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dc.contributor.authorOngera, Faith Kwamboka
dc.contributor.authorNdede, Fredrick W.S
dc.date.accessioned2020-10-28T11:44:48Z
dc.date.available2020-10-28T11:44:48Z
dc.date.issued2019
dc.identifier.citationOngera, F., & Ndede, F. (2019). Shariah Banking and Financial Performance of Selected Commercial Banks in Kenya. International Journal of Current Aspects, 3(VI), 50-66. https://doi.org/10.35942/ijcab.v3iVI.78en_US
dc.identifier.issn2616-6976
dc.identifier.urihttp://ir-library.ku.ac.ke/handle/123456789/20711
dc.descriptionAn Article Published in International Journal of Current Aspectsen_US
dc.description.abstractFinancial performance is important among banking institutions. The ability to reinvest earnings and aggressively compete for the market share in the business environment is determined by the level of profits. In recent past, Kenyan commercial banks financial performance has declined due to a number of factors ranging from decline in PAT, interest capping, increased competition and rise in non-performing loans. This has created a need for income diversification where commercial banks are diversifying into shariah banking so as to attract investors with an interest in shariah compliant products and services. The main research objective was to investigate shariah compliant banking effects on the selected Kenyan commercial banks in terms of financial performance. The independent variables employed in the study were liquidity, efficiency and asset quality as determinants of financial performance of commercial bank. There are major gaps in the financial performance literature regarding shariah compliant banking. Minimal research studies have been carried on financial performance comparison between commercial and shariah compliant banks in Kenya. In order to achieve the research objectives, descriptive research approach was employed in the study. A census study was carried out; secondary data from relevant central bank data will be used. The population was the four commercial banks operating shariah banking in Kenya. Secondary data from 2013 to 2017 was obtained from the central bank website and the audited financial statements of the selected licensed commercial banks operating shariah banking in Kenya. Data analysis was achieved through use of descriptive, correlation and regression methods. Data was processed through Statistical Package for Social Science software (SPSS). Data was analyzed using descriptive and inferential analysis and presented using charts and tables. Ratio analysis and trend analysis was used in the study. The study aimed at using the framework of innovation diffusion theory to suggest a model for adoption of shariah banking in the Kenyan banking industry, modern portfolio theory to explain the importance of diversified portfolio in the Banking Sector and Agency Theory. The study found commercial banks’ performance was as a result of that Shariah banking ratio then by liquidity ratio, efficiency ratio, asset ratio, and finally bank size. Bank size had a ratio of 0.0128, expense management ratio 0.0131, efficiency ratio 0.0024, Asset quality 0.0006, liquidity ratio 0.0120 and sharia banking ratio was 0.0025. It was revealed by the research that commercial banks’ adoption of shariah banking positively influenced their financial performance. This research recommends that same studies to be carried out in Africa’s Eastern part to compare since shariah banking’ concentration is on the Asian and West Africa countries. The research recommends that commercial banks management take advantage of its existing branch networks to open shariah banking alongside its core business in tapping the potential new clienteleen_US
dc.language.isoenen_US
dc.publisherIJCAB Publishing Groupen_US
dc.subjectShariah Compliant Banking Ratioen_US
dc.subjectAsset Qualityen_US
dc.subjectCommercial Banks’ Liquidityen_US
dc.subjectEfficiencyen_US
dc.subjectCommercial Banks Performanceen_US
dc.titleShariah Banking and Financial Performance of Selected Commercial Banks in Kenyaen_US
dc.typeArticleen_US


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