Factors Affecting Risk Management Practices of Interest Free Banks: the Case of Werabe Town in Siltie Zone Central Ethiopia Regional State
Year: 2025
Type: article
Abstract: ABSTRACT A few years ago, interest free banking was introduced in the Werabe town, as an alternative within the conventional banking system, operating on both a window based model and full fledged that adheres strictly to Sharia principles. However, its operations have faced several challenges, including issues related to risks management practices. Identifying these factors is crucial for implementing effectively risk management practices. Accordingly, this study aims to examine the factors affecting the risk manag ement practices of interest free banks in the Werabe town, Siltie zone central Ethiopia regional state. The study employed both descriptive and inferential analysis to explore risk management practice hindering factors. Cross sectional data was collected through questionnaires to address the research questions. 188 sample respondents (manager, non manger staffs) were drawn from two full fledged and 16 window based banks using simple random probability sampling method. The data collected from the questionn aires were analyzed using STATA software, applying descriptive statistics such as percentages and frequencies, as well as regression analysis. The results indicate that risk assessment and analysis, and credit risk analysis are important factors to enhance risk management practices of interest free banks in the study area . Additionally, the study recommends that Interest free banks in the Werabe town need to facilitate trainings to their staffs to enhance their level of understanding, identifying and managi ng the various potential risks in the banking sector.
DOI: 10.20372/nadre:9367
Author: Redwan Hirpo
Language: English
Subfield: Accounting
Domain: Social Sciences
Open Access status: green
OpenAlex ID: W6907333423
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