based on their
number of branch. Then, sample respondents were selected from respective branches by way of
approaching customers who visit the branch accidentally with the help of respective branches
staffs. Under convenience or accidental sample selection sample was identified primarily on the
basis of its relative ease of access or convenience; for example, market developments research
(IFC, 2009).

3.5 Data Sources and Types

In this study the Researcher uses both secondary and primary data. Secondary sources that are
going to be used in this research include books, journal articles, reports, research paper, and
various documents that help assist the preparation of this study. On the other hand, the primary
source of data will be the responses collected from customers of the six commercial banks (CBE,
AB, DB, OCB, OIB, and BA) who have registered to use mobile banking service.
3.6 Data Collection Procedures
Fin (1995) identifies four types of primary data collecting methods: self-administered
questionnaires; interviews; structured record reviews; and structured observations. For this study
primary data will be collected using structured questionnaire, because

This method is easy to standardize and produce results that are easy to summarize,
compare and generalize.
It is easy to use with large sample by fitting diverse experience into predetermined
response categories. Third,
it contributes to reliability by promoting greater consistency; since every respondent is
asked the same questions.

The questionnaire has two parts; the first part focuses mainly about the personal profiles of
sample respondents such as age, gender, income, education status etc. Whereas part two of the
questionnaire is going to deal with different factors based on TAM and the six added variables.
Closed ended questionnaires were used for the study.

3.7 Data Analysis

This study will employ customer survey to gather data and the quantitative evaluation of
customer’s attitudes and behaviors (on five-point scale) will uses to examine the relationships of
factors under the conceptual frame work. Descriptive analysis will be used to analyze the
demographic data of the sample. Mean, standard deviation and frequency percentages will be
used to summarize sample population characteristics obtained through the questionnaire. The
inferential (cause and effect) analysis is conduct using SPSS software.

3.8 Reliability and Validity

3.8.1 Reliability
As per Kothari (2004), we can say a measuring instrument is reliable if it provides consistent
results. Reliability is conducted to assess data quality. That is, answers to a reliable survey differ
because respondents have different opinions, not because the survey is confusing or has multiple
interpretations.

The study uses Cronbach’s alpha to assess the reliability of the variables. According to Field
(2005) and Tan &Teo, (2000), Cronbach’s alphas of the sub-scales ranged from 0.690 to 0.985
which indicate an acceptable internal consistency and reliability measures for the questionnaire
meaning that if the results exceed the minimum alpha of 0.690, the constructs measures are
reliable. In this study the measure is going to be taken as reliable when the Cronbach’s alpha
value is found to be 0.7 or above.

3.8.2 Validity
According to Kothari (2004), validity is the most critical criterion that indicates the degree to
which an instrument measures what it is supposed to measure. Validity can also be thought of as
utility. In other words, validity is the extent to which differences found with a measuring
instrument reflect true differences among those being tested. the researcher strongly asked
recognized experts give their opinion on the validity of the questionnaire items to measure the
variables.

3.9 Ethical Consideration

In order to keep the confidentiality of the data given by respondents, the respondents are not
going to be required to write their name and assured that their responses will be treated in strict
confidentiality. Furthermore, the researcher tried avoiding misleading or deceptive statements in
the questionnaire. Lastly, the questionnaires will be distributed only to voluntary participants.

Chapter Four

Budget and Work Schedule

4.1 Time Schedule

No Activity March April May June
1 Communicating your advisor and reparsing
your tittle
2 Working on the first draft and submitting to
your advisor for comment.
3 Correcting the first draft based on the
comments
4 Submitting the final to your advisor for
 approval
5 Submitting the Final Draft to your
Department and/or Program Coordinator
Office
6 Working on Review Literature to Develop it
well
7 Working on Data Collection Tools and get
approval from your advisor
8 Collecting data
9 Produce the first draft of the thesis and
submit to your advisor for comment
10 Produce the final Draft based on
comments
11 Thesis Submission to the Department
and/or Program coordinator office.
12 Thesis Defense

4.2 Budget
No Expense Units Cost per units Total costs
1 Research equipments
WIFI router 1 3000 3000
Tablet for data collection 1 2500 2500
Hand disk( 1TB) 1 3500 3500
2 Research material
Costly for monthly internet 4 750 3000
service
Photocopies 200 2 400
Paper 1 desta 500 500
Pen 10
Flip charts 5
Marker 2
Cell phone costs 600 minutes 200 200
4 Publication and
 dissemination
Printing and binding of the 1 500 500
proposal
Printing and binding of the 1 500 500
final report
TOTAL 14,100

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Appendix
Questioner

This survey is designed to obtain perceptual data for the dissertation entitled:
“FACTORSINFLUENCING THE ADOPTION OF MOBILE BANKING SERVICE” Case
of selected commercial banks in Asela Town to be submits to UNITY COLLEGE for the
fulfillment of Master of Business Administration (MBA) Program. The purpose of thesis is to
suggesting possible recommendation which can help the commercial banks to improve the
adoption of mobile banking. The survey requires you to spend about 15 to 20 minutes to
complete all the items.

Part -1 General Information Please put an “X “mark of your choice on the space provided.

1. Gender?

Male

Female

2. Age group?

18 - 25

26 – 30

31 – 40

41 – 50

Above 51

3. Education Level

No formal education

Secondary education

Diploma

University degree / college graduate

Master’s Degree

PhD

4. Income per month (Etb)?

No Income sources
 100 – 1,999

2,000 – 3,999

4,000 – 8,999

9,000 – 14,999

15,000 – 25,000

Above 25,000

5. Work status?

Employed

Un-Employed

A student

Military

House wife

Retired

6. Which bank’s service are you currently using?

Commercial bank of Ethiopia

Dashen Bank

Awash bank

Oromia Cooperative bank

Oromian International

Bank Bank of Abyssinia

7. How many years have you been using mobile banking service?
 1

More

8. Which service do you use in your mobile banking?

Balance inquiry View

Mini-statements

Fund transfer

Merchant payment

Currency conversion

Cash withdrawal

Other services

None of those

Part II – Basic Information

Please put “X “in the space provided on the appropriate response category against each question
where 1= Strongly Disagree (SD). 2= Disagree (D). 3= Neutral (N). 4= Agree (A). 5= Strongly
Agree (SA).

S. Factors influencing Statements scales

N adoption of mobile 1 2 3 4 5
SD D N A SA
banking service
1 1.Using mobile banking enables me to
Perceived usefulness utilize banking services more quickly
2.Using mobile banking improves my
performance
3.Mobile banking increases my
productivity
4.Using mobile banking services is
cost efficient
2 Perceived ease of use 1.Learning to use mobile banking is
easy for me
2.I find it easy to do what I want to do
by having a mobile banking

3.I find mobile banking flexible to

interact with
4.My interaction with mobile banking
is clear and understandable

3 Security and Privacy 1.Using Mobile banking is financially

secure
2.I trust in the ability of an online
bank to protect my privacy
3.I am not worried about the security
of mobile banking.
 4.Matters of security have no
influence on using Mobile banking
services
4 SelfEfficacy 1.I have confidence in my self
2.I feel confident about using Mobile
banking
3.I feel comfortable when using new
technologies
4.I am very skilled at conducting
electronic transactions
5 Facilitating 1.It is important for me to have
Conditions (Bank someone to help out in the bank in
Support) case of a problem when using mobile
banking
2.I think my bank is able to help me
quickly in technical and non-technical
issues related to mobile banking

3.I think the bank provides sufficient

training and guides to use mobile
banking
4.I am satisfied with the personal
service I get from the bank related to
mobile banking

6 Adoption of mobile 1.I find that mobile banking helps my

banking day to day activity
2.I intend to use mobile banking to
perform financial transactions
3.I use electronic fund transfer to
transact large amounts of money

4.I will strongly recommend others to

use mobile banking.
5.I will frequently use mobile banking
in the future