A Methodology to Test Viability of an Interest Rate Commission Agent Banking System (AIRCABS)

This research presents a stepwise description, explanation and prediction of dependent and independent variables in developing empirical methodology to test the viability of an interest rate commission agent banking system, a system where the bank acts as an agent for investors' loan funding. The bank sets an agreement to administer the loan after disbursement and retains reasonable interest rate commission from the agreed investors' loan funding credit price. Although no empirically tested bank intermediation model has been published, the researcher considered primary data from structured survey questionnaires from a sample population of 300 bank professionals and ten years financial statements published in the period from 1 July, 2006 to 30 June, 2016. One government bank and 16 private commercial banks in Ethiopia were included. To test the research hypothesis, canonical correlation and a multiple logistic regression statistical tools were considered. To analyse the survey questionnaires Cronbach Alpa was used