Abstract
The aim of this research was to assess the role of social networks (circles of friends, family members, close relatives, members of an ethnic group, congregates of a certain religion, etc) in peoples’ economic decision making endeavors, focusing on how these variables influence customers’ choice of banks in Shashemene town, Oromia, Ethiopia. Oromia International Bank and Cooperative Bank of Oromia were purposively selected as case studies with the intention that the nomenclature of the organizations is associated to the largest ethnic group in the study area (oromo). A descriptive survey research design was used in which quantitative data were collected from 237 samples selected based on convenience sampling technique. Data were then inserted in to SPSS version 20 for further analysis and presented using descriptive statistical tools. It was found that 79.3% of customers belong to the dominant ethnic group in the study area (Oromo). Respondents’ decision of becoming customers of the current bank was made because there were employees in the bank with whom they had personal relationships, realizing that they can make transactions using their mother-tongue language, the nomenclature of the bank is associated to their ethnic identity, and due to recommendations from close relatives and friends that have been using the bank (8%, 5.1%, 25.7%, 5.5%, respectively). In addition, social networks also play the role of serving as sources of information for customers during the process of bank selection. Findings suggest that social networks influence individuals’ economic behavior by supplying information, serving as role models, and recommending others to join an economic behavior similar to their own. Above all, people do not always behave after rational calculations of the costs and benefits of an economic action; instead, they also act according to the social setting in which they live, often in an attempt to comply with existing norms. Keywords: - economic behavior, bank selection, social networks, rationality, ethnicity DOI : 10.7176/JCSD/52-02 Publication date :October 31 st 2019
Highlights
Background of the studyEvery day life involves varied level of economic action and decision making for individuals, organizations, and the society at large
In addition to the 27.4% of respondents who have chosen their current financial service provider on the basis of information about its better services, respondents’ decision of becoming customers of the current bank was made because there were employees in the bank with whom they had personal relationships, realizing that they can make transactions using their mother-tongue language, the nomenclature of the bank is associated to their ethnic identity, and hearing that their close relatives and friends have been using the bank (8%, 5.1%, 25.7%, 5.5%, respectively)
According to the data in the present study, social networks play the role of serving as sources of information for customers during the process of bank selection
Summary
Every day life involves varied level of economic action and decision making for individuals, organizations, and the society at large. The motives behind such economic behaviors vary both between and among these different units of analysis. Most researches undertaken so far on individuals’ economic behavior have been largely influenced by the neo-classical tradition that emphasizes about how a person’s economic decision making is determined by monetary incentives alone (Kinga, 2017:3). At the first pole are rational choice theories defining individual decision making as the process of determining what options are available and choosing the most preferred one according to some consistent criterion (Jonathan & Paul, 2004). It is argued that individuals base their decision on cost-benefit calculations and choose the alternative that generates the highest expected utility (Brian, 2013)
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