The Effect of Mobile Banking On Financial Performance, A Case In Commercial Bank Of Ethiopia Dire Dawa City

The purpose of the study was to investigate the effect mobile banking on financial performance of the commercial bank of Ethiopia in Dire Dawa City, Ethiopia. The study was guided by the following research objective to: identify products of mobile banking service practiced, measure the association between mobile banking service components and financial performance, and assess the effect of mobile banking service components on financial performance. The study also guided by diffusion of innovation theory, the market power theories, and financial intermediation theory. To achieve this objective both descriptive and explanatory type of research design which is a cross sectional in nature with a quantitative approach were used. Primary data was collected using a 5 point likert scale using closed-ended questionnaire from employees. The study sampled 246 employees out of a target population of 637 using proportionate stratified sampling. Data was analyzed by using both descriptive statistics and inferential statistics measures to summarize and relate variables. Descriptive statistics included such as mean, percentage, frequency and standard deviation were used to describe the characteristics of the variables. Reliability of data collection instrument was measured by Cronbach Alpha and researcher ensured the 0.7 threshold was not met. Multiple regression analysis was applied to test the hypotheses. The results of the hypotheses tested indicate that all elements of mobile banking ; Fund transfer, Balance Inquiry and Bill payment carried out by the bank affect bank"s financial performance significantly in a positive manner with different levels. Fund transfer dimension of mobile banking has the highest effect on financial performance, flowed by balance inquiry. Bill payment has the least effect among all identified elements of mobile banking. This study has recommended the exploitation of elements of mobile banking aspects; Fund transfer, balance inquiry and bill payment more in order to enhance financial performance. It further recommends that the bank need to improve the existing mobile banking practice to influence financial performance in a better way either by promoting users, and making promotion on the use of such service.