CPU BUSINESS AND INFORMATION TECHNOLOGY

COLLEGE SCHOOL OF BUSINESS POSTGRADUATE

PROGRAM MBA PROGRAM

THE EFFECT OF INFORMATION & COMMUNICATION

TECHNOLOGY ON ETHIOPIAN PRIVATE BANKS’

PERFORMANCE: THE CASE OF AWASH BANK

BY: ZEMEN HELISO

AUGUST 2023

ADDISABABA, ETHIOPIA
 CPU COLLEGE SCHOOL OF POSTGRADUATE

THE EFFECT OF INFORMATION & COMMUNICATION

TECHNOLOGY ON ETHIOPIAN PRIVATE BANKS’

PERFORMANCE: THE CASE OF AWASH BANK

A RESEARCH PROPOSAL SUBMITTED TO CPU COLLEGE,

FOR PARTIAL FULFILMENT OF THE REQUIREMENTS FOR
THE DEGREE OF MASTER OF ARTS IN BUSINESS
ADMINSTRATION (MBA)

BY:

ZEMEN HELISO

MAJOR ADVISOR:

YOHANNES W. (PhD)
 CERTIFICATE

This is to certify that the thesis entitles “The Effect Of Information &
Communication Technology On Ethiopian Private Banks Performance: The Case Of Awash
Bank” , submitted to CPU college for the award of the degree of the degree of master of
business administration (MBA) and is a record of bonafide research work carried out by Mr.
under our guidance and supervision. Therefore, here by declare that no part of this thesis has
been submitted to any other university or institutions for the award of any degree or diploma.

Main Adviser’s Name Date Signature

___________________ _______________ _________________

Co-Advisor’s Name Date Signature

__________________ __________________ _________________

 DECLARATION

I hereby declare that this thesis entitled “The Effect of Information & Communication
Technology on Ethiopian Private Banks Performance: The Case Of Awash Bank”, has been
carried out by me under the guidance and supervision of Dr._______________

The thesis is original and has not been submitted for the award of any degree or diploma
to any university or institutions.

Researcher’s Name Date Signature

_______________ ____________ _____________

 Abstract
Information and Communication Technology (ICT) has emerged as a transformative
force in the banking sector, revolutionizing traditional banking practices and reshaping the
industry's landscape. This thesis investigates the multifaceted effects of ICT adoption on private
in case of Awash bank, analyzing its influence on various aspects, including organizational
strategies, financial performance, and customer experience. The research employs a mixed-
method approach, combining qualitative and quantitative analyses to gain a comprehensive
understanding of the ICT-driven changes within the banking sector. The qualitative phase
involves in-depth interviews and case studies with key industry stakeholders, including bank
executives, IT professionals, and customers, to explore the motivations, challenges, and
outcomes of ICT implementation.

Through an extensive literature review, this study examines the theoretical foundations
and conceptual frameworks underpinning the integration of ICT in the banking domain. It sheds
light on the various technologies employed by banks, such as mobile banking, online
transactions, artificial intelligence, big data analytics, and block chain, and how they have
revolutionized traditional banking processes.

The findings demonstrate that ICT adoption has significantly affected banks' strategies,
allowing them to streamline operations, improve efficiency, and expand their service offerings.
Moreover, banks that have successfully embraced ICT have witnessed enhanced financial
performance, with improved profitability and reduced operational costs.

The thesis concludes with practical recommendations for banks and industry practitioners aiming
to leverage ICT effectively. By combining theoretical insights with empirical evidence, this
study contributes to the understanding of ICT's transformative impact on the banking sector and
provides valuable insights into creating strategies that maximize the benefits of technology
adoption while mitigating potential risks.
 Acknowledgement

I would like to express my deepest appreciation and gratitude to the following individuals
and organizations, without whom this thesis would not have been possible. My sincere thanks go
to my supervisor,Yohanes W. (PhD) for their invaluable guidance, mentorship, and unwavering
support throughout the entire research process. Their expertise and encouragement have been
instrumental in shaping the direction and quality of this thesis.

I am grateful to the faculty members of the CPU college MBA department staffs for their
valuable insights and feedback, which have enriched my understanding of the subject matter.
Special thanks to the participants of this study, whose cooperation and willingness to share their
time and knowledge have been crucial in gathering the necessary data for my research.

I would also like to acknowledge the support of my friends and family, who have been a constant
source of motivation and encouragement. Their belief in my abilities has kept me focused and
determined to complete this thesis.
Table of contents

Table of Contents
CHAPTER ONE...........................................................................................................................................9

INTRODUCTION.........................................................................................................................................9

1.1. Background of the study..............................................................................................................9

1.2. Statement of the problem and research questions...................................................................10

1.2.1. Statement of the problem.................................................................................................10

1.2.2. Research Question.............................................................................................................11

1.3. Objective of the Study...............................................................................................................12

1.3.1. General Objective..............................................................................................................12

1.3.2. Specific Objectives.............................................................................................................12

1.4. Research Hypothesis..................................................................................................................12

1.5. Significance of the study............................................................................................................12

1.6. Scope of the study.....................................................................................................................13

1.7. Limitation of the study...............................................................................................................14

1.8. Organization of the Study..........................................................................................................14

CHAPTER TWO........................................................................................................................................15

REVIEW OF RELATEDLITERATURE.......................................................................................................15

2.1. Theoretical Review....................................................................................................................15

 2.1.1. Theory of Information Communication Technology..........................................................16

2.1.1.1. Transaction cost Theory of ICT...........................................................................................16

2.1.2. Relationship between ICT and Organizational Performance: Banking Industry.................17

2.1.3. Role of ICT in the Banking Industry......................................................................................18

2.2. Theoretical Framework..............................................................................................................18

2.2.1. Measuring Customer Satisfaction......................................................................................18

2.2.2. Measuring Staff Productivity..............................................................................................19

2.3. Empirical literature....................................................................................................................19

CHAPTER THREE.....................................................................................................................................21

METHODOLOGY.......................................................................................................................................21

3.1. The study setting........................................................................................................................21

3.2. The study design........................................................................................................................21

3.3. Population and Sampling Design...............................................................................................22

3.3.1. Population of the study......................................................................................................22

3.3.2. Sample Size Determination................................................................................................22

3.4. Sample Selection Technique......................................................................................................23

3.5. Source and Methods of Data Collection................................................................................24

3.6. Methods of Data Analysis..........................................................................................................24

3.7. WORK PLAN (TIME BUDGET).....................................................................................................24

3.8. COST BUDGET............................................................................................................................25

2. Reference..........................................................................................................................................26
 CHAPTER ONE

INTRODUCTION

1.1. Background of the study

Information Communication Technologies have been a current issue for the past few years and
hardly a day goes without a newspaper covering news referring to the ‘new economy’ or
‘information society’. ICT is also widely talked about in academia and governmental bodies.
This is because of their influence in many aspects of our society from on-line shopping to virtual
chatting.

The role of ICT in the banking industry became of interest to this study due to the significance
role it plays in the economy by stimulating economic growth through the intermediation of funds
to economic agents that need them for productive activities. This function is very vital for any
economy that intends to experience meaningful growth because it makes arrangement that bring
borrowers and lenders of financial resource together and more efficiently too than if they had to
relate directly with one another. (Adam, 1998)

Hence, the objective of this study is to examine the role of information and communication
technology in ensuring efficient service delivery in the banking industry as a strategy for the
actualization of the profit maximization objectives of banks. The history of modern money in
Ethiopia is traced back more than 2000 years (Pankhust 1968 cited in Alemayehu, 2006).

Modern banking in Ethiopia was started in 1905 with the establishment of Abyssinia Bank,
which was based on a fifty-year agreement with the Anglo-Egyptian National Bank. In 1908 a
new development bank (called Socite Nationale d’Ethiope Pour le Development de Agriculture
et du Commerce) and two other foreign banks (Banque de 1’Indochine and the Compagnie de
1’Afrique Orientale) were also established. These banks were criticized for being wholly foreign
owned.

This research concentrates on the effects of ICT in the performance of commercial banks.

The aim is to identify and understand the changes that ICT is causing on the banking sector, in
order to examine in detail how the recent (and foreseeable) advances in ICT are affecting the
sector and its future evolution. As ICT is having a strong influence on the evolution of the
financial sector as a whole, financial markets and banks, some characteristics of evolution of
markets will fall within the scope of this research.

There exist various approaches to studying the impact of ICT on the banking sector. In this
research, we combine the technology assessment (TA) and economic approach. The aim of TA is
to state objectively as much as possible the positive and negative impacts, the costs and benefits,
the risks and advantages associated with (present or foreseeable) technical challenges. TA is an
appropriate conceptual framework for analyzing the multiple aspects of the relationship between
technology and banking and payment systems.

1.2. Statement of the problem and research questions

1.2.1. Statement of the problem

One of the challenges confronting e banking could be classified in to three classes as human,

Operational and technical constraints. The human constraints include physical disability, poor

sight, illiteracy and aging. The operational constraints include insecurity of funds transferred,

frauds and standardization of channels. The technical constraints are centered on the lack of

Supporting infrastructure such as erratic electric supply, independence and lack of encryption on

short messages system (SMS) messages (Agbada, 2008).

Other identified problems that can have an impact on the banks in the adoption of ICT can
be grouped broadly as physiological and behavioral. These include consumer awareness,
security, accessibility to computers, reluctance to change, the cost of adoption, and preference
for personalized services among others.

Additionally, diffusion of smart card innovation needs high investment for the upgrade of

ATMs and EFT/POS terminals to be capable of accepting smart cards and presumably a

Substantial investment in adding smart card technology for mobile computers and telephony
stand to be another challenge.

Coupled with the problems is a situation where a bank issues an individual debit card that is

associated with an account with a line of credit and is also an ATM debit card, the individual can

Perform a number of different types of transactions with the same card. The line of credit could
be accessed fraudulently, where the owner has resource under consumer credit legislation and
under regulation if the fraud involves an electronic fund transfer (EFT). When automated teller
machines (ATMs) or electronic points of sale (POS) terminals are used, his liability is limited
under the electronic fund transfer agreement. If, however, the fraudulent use of the card directly
debits his bank account in a paper-based transaction, the consumer has no recourse under current
legislation.

This is an example where the same card represents three different instruments, each of which, in
the case of fraud, would require different actions by the consumer (Agbada, 2008). In order to
investigate the impact of ICT on bank performance in addition to problems identified, this study
intends to investigate the following question: To what extent does ICT improve bank
performance with reference to the selected Awash banks in Ethiopia?

1.2.2. Research Question

Based on the statement of the problem and review of related literature, this study seeks answers

For the following questions:

 To what extent does ICT have any effect on customers‟ satisfaction in Ethiopian Private

Banks industry?
  To what extent has ICT affected employee performance/productivity in discharging their

Duties and responsibilities?

 What are the main challenges that discourage customers to use Technology-based

Products and services provided by the banks

1.3. Objective of the Study

1.3.1. General Objective

To leverage Information and Communication Technology to enhance the overall performance

and efficiency of banking operations an to analyze the impact of ICT in enhancing the
performance of banking operations with reference to selected commercial banks in Ethiopia.

1.3.2. Specific Objectives

Specific objectives of my study will be:

 To evaluate the effects of ICT on bank’s profitability

 To assess the contribution of macroeconomic factors on banks ICT and bank’s profit
 To strengthen Data Security and Privacy
 To enable Digital Transformation.

1.4. Research Hypothesis

Based on the research objectives stated above, the following research hypothesis will be

developed:

H1: ICT has significant effect on Awash bank’s bank performance.

H2: ATM has no significant relationship on Awash bank’s bank performance.

H3: POS has no significant relationship on Awash bank’s bank performance.

H4: GDP has significant relationship on Awash bank’s bank performance.

H5: Inflation has no significant effect on Awash bank’s bank performance.

H6: Number of branch has significant effect on Awash bank’s bank performance.
1.5. Significance of the study

The significance of the study on the effects of ICT on Banks' Performance lies in its potential to
provide valuable insights and contributions to various stakeholders in the banking and
technology sectors. Here are some key points that highlight the significance of the study:

The study contributes to the existing body of knowledge in the banking industry by providing a
deeper understanding of how ICT adoption influences banks' performance.

Strengthening Customer-Centric Approaches understanding the effects of ICT on customer

experience and satisfaction allows banks to develop customer-centric approaches. By leveraging
ICT, banks can offer personalized services, streamlined processes, and convenient digital
channels to enhance customer relationships and loyalty.

Building a Case for ICT Adoption for banks that have not fully embraced ICT, the study can
provide evidence of its potential benefits. It may encourage more banks to invest in and adopt
ICT to stay competitive and deliver better services to customers

Promoting Innovation in Banking: The study may reveal innovative ICT solutions and best
practices that have positively influenced banks' performance. This can encourage banks to adopt
a culture of innovation and explore cutting-edge technologies to stay competitive in the digital
landscape.

In conclusion, the significance of the study on the "Effects of ICT on Banks' Performance"
extends beyond the banking sector. It offers valuable knowledge, insights, and guidance that can
positively influence the strategies and practices of banks, policymakers, investors, and other
stakeholders. The study's findings have the potential to foster a more technologically advanced
and customer-focused banking industry, ultimately benefiting the broader economy and society.

1.6. Scope of the study

This study is confined only to know the impact of ICT on customers‟ satisfaction and
employees‟ performance/productivity of selected Ethiopian private banks. The study was
conducted based on Dashen Bank and United Bank; for they are pioneers to move towards
adopting Information and Communication Technology and networking their branches and to
move to core banking which is the platform for all Technology-based services/products. The
participants of the study were also selected from Addis Ababa branches of the two selected
banks.

The first limitation of the study relates to the sampling procedure i.e. convenience sampling,
which limits the generalizability of the research findings. The second limitation relates to the
sample size for primary data sources; the number of participants included in the sample may not
be good representative of the population. As last limitation, the study failed to measure the
financial impact of adoption and use of the ICT in the banking industry. Future research is,
therefore, recommended to address the above stated limitations.

1.7. Limitation of the study

The study was conducted based on AWASH BANK; for they are pioneers to move towards
adopting Information and Communication Technology and networking their branches and to
move to core banking which is the platform for all Technology-based services/products.

The first limitation of the study relates to the sampling procedure i.e. convenience sampling,
which limits the generalizability of the research findings. The second limitation relates to the
sample size for primary data sources; the number of participants included in the sample may not
be good representative of the population. As last limitation, the study failed to measure the
financial impact of adoption and use of the ICT in the banking industry. Future research is,
therefore, recommended to address the above stated limitations.

1.8. Organization of the Study

The study consists of five chapters. Chapter one is the introduction chapter, which presents
background of the study, statement of the problem, research question, research hypothesis,
objective of the study, significance of the study, scope and limitation of the study. The second
chapter deals with review of related literatures regarding the topic of the study. The third chapter
discusses the research methodology and methods employed by the current study. Chapter four
 presents the data analysis results and their interpretation. Finally, based on the analysis and
interpretation of the findings, chapter five presents the conclusion and recommendation.

CHAPTER TWO

REVIEW OF RELATEDLITERATURE
This chapter starts with presenting the overview of banking system in Ethiopia. Besides,
information and communication technology and its impact on commercial bank’s performance
were presented. Following this, empirical studies are reviewed by focusing on ATM, POS and
ICT infrastructure. Then after, the knowledge gaps from the reviewed literatures are outlined.

2.1. Theoretical Review

Ethiopian banking history, in its modern sense, began towards the end of the reign Emperor
Menilek. This period witnessed the establishment of the country’s first bank, called Bank of
Abyssinia, which was an affiliate of the National bank of Egypt, and was founded in 1905
(Pankhurst,2012). Currently, banking sectors in Ethiopia is showing progressive development in
terms of number of branches, total assets and human resource utilization. Thus, currently number
of banks in Ethiopia reached nineteen as shown in the following table.

No. Name of Bank Number of % Market Share Year of

Branches Establishment
1 Commercial Bank of Ethiopia 856 38.8 1963
2 Construction and Business Bank 115 5.2 1975
3 Development Bank of Ethiopia 32 1.4 1969
4 Awash International Bank 152 6.9 1994
5 Dashen Bank 142 6.4 1995

6 Abyssinia Bank 109 4.9 1996

7 Wegagen Bank 100 4.5 1997

8 United Bank 99 4.5 1998

9 Nib International Bank 94 4.3 1999

10 Cooperative Bank of Ethiopia 105 4.8 2004

11 Lion International Bank 62 2.8 2006

12 Oromia International Bank 109 4.9 2008

13 Zemen Bank 9 0.4 2008

14 Bunna International Bank 63 2.9 2008

15 Berhan International Bank 48 2.2 2009

16 Abay Bank 70 3.2 2010

17 Addis International Bank 21 1.0 2011

18 Debub Global Bank 19 0.9 2012

19 Enat Bank 3 0.1 2012

Source: National Bank of Ethiopia Annual Report, 2013/14

2.1.1. Theory of Information Communication Technology

ICT becomes integral interactive tools deeply involved in the minute-to-minute operations and
decision making for any organizations. The following theoretical explanations help us to
understand how IT alters organizations operation to be more efficient, competitive and
profitable.

2.1.1.1. Transaction cost Theory of ICT

IT affects the quality and cost of acquire information and by doing this it helps firms’ contract in
size because it can reduce transaction cost which is the cost incurred when a firm buys on the
marketplace what it is cannot make itself. According to Transaction cost theory, firms and
individuals seek to economize on transaction costs, much as they do on production cost.
Traditionally, firms have tried to reduce transaction cost through vertical integration, by getting
bigger, hiring more employees, buying their own suppliers and distributors.

ICT, especially the use of networks, can help the firms lower the cost of market participation
(transaction cost), making it worthwhile for firms to contract with external suppliers instead of
using internal sources. Firms traditionally grew in size to reduce transaction cost. IT potentially
reduces the costs of a given size, shifting the transaction cost curve inward, and opening up the
possibility of revenue growth without increasing size, or even revenue growth accompanied by
shrinking size. This is thought enabling the company online finding of low cost suppliers all over
the world (Kenneth & Jane, 2009).
2.1.1.2. Theory of Organizational behavior

According to this theory information, technology facilitates flattening of hierarchies by

broadening the distribution of information to empower lower level employees make a decision
and increase management efficiency. IT pushes decision-making rights lower in the organization
because lower level employees receive the information they need to make decision without
supervision. Second, because managers can now receive so much more accurate information on
time, they become much faster at making decision which decline management cost as a
percentage of revenues and make the organization more efficient. Moreover, information
technology creates networked organization in which groups of professionals come together
electronically and accomplish a specific task.

Hence, firms operate as virtual organizations in which work no longer is tied to geographic
location. Virtual organization link use networks to link people, asset and ideas. They can ally
with suppliers, customers, competitors and other stockholders to create and distribute new
products and services without being limited by traditional organizational boundaries or physical
locations. IT helps companies organize in more flexible ways, increasing their ability to sense
and respond to changes in the marketplace and to take advantage of new opportunities (Robert
&Dorothy, 2003).

According to Kenneth& Jane (2009) there are six important strategic benefits that business will
realize as a result of using Information technology and associated technologies make so essential.
These are operational excellence; new products, services, and business models, customer and
supplier intimacy, improved decision making, competitive advantage and survival.

2.1.2. Relationship between ICT and Organizational Performance:

Banking Industry

Most of the initiatives regarding technology are aimed at providing better and more efficient
customer service by offering multiple options to the customer. The death of distance, which is
aby-product of technology, has become a reality in the banking sector. Technology is also
playing key role in banks‟ strategies for gaining a competitive edge (R.K. Uppal, 2008).
According to Alalade et. al. (2014), the application of information and communication
technology concepts,

Techniques, policies and implementation strategies to banking service, has become a subject of
fundamental importance and concern to all banks and indeed a prerequisite for local and global
competitiveness. ICT directly affects how managers decide, how they plan and what products
and services are offered in the banking industry. According to R.K. Pupal (2008), the
relationship between IT and banking is fundamentally symbiotic. In the banking sector, IT can
reduce costs, increase volumes, and facilitate customized products; similarly, IT requires banking
and financial services to facilitate its growth.

Alalade et. al. (2014) argued that the most significant shortcoming in the banking industry today
is a wide spread failure on the part of senior member of management in banks to grasp the
importance of technology and incorporate it into their strategic plans accordingly. He continued
that banks should re-examine their service and delivery systems in order to properly position
them within the framework of the dictates of the dynamism of information and communication
technology. Many studies agreed that there is a positive relationship between ICT and
performance of banking in terms of quality service delivery, customer satisfaction and attraction,
employees‟ productivity, cost reduction, profitability, and effective decision-making.

2.1.3 Role of ICT in the Banking Industry

Information and Communication Technology has become the heart of banking industry, while
banking industry is the heart of the economy. ICT has created a new infrastructure for the world
economy to become truly global and provided the users of new technology a competitive
advantage over their rivals. Electronic banking system has become the main technology driven
revolution in conducting financial transactions. However, banks have made huge investments in
telecommunication and electronic systems, users have validated to accept electronic banking
system as useful and easy to use (Adesina and Ayo, 2010).

Castells (2001) reveals that, now transactions worth billions of dollars can only take place in
seconds in the electronic circuit throughout the globe by pressing a single button. Although ICT
has revolutionized the way of living as well as conducting businesses and study of banking
industry has received increased attention over the last decade, it continues to pose challenges for
marketers and academic alike. Imran et. al., (2012) investigated the role of ICT on the efficiency
of the bank and explored the relationship between the investment in ICT and bank efficiency
measures. The result showed that investment in information systems is contributing new
products and services. These are the major benefits of investment in ICT, which are propelling
many banks to invest in ICT.

2.2. Theoretical Framework

2.2.1. Measuring Customer Satisfaction

Customer satisfaction can be defined as the company’s ability to fulfill business, emotional, and
psychological needs of its customers. In other word, it is a summary of psychological state
resulting when the emotion surrounding disconfirmed expectations is coupled with the
consumers‟ prior feeling about the consumption experience (Chavan and Ahmad,
2013).However Kumbhar (2011) argued that a customer satisfaction is an ambiguous and
abstract concept. He continued that, actual manifestation of the state of satisfaction will vary
from person to person, product to product and service to service.
2.1.2. Conceptual framework

2.2.2. Measuring Staff Productivity

With the unpredictable business environment and intense business competition, the companies
are required to reach certain standards by improving their performance to align with such great
demands; otherwise, many problems will surface, including running the risk to close down the
business. This performance relates to the firm or individual level which sees the human resource
becoming the most determining factor to achieve the organizations‟ objectives (Muda et.
al.,2014). The concept of performance is something that interests and concerns everybody,
whetherit is the performance of a car, or individuals and teams in organizations. An employee
who performs well is seen as one who achieves good results according to some pre-determined
goals(Ojokuku & Sajuyigbe, 2012). Similarly Imran et. al, (2014) concurred that a firm‟s
resource areextremely important for the firm‟s development, and that human capital is a key
resource of afirm.

2.3. Empirical literature

Under this section, previous empirical studies on the impact of ICT on the performance of
commercial banks and related studies in developed and developing countries and Ethiopia will
be reviewed. Managers cannot ignore Information Systems because they play a critical role in
contemporary organization. The application of information and communication technology
concepts, techniques, policies and implementation strategies to banking services has become a
subject of fundamental importance and concerns to all banks and indeed a prerequisite for local
and global competitiveness. ICT directly affects how managers decide, how they plan and what
products and services are offered in the banking industry. It has continued to change the way
banks and their corporate relationships are organized worldwide and the variety of innovative
devices available to enhance the speed and quality of service delivery.

Information and Communication Technology (ICT) is the automation of processes, controls, and
information production using computers, telecommunications, software’s and other gadget that
ensure smooth and efficient running of activities. It is a term that largely covers the coupling of
electronic technology for the information needs of a business at all levels. ICT has surpassed the
role of support services or only electronic data processing; its fields of applications are slightly
global and unlimited. Its devices especially the Internet and modern computer email facilities
have further strengthened early modernizations like the telephone and fax. Other ICT devices
include data recognition equipment, factory automation hardware, services, telecommuting, and
teleconferences using real time and online system (Adeoti, 2005).
 CHAPTER THREE

METHODOLOGY

3.1. The study setting

This study will conduct on private banks in Ethiopia specifically in case of Awash bank in Addis
Ababa different branches. It will be at Awash Bank's head office and various branches to inform
new employees who have been working in the bank for many years, as well as new employees
about the bank's ICT.

3.2. The study design

Study design is a master plan specifying the methods and procedures for collecting and analyzing
the required data. The choice of research design depends on objectives that the researchers want
to achieve (John, 2007). Since this study was designed to examine the relationships between ICT
and banks performance, a logical reasoning either deductive or inductive is required. Deductive
reasoning starts from laws or principles, generalizes to particular instance where as inductive
reasoning starts from observed data, and develops generalization from facts to theory. Besides,
deductive reasoning is applicable for quantitative research whereas inductive reasoning is for
qualitative research. Thus, due to quantitative nature of data, the researcher used deductive
reasoning to examine the relationship between ICT and commercial banks performance in this
study.

According to Creswell (2003), the objective to be achieve in the study is a base for determining
the research approach for the study. In case, if the problem identified is factors affecting the
outcome having numeric values, it is quantitative research. Therefore, the researcher employed
quantitative research approach to see the regression result analysis with respective empirical
literatures on the impact of ICT on commercial banks performance. Thus, the researcher used
data from 2010 to 2014 period for seven commercial banks in Ethiopia.
3.3. Population and Sampling Design
3.3.1. Population of the study

200 customers and 60 employees of Awash Bank will be randomly select to participate in the
study. The participants were selected using convenient sampling technique, Non-probability
sampling method (Saunders et. al., 2009). According to Saunders et. al. (2009) unlike probability
sampling, there are no rules in non-probability sampling techniques.

Rather the logical relationship between your sample selection technique and the purpose and
focus of your research is important; generalizations being made to theory rather than about a
population. Non-probability sampling involves the selection of subject based on assumption
regarding the population of interest, which forms the criteria for selection.

For the purpose of this research work, the sample used comprises six selected Awash banks
branches out of one hundred twenty five banks in Addis Ababa. Thus, compared to the
population, the sample that makes it adequate for drawing inferences with respect to the entire
population of the eighteen banks in Addis Ababa.

3.3.2. Sample Size Determination

The total populations in the study area are 412 employees. It is very expensive to collect data
from all these employees, so that the researcher will use Toro Yamane’s (1973) as cited by
Fikadu Abdias, to determine the sample size, which is from the representative of total
population. The sample size is determined by the following formula take 95% confidence level
assume that for this formula to determine the sample size, at e=0.05.

N.O Branch name Clerical employee Sample Proportion

1 Abuare
2 Addis Ketema
3 Arat Killo
 4 Awtobis Tera
5 Bambis
6 Beklobet
7 Bole
8 Bole 24  Branch
9 Churchill road
10 Kebena

11 Megenagna
12 Mehal Arada
13 Mexico
14 Piazza
15 Sidist Killo
16 Urael
17 Enderase
18 CMC
19 Ayat Adebabay
20 Africa Avenue

3.4. Sample Selection Technique

Sampling is a technique of selecting a suitable sample for the purpose of determining parameters
of the whole population. Population is the list of elements from which the sample may be drawn
(John, 2007). A sample is drawn to overcome the constraints of covering the entire population
with the intent of generalizing the findings to the entire population. As noted by Kothari (2004),
good sample design must be viable in the context of time and funds available for the research
study. Besides, judgmental sampling offers the researcher deliberately select items for the sample
concerning the choice of items as supreme based on the selection criteria set by the researcher.
According to Asika (2006), it is practically impossible to take a complete and comprehensive
study of the entire population going by nature and pattern of distribution. Hence, a representative
sample is used from the population of the study.

For the purpose of this research work, the sample used comprises six selected Awash banks
branches out of one hundred twenty five banks in Addis Ababa. Thus, compared to the
population, the sample is 61.3%, which makes it adequate for drawing inferences with respect to
the entire population of one hundred twenty five banks in Addis Ababa.

3.5. Source and Methods of Data Collection

There are two types of data which is usually used in researches, primary and secondary data.
Primary data does not actually exist until and unless it is, generate through the research process
as part of the consultancy or dissertation or project. It will often be collect through techniques
such as experimentation, interviewing, observation and surveys. On the other hand, Secondary
data is information which already exists in some form or other but which was not primarily
collect, at least initially, for the purpose of the consultancy exercise at hand. In fact, secondary
data is often the start point for data collection in as much as it is the first type of data to be
collected (Lancaster, 2005).

This study will uses primary and secondary source of data. Regarding the primary data, the
researcher will distribute structured questionnaires to relevant participants. In order to strength
the result and findings of the study the researcher will examine different articles, academic
journals, useful academic books and banks’ reports as secondary data.

3.6. Methods of Data Analysis

Creswell (2005) defined data analysis as a process, which involves drawing conclusions and
explaining findings in words about a study. Panel regression analysis will be conducted using E-
View 8 data analysis econometric packages to determine the exact nature of the relationship that
exist between ICT investment, ATM and POS. Prior to the estimation of the regression line,
descriptive analysis will be use to describe the behavior of the individual variables over the
period under review. The descriptive analysis was also inculcated a brief assessment of the
general external and internal variables in the country over the period. Correlation analysis was
also conducted to see the relationship among the dependent and independent variables. This
would help to get an initial picture as to the nature of the relationship among the variables before
proceeding to regression analysis.

3.7. WORK PLAN (TIME BUDGET)

The study is expected to be completed within time table explain each of the important phase of
the research as follows.

NO Activity Months

Mar Apr May June July August Sep Oct

2015 2015 201 2015 2015 2015 2016 2015
5
1 Bibliographic Searches
2 Photocopy info from non
bibliographic sources
3 Problem defining &
literature finding, Title
selection
Proposal Writing
4 Submission of thesis
proposal
5 Fine tune research
question and methodology
6 Prepare research tools in
detail
7 Make contacts for
interviews/questionnaires
8 Data collection

9 Data analysis

10 Writing up of paper
 11 Revision, editing and
submission
12 Submission of research
paper
13 Paper defense

3.8. COST BUDGET

A table that shows the expected costs to be incurred for the accomplishment of each activity is
presented below.

Budget heading Unit Quantity Cost Total

Cost(Birr)
Perdiem for Researcher Person 1 - -

Perdiem Data Collector Person 1 - -

Stationary and Equipment
Photo copy paper Ream 1 780 780
Pen Pcs. 1 25 25
Flash disk Pcs. 1 350 350
Miscellaneous Birr 500
Sub-total 1655
Contingency 10% 165
GRAND TOTAL 1820
2. Reference

1. Adegbaju, A. A. & Olokoyo, F. O. (2008): Recapitalization and Bank’s Performance: A

Case Study on Nigerian Banks, African Economic and Business Review, Volume 6, number

1: Spring

2. Agbada, A. O. (2008), Electronic Banking in Nigeria, Problems and Prospects from the

Consumer’s Perspective, Central Bank of Nigeria Bulletin, Volume 32, Number 4; October

– December.

3. Asika, N. (2006). Research Methodology in Behavioral Sciences, First Edition. Ibadan:

Longman Publishers Nig. Ltd.

Abdllah, Z. (1985), A Critical Review of the Impact of ATMs in Malaysia, Banker's journal

of Malaysia, Vol. 28 pp.

4. Adam (1998), Financial Intermediation and Economic Growth: Evidence from Nigeria,

Journal of Economic Management

5. Adeoti, J.O (2005) “Information Technology Investment in Nigerian Manufacturing Industry:

The Progress So Far”, Selected Papers for the 2004 Annual Conference, Ibadan: Nigerian

Economic Society

6. Adesina, A. and Ayo, C. (2010), an Empirical Investigation of the Level of Users’

Acceptance of E- banking in Nigeria, Journal of Internet Banking and Commerce, Vol. 15,

No.1.

7. Akram Jalal-Karim, & Hamdan, Allam M. (2010): “The Impact of Information Technology
on improving Banking Performance Matrix: Jordanian Banks as Case
Study”, European Mediterranean and Middle Eastern Conference on Information System, April
12 th –13th, Abu Dhabi, UAE.

8. AmanAssefa (2009).Information and Communication Technology in Ethiopia Challenges and

Prospects from an A2K Perspective Unpublished Master’s Thesis, Addis Ababa

University