Professional Documents
Culture Documents
Proposal Edit
Proposal Edit
Proposal Edit
BY
June, 2024
By
Advisor
GUDETA (Ph.D.)
June, 2024
Addis Ababa, Ethiopia
I
Abstract
In the context of the Ethiopia Commodity Exchange in Addis Ababa, the goal of this study is to
investigate how members' satisfaction levels are influenced by the quality of e-trading services.
The research outcomes of this study will contribute to the existing body of knowledge and offer
significant perspectives for other commodities exchanges in developing nations that are shifting
to electronic trading platforms. These exchanges can create plans to improve the caliber of their
e-trading services and provide members with a more positive trading experience by identifying the
crucial elements affecting member happiness. This study will include both descriptive and
inferential methodology. Out of the 368 customers who made up the target demographic, a sample
size of 188 responders was chosen. The study will use the stratified sampling technique to choose
the sample. Multiple regression model will be utilized for determining the relationship between the
independent and dependent variables in order to meet the study's objectives.
I
Contents
Abstract ............................................................................................................................................ I
2.2.4 Service Quality and Customer Satisfaction in the Financial Services Industry ............. 9
2.2.7 DeLone and McLean Information Systems (IS) Success Model ................................. 11
RESEARCH METHODOLOGY.................................................................................................. 16
II
3.1 Research Design ...................................................................................................................16
References ..................................................................................................................................... 23
III
CHAPTER ONE
1.1 Background of the Study
Commodity exchanges have long played a crucial role in the global economy, facilitating the trade
of agricultural and natural resource commodities (Rashid et al., 2010). In recent decades, the
advancement of information and communication technologies (ICTs) has transformed the
operations of these exchanges, leading to the emergence of electronic trading (e-trading) platforms
(Gebreeyesus, 2019).
The advent of e-trading platforms has brought significant changes to the way commodity
transactions are conducted. These platforms offer a range of benefits, including increased
efficiency, transparency, and accessibility, making them an attractive option for commodity traders
(Dempsey, 2018). E-trading platforms allow for real-time order matching, instantaneous
execution, and remote access, which can improve the overall trading experience and reduce
transaction costs (Mohan & Chikhalkar, 2016).
The Ethiopia Commodity Exchange (ECX) was established in 2008 with the aim of modernizing
the country's agricultural commodity trading system (Cochrane, 2014). Prior to the ECX,
Ethiopia's commodity trading was characterized by inefficiencies, lack of transparency, and limited
access for small-scale producers and traders (Gebremedhin & Hoekstra, 2006). The creation of the
ECX was seen as a crucial step towards addressing these challenges and enhancing the
competitiveness of the country's agricultural sector.
One of the key developments in the ECX's evolution was the implementation of an e-trading
platform in 2010 (ECX, 2022). This electronic trading system has enabled the exchange to
streamline its operations, increase market accessibility, and enhance the overall trading experience
for its members. The quality of the e-trading services provided by the ECX is crucial in
determining the satisfaction of its members, which can ultimately impact the overall success and
sustainability of the exchange (Weldeslasse, 2019).
E-trading platforms have transformed the way commodity exchanges operate by increasing
efficiency, transparency, and accessibility (Dempsey, 2018; Mohan & Chikhalkar, 2016). These
platforms automate the order matching and execution process, enabling faster transactions and
1
improved price discovery. They also provide real-time access to market data, enhancing
transparency and building trust among market participants (Dempsey, 2018).
Furthermore, e-trading platforms have improved the accessibility and inclusiveness of commodity
trading by eliminating the need for physical presence at a trading floor (Gebreeyesus, 2019). This
has enabled small-scale producers and traders, who were previously excluded from the formal
trading system, to participate in the market and potentially achieve better prices for their
commodities.
The adoption of e-trading platforms has also had significant implications for the operations and
management of commodity exchanges. Exchange operators must invest in developing and
maintaining robust e-trading infrastructure, including hardware, software, and network
connectivity (Mohan & Chikhalkar, 2016). They must also ensure the security and reliability of
their e-trading systems to build trust and confidence among market participants.
The quality of e-trading services provided by commodity exchanges is a crucial factor in
determining the satisfaction and continued engagement of their members. Factors such as system
reliability, responsiveness, and ease of use can have a significant impact on the overall trading
experience and the willingness of members to continue using the exchange's services (Vaidya &
Charkha, 2016).
The establishment of the Ethiopia Commodity Exchange (ECX) in 2008 was a pivotal step in
addressing the challenges that plagued the country's traditional commodity trading system, such
as inefficiencies, lack of transparency, and limited access for small-scale producers and traders
(Cochrane, 2014; Gebremedhin & Hoekstra, 2006). The implementation of the ECX's e-trading
platform in 2010 has enabled the exchange to streamline its operations, increase market
accessibility, and enhance the overall trading experience for its members (Weldeslasse, 2019).
The quality of the e-trading services provided by the ECX is crucial in determining the satisfaction
of its members, which can ultimately impact the overall success and sustainability of the exchange
(Vaidya & Charkha, 2016). Factors such as system reliability, responsiveness, and ease of use can
have a significant influence on the willingness of members to continue using the exchange's
services.
Moreover, the satisfaction of ECX members with the e-trading services can have broader
implications for the development of Ethiopia's agricultural sector. By providing a reliable and
efficient trading platform, the ECX can contribute to the increased participation of small-scale
2
producers and traders in the formal market, leading to better price discovery, improved market
access, and enhanced income-generating opportunities for these stakeholders (Rashid et al., 2010).
The relationship between e-trading services quality and member satisfaction in commodity
exchanges can be examined through the lens of various theoretical frameworks, including the
Service Quality (SERVQUAL) model and the Technology Acceptance Model (TAM). The
SERVQUAL model identifies five key dimensions of service quality: tangibility, reliability,
responsiveness, assurance, and empathy, which can be applied to the context of e-trading services
(Parasuraman et al., 1988). The TAM, on the other hand, suggests that the perceived usefulness
and perceived ease of use of a technology are the primary determinants of an individual's intention
to use and, ultimately, their actual usage behavior (Davis, 1989).
In the context of the ECX, these theoretical frameworks can be used to assess the factors that
influence the satisfaction of exchange members with the e-trading services, such as the reliability
of the platform, the responsiveness of the support systems, and the user-friendliness of the interface
(Mohan & Chikhalkar, 2016; Vaidya & Charkha, 2016).
The ECX is a centralized marketplace that facilitates the trading of agricultural commodities, such
as coffee, sesame, and wheat, among its members. The exchange has implemented an e-trading
platform to enhance the efficiency and transparency of its trading operations (Gebre-Egziabher et
al., 2019). However, the success of an e-trading platform is largely dependent on the quality of the
services it provides to its members.
Previous studies have emphasized the importance of service quality in the context of e-trading
platforms. For instance, Jeon and Choi (2018) found that the quality of e-trading services,
including system quality, information quality, and service quality, significantly influences
customer satisfaction and loyalty. Similarly, Amin (2016) highlighted the critical role of e-trading
service quality in determining customer satisfaction and behavioral intentions.
3
In the case of the ECX, limited research has been conducted to examine the effect of e-trading
services quality on members' satisfaction. Existing studies have primarily focused on the overall
performance and impact of the ECX, with limited attention paid to the specific factors that
influence member satisfaction (Gebre-Egziabher et al., 2019; Mekuriya & Mulugeta, 2017).
The study will aim to address this gap by investigating the effect of e-trading services quality on
members' satisfaction in the context of the ECX. Specifically, it will examine the dimensions of e-
trading services quality, including system quality, information quality, and service quality, and their
impact on members' satisfaction.
Understanding the relationship between e-trading services quality and members' satisfaction is
crucial for the ECX to maintain its competitiveness and ensure the continuous engagement of its
members. Improved e-trading services quality can lead to increased member satisfaction, which in
turn can contribute to the overall success and sustainability of the exchange (Jeon & Choi, 2018).
Moreover, the findings of the study will provide valuable insights for other commodity exchanges
in developing countries that are transitioning towards e-trading platforms. By understanding the
critical factors influencing member satisfaction, these exchanges can develop strategies to enhance
the quality of their e-trading services and foster a more satisfactory trading experience for their
members.
Generally, this study will investigate the effect of e-trading services quality on members'
satisfaction in the context of the Ethiopia Commodity Exchange, Addis Ababa. The research will
aim to contribute to the existing knowledge on the impact of e-trading services quality on member
satisfaction, which can have significant implications for the long-term success and sustainability
of the ECX and similar commodity exchanges in developing countries.
4
1.3 Research Objectives
Investigating the influence of e-trading service quality on members' satisfaction within the setting
of the Ethiopia Commodity Exchange, Addis Ababa, will be the study's main goal.
The study's findings may also have wider effects on the financial sector because online trading
platforms are growing more and more common across a range of businesses. The knowledge
acquired from this study may be useful to other businesses who have already adopted or are
thinking about establishing e-trading platforms.
5
method, the research will employ an explanatory and descriptive research design during the
investigation.
The collection of necessary information from their appropriate sources will make use of both
primary and secondary data. The findings will be subjected to an analysis utilizing multiple linear
regression analysis to investigate the correlation between the studies’s independent and dependent
variables.
6
CHAPTER TWO
LITERATURE REVIEW
2.1 Introduction
The growth of electronic trading (e-trading) platforms has transformed the global commodity
exchange landscape, offering unprecedented opportunities for improved efficiency, transparency,
and accessibility (Kurtulmuş & Öztürk, 2020; Martins et al., 2019). One such exemplary e-trading
platform is the Ethiopia Commodity Exchange (ECX), established in 2008 to facilitate the trading
of agricultural commodities in the country (Gebresilassie, 2014). The ECX has been hailed as a
pioneering institution, leveraging technology to enhance the functioning of the commodity market
and address long-standing challenges faced by farmers and traders (Gabre-Madhin, 2012).
Central to the success of the ECX is the quality of its e-trading services, which encompasses the
system, information, and service dimensions (Akter et al., 2013; DeLone & McLean, 2003). The
e-trading services quality has a significant influence on the satisfaction of the ECX's members,
who are the primary users of the platform (Balasubramanian et al., 2003; Pitt et al., 1995). Satisfied
members are more likely to continue using the ECX's services, contribute to its growth, and
recommend it to others, ultimately enhancing the overall performance of the commodity exchange
(Huang, 2008; Rahi & Ghani, 2018).
This literature review aims to critically examine the existing research on the relationship between
e-trading services quality and members' satisfaction in the context of the ECX. It will delve into
the theoretical underpinnings, empirical evidence, and contextual factors that shape this
relationship. By synthesizing the relevant literature, the review will identify gaps and opportunities
for further research, ultimately informing the development of a comprehensive research
framework to guide the proposed study.
7
2.2.1 Service Quality and Customer Satisfaction
The concept of service quality has been widely studied in the marketing and management
literature, and several theoretical models have been developed to understand its relationship with
customer satisfaction. One of the most influential frameworks is the SERVQUAL model, proposed
by Parasuraman, Zeithaml, and Berry (1988). The SERVQUAL model defines service quality as
the difference between customers' expectations and their perceptions of the actual service
performance, and it identifies five key dimensions of service quality: tangibility, reliability,
responsiveness, assurance, and empathy.
According to the SERVQUAL model, when customers' perceptions of service performance exceed
their expectations, they experience a high level of satisfaction, and vice versa (Parasuraman et al.,
1988). This relationship between service quality and customer satisfaction has been well-
established in various service-oriented industries, including banking, insurance, and e-commerce
(Ladhari, 2009; Parasuraman et al., 1988).
These models identify key dimensions of e-service quality, including efficiency, system
availability, privacy, responsiveness, compensation, and contact. Efficiency refers to the ease and
speed of accessing and using the e-trading platform, while system availability measures the
reliability and accessibility of the platform. Privacy concerns the secure handling of user
information, and responsiveness captures the promptness of the e-trading system in addressing
user issues or requests. Compensation and contact assess the extent to which the e-trading platform
provides adequate redress for problems and facilitates user assistance, respectively (Parasuraman
et al., 2005).
8
2.2.3 The Ethiopia Commodity Exchange (ECX)
The ECX is a centralized electronic marketplace for the trading of agricultural commodities in
Ethiopia (ECX, 2022). The exchange operates an electronic trading platform that allows members
(including farmers, traders, and other market participants) to execute trades remotely and access
real-time market information (ECX, 2022). The ECX's e-trading system is a critical component of
the exchange's operations, as it facilitates the efficient and transparent exchange of commodities
and supports the price discovery process.
Given the importance of the e-trading system to the ECX's overall functioning, understanding the
factors that influence members' satisfaction with this service is crucial. Drawing on the theoretical
frameworks of service quality and e-service quality, this literature review will explore the potential
relationship between the quality of the ECX's e-trading services and members' satisfaction with
the exchange.
2.2.4 Service Quality and Customer Satisfaction in the Financial Services Industry
The relationship between service quality and customer satisfaction has been extensively studied in
the financial services industry, which shares several characteristics with the ECX's e-trading
platform, such as the need for reliability, responsiveness, and security.
Jamal and Naser (2002) investigated the link between service quality and customer satisfaction in
the Pakistani banking industry. Using the SERVQUAL model, the researchers found that all five
dimensions of service quality (tangibility, reliability, responsiveness, assurance, and empathy)
were significantly related to customer satisfaction. Similarly, Ladhari (2009) conducted a meta-
analysis of studies examining the service quality-customer satisfaction relationship in the banking
sector, and reported a strong and positive correlation between the two constructs.
In the context of the insurance industry, Seiler, Rudolf, and Krume (2013) examined the impact of
service quality on customer satisfaction and loyalty. Their findings indicated that the dimensions
of service quality, such as reliability, assurance, and empathy, were significant predictors of
customer satisfaction, which in turn influenced customer loyalty.
These studies provide a solid theoretical foundation for understanding the potential relationship
between service quality and customer satisfaction in the specific case of the ECX's e-trading
platform. The financial services industry shares many similarities with the ECX in terms of the
9
need for secure, reliable, and responsive digital services, suggesting that the same principles may
apply.
Several studies have found that dimensions of e-service quality, such as efficiency, system
availability, and privacy, are significant predictors of customer satisfaction in online shopping
environments (Bauer, Falk, & Hammerschmidt, 2006; Parasuraman et al., 2005; Zeithaml,
Parasuraman, & Malhotra, 2002). For example, Bauer et al. (2006) developed the eTransQual
model to assess e-service quality in the context of online retailing and found that factors like
functionality/design, enjoyment, and process quality were key determinants of customer
satisfaction.
Likewise, Parasuraman et al. (2005) proposed the E-S-QUAL and E-RecS-QUAL models to
capture the multidimensional nature of e-service quality, and their findings showed that these
dimensions were significantly related to customer satisfaction and loyalty in e-commerce settings.
These studies suggest that the quality of the ECX's e-trading platform, in terms of its efficiency,
reliability, and security, may play a crucial role in shaping members' satisfaction with the exchange.
The e-commerce literature provides a useful theoretical framework for understanding the specific
factors that contribute to e-service quality and how they might translate to the context of the ECX.
In a study of the Hong Kong Stock Exchange, Lam and Burton (2006) found that service quality
dimensions, such as reliability, responsiveness, and assurance, were significantly related to
customer satisfaction among retail investors. Similarly, Kaura, Durga Prasad, and Sharma (2015)
investigated the impact of service quality on customer satisfaction in the Indian banking industry
and reported that factors like system availability and responsiveness were key determinants of
satisfaction.
10
Although these studies did not focus on commodity exchanges specifically, they provide valuable
insights into the potential linkages between service quality and customer satisfaction in the context
of financial market platforms. The ECX, as an electronic marketplace for the trading of agricultural
commodities, shares some similarities with stock exchanges and banking institutions, suggesting
that the same principles may apply.
In the context of e-trading platforms, the DeLone and McLean model has been extensively applied
to understand the factors that contribute to the success of these systems (Akter et al., 2013; Martins
et al., 2019). System quality refers to the desirable characteristics of the e-trading platform, such
as its ease of use, reliability, and responsiveness (DeLone & McLean, 2003). Information quality
encompasses the relevance, accuracy, and timeliness of the information provided by the e-trading
platform (DeLone & McLean, 2003). Service quality reflects the overall support and assistance
offered to the users of the e-trading platform (DeLone & McLean, 2003).
The DeLone and McLean model posits that higher levels of system quality, information quality,
and service quality lead to greater user satisfaction, which, in turn, contributes to the overall
success and performance of the e-trading platform (DeLone & McLean, 2003). This theoretical
framework has been widely adopted in the literature to investigate the relationship between e-
trading services quality and members' satisfaction in the context of commodity exchanges
(Balasubramanian et al., 2003; Huang, 2008).
11
2.2.8 Service Quality (SERVQUAL) Model
The SERVQUAL model, developed by Parasuraman et al. (1988), is another influential framework
that has been applied to the study of e-trading services quality and its impact on user satisfaction.
The SERVQUAL model identifies five key dimensions of service quality: tangibility, reliability,
responsiveness, assurance, and empathy (Parasuraman et al., 1988).
In the context of e-trading platforms, the SERVQUAL model has been adapted to capture the
unique characteristics of electronic services (Bauer et al., 2006; Zeithaml et al., 2002). The
tangibility dimension, for instance, may be reflected in the visual appeal and design of the e-trading
platform, while the reliability dimension may focus on the consistency and dependability of the
system's performance (Bauer et al., 2006). The responsiveness dimension may encompass the
platform's ability to address user inquiries and resolve issues in a timely manner, while the
assurance dimension may relate to the trustworthiness and competence of the platform's support
staff (Bauer et al., 2006). The empathy dimension may be exemplified by the platform's
understanding of users' specific needs and the provision of personalized attention (Bauer et al.,
2006).
The SERVQUAL model posits that higher levels of service quality, as perceived by users, lead to
greater user satisfaction and, consequently, improved organizational performance (Parasuraman et
al., 1988). This theoretical framework has been widely applied in the literature to investigate the
relationship between e-trading services quality and members' satisfaction in commodity exchanges
(Balasubramanian et al., 2003; Pitt et al., 1995).
In the context of e-trading platforms, the ECT suggests that members' satisfaction is influenced by
their initial expectations of the e-trading services quality and the extent to which the platform's
performance meets or exceeds those expectations (Bhattacherjee, 2001; Rahi & Ghani, 2018). If
the perceived e-trading services quality exceeds the members' initial expectations, they are more
12
likely to be satisfied and continue using the platform (Bhattacherjee, 2001). Conversely, if the
perceived e-trading services quality falls short of the members' expectations, they are more likely
to be dissatisfied and potentially discontinue their use of the platform (Bhattacherjee, 2001).
The ECT has been widely employed in the literature to examine the relationship between e-trading
services quality and members' satisfaction in commodity exchanges, with a focus on understanding
the role of users' expectations and the confirmation (or disconfirmation) of those expectations
(Bhattacherjee, 2001; Rahi & Ghani, 2018).
Several studies have investigated the influence of system quality on the satisfaction of ECX
members. Gebresilassie (2014) conducted a study on the ECX and found that the reliability,
responsiveness, and usability of the e-trading platform were significant predictors of members'
satisfaction. The researchers highlighted the importance of system stability, easy navigation, and
timely system responses in enhancing the members' overall satisfaction with the platform.
Similarly, Martins et al. (2019) examined the factors influencing the success of the ECX and
identified system quality as a crucial determinant of members' satisfaction. The study found that
characteristics such as system availability, system reliability, and system flexibility were positively
associated with members' satisfaction with the e-trading platform.
Kurtulmuş and Öztürk (2020) investigated the impact of e-trading system quality on the
performance of the ECX. Their findings indicated that system quality, measured by factors such
as ease of use, system reliability, and system responsiveness, had a significant positive effect on
members' satisfaction and overall system performance.
The quality of information provided by the ECX's e-trading platform has also been examined as a
key determinant of members' satisfaction. Gabre-Madhin (2012) highlighted the importance of
accurate, timely, and relevant information in enhancing the transparency and efficiency of the
ECX, which ultimately contributed to the satisfaction of its members.
13
Several empirical studies have investigated the relationship between e-trading service quality and
member satisfaction in the context of commodity exchanges. In a study conducted by Giday and
Worku (2016) on the ECX in Ethiopia, the researchers found that e-trading service quality, as
measured by the E-S-QUAL model, had a significant positive impact on member satisfaction.
Specifically, they identified efficiency, system availability, and fulfillment as the most critical
dimensions influencing satisfaction levels.
Similarly, a study by Abebe and Mammo (2018) on the ECX revealed that the quality of e-trading
services, including factors such as system reliability, information quality, and responsiveness, was
a strong predictor of member satisfaction. The researchers also highlighted the importance of trust
in the exchange and the perceived value of the e-trading services as additional determinants of
satisfaction.
Internationally, a study by Cetin and Kilic (2015) on the Turkish Derivatives Exchange (TurkDEX)
found that e-trading service quality, as measured by factors such as system availability, ease of use,
and reliability, had a significant positive effect on trader satisfaction and loyalty. The researchers
emphasized the crucial role of service quality in maintaining a competitive advantage and retaining
members in the highly dynamic and technology-driven commodity exchange market.
While the existing literature highlights the importance of e-trading service quality for member
satisfaction, several studies have also identified the challenges faced by commodity exchanges in
delivering high-quality e-trading services.
A study by Aemro and Worku (2018) on the ECX revealed that technological infrastructure
limitations, including network connectivity issues and system instability, were major impediments
to the exchange's ability to provide reliable and efficient e-trading services. The researchers also
highlighted the need for improved user support and training to enhance members' understanding
and utilization of the e-trading platform.
In a similar vein, a study by Teka and Worku (2016) on the ECX found that the exchange faced
challenges in ensuring data security and privacy, which undermined members' trust in the e-trading
platform. The researchers emphasized the importance of implementing robust cybersecurity
measures and transparent data management practices to address these concerns.
14
Internationally, a study by Celik and Yilmaz (2011) on the Istanbul Stock Exchange (BIST)
identified the lack of user-friendly interface design and the complexity of trading procedures as
key barriers to delivering a satisfactory e-trading experience for investors. The researchers
underscored the need for continuous improvement and user-centric design approaches to enhance
the overall quality of e-trading services.
To address the challenges in delivering high-quality e-trading services, researchers have proposed
various strategies and recommendations for commodity exchanges to enhance member
satisfaction.
A study by Abebe and Mammo (2018) on the ECX suggested that the exchange should invest in
upgrading its technological infrastructure, including improving network connectivity, system
stability, and data security measures. The researchers also emphasized the importance of providing
comprehensive training and support to members to improve their understanding and utilization of
the e-trading platform.
In a similar vein, Giday and Worku (2016) recommended that the ECX should focus on enhancing
the efficiency and reliability of its e-trading services, as well as improving the fulfillment of
member expectations. They also highlighted the need for the exchange to engage in regular
feedback collection and continuous improvement efforts to address the evolving needs and
preferences of its members.
Internationally, a study by Cetin and Kilic (2015) on the TurkDEX suggested that the exchange
should adopt a more user-centric approach in designing and delivering its e-trading services. This
includes improving the platform's ease of use, responsiveness, and overall aesthetic appeal to
enhance the members' overall experience and satisfaction.
Moreover, Celik and Yilmaz (2011) emphasized the importance of implementing robust
information security measures and ensuring the confidentiality and integrity of member data to
build trust and confidence in the e-trading platform. They also recommended that exchanges
should provide personalized support and customization options to cater to the diverse needs and
preferences of their members.
15
CHAPTER THREE
RESEARCH METHODOLOGY
3.1 Research Design
The study will use a mixed-methodologies to examine how members' satisfaction is influenced by
the quality of online trading services by combining quantitative and qualitative methods. A cross-
sectional survey will be used for the research since it enables data collecting at a particular moment
in time.
n = N / (1 + N (e2))------------------------------------------------------------------------------.3.1
Where:
e represents the desired level of precision (expressed as a proportion, typically between 0 and 1).
16
The total number of sample sizes becomes 188 after applying equation 3.1. Consequently, 46
respondents and 142 respondents from buyers and sellers, respectively, will be used. As a result,
188 respondents will be the source of the primary data needed for the study, having administered
questionnaires to stakeholders involved in the construction industry.
17
3.4.1 Model specification
In order to investigate the effects of five online trading service quality aspects on members'
satisfaction by ECX, the study will employ a multiple regression model. The model will
incorporate multiple variables to capture the factors influencing members satisfaction, and the
model's performance will assessed using theoretical, statistical and econometrics techniques.
𝑌 = 𝛽𝑜 + 𝛽1𝑥1 + 𝛽2𝑥2 + 𝛽3𝑥3 + 𝛽4𝑥4 + 𝛽5𝑥5 + ⋯ + 𝛽11𝑥11 + 𝑒
The nature of variables used in the regression model encompassing both quantitative and
qualitative factors.
List of independent variables included in regression analysis
Member Satisfaction
Reliability
Assurance
Tangibility
Empathy
Responsiveness
18
2
VIF (Xi) = 1/ (1-R )
Gujarati (2004) states that increased collinearity among one or more model explanatory variables
is indicated by a larger VIF value. Generally speaking, a variable is considered extremely collinear
if its variance index factor (VIF) is greater than 10, which occurs when the multiple R-square
value is higher than 0.90 (Gujarati, 2004).
The approach of contingency coefficient (CC) was employed in a similar manner to ascertain the
extent of correlation between discrete explanatory variables. As per Healy's (1984) findings,
discrete or dummy variables are considered collinear if the contingency coefficient (CC) value
exceeds 0.75.
Mathematically:
𝑋2
𝐶𝐶 = √
𝑛 + 𝑋2
19
CHAPTER FOUR
TIME SCHEDULE AND BUDGET BREAKDOW
4.1 Time schedule
Sr.no Activities Time needed Schedule in 2011 E.C
20
4.2. Budget breakdown
Stationary
Total 1750
Training and
pilot survey
Total 20,100
21
Transport, per-diem and miscellaneous expenses
Total 8000
Contingency 2000
Total 31,850
NB: the total budget needed and requested for this research proposal is 31,850Birr.
22
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