Factors Affecting the Intention to adopt Internet Banking Services among Small and Medium Sized-Enterprises in Yemen

Nabil Hussein Al-Fahim¹, Wan Jamaliah Wan Jusoh², Adewale Abideen³

¹PhD student, Business Administration, KENMS, IIUM

²Department of Business Administration, KENMS, IIUM

³Assistant Prof. Dr., Department of Finance, KENMS, IIUM

Corresponding author Email: nalfaheem@yahoo.com

Accepted 03 June 2014

Abstract

In spite of the wide adoption of Internet banking service in developed countries, its application is still low in developing countries like Yemen. The purpose of this study is to examine and investigate the main factors which influence the adoption of Internet banking services by Small and Medium Enterprises (SMEs) managers or owners in Yemen. The research framework consists of five latent variables, four exogenous variables and one endogenous variable. The exogenous variables consist of environmental factors such as ICT readiness, regulatory support, financial institution support and competitive pressure while endogenous variable comprises of intention towards Internet banking service adoption (IBSA). In addition, this study will explain how the Technology Organization Environment (TOE) framework was being used in examining the factors of Internet banking services adoption in Yemen. The hypothetical relationship was examined using structural equation modeling (SEM). The findings of the study indicated that competitive pressure was the high predictor that influence towards IBSA followed by regulatory support and financial institution support while ICT readiness was an insignificant and negative effect towards IBSA in Yemen.

Keywords: Internet Banking Services Adoption (IBSA), Environmental factors, TOE framework, SMEs, Yemen