Macro Economic Variables and Financial Performance of Islamic Banks in Kenya

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dc.contributor.advisorJoseph Theurien_US
dc.contributor.authorToel, Ombaso Denis
dc.date.accessioned2024-02-07T11:57:29Z
dc.date.available2024-02-07T11:57:29Z
dc.date.issued2023-02
dc.descriptionA Research Project Submitted In Partial Fulfillment of the Requirements for the Award of the Degree of Masters in Business Administration (Finance), School of Business, Economics and Tourism Kenyatta Universityen_US
dc.description.abstractIslamic banks are commercial banks that operate under the Islamic principles and guidelines (sharia law). Following the economic theories and other practical considerations, Interest rates and inflation rates complement one another on the effects of the financial results posted by banks. Exchange rates have been found to have negative effects on performance outcomes posted by Islamic banks in Kenya. The study focuses on these three variables and their effects on the financial performance of Islamic banks. This study aimed to identify the effect of the macroeconomic variable i.e. exchange rate, inflation rate and interest rate on the financial performance of Islamic banks in Kenya. Specific objectives entailed: determining the effect of interest rate, inflation rate and exchange rate on the financial performance of Islamic banks in Kenya. The findings of this study would assist persons in management among banks in Kenya to develop appropriate risk mitigation policies. It would help the Islamic banks regulatory body (sharia compliance board) to be able to set appropriate guidelines that will assist in managers in these banks. Finally, it will be useful to the Islamic banking customers especially on the profit sharing. Three theories served as the study's foundation; demand pull theory, Purchasing power parity theory, Productivity Theory and Irving Fisher’s theory. The study shall focus on three licensed Islamic banks. A descriptive design was adopted for this research. Secondary data was used to collect data for the study. Research instrument was data collection schedule with information being obtained on a period of 13 years (2009-2021). Analytical software capable of undertaking the inferential tests used in analysing data. The Descriptive data statistics such as mean; standard deviation were used to analyse quantitative data. Inferential statistics shall be used to draw conclusions on the link between macroeconomic variables and performance. There result was presented using tables, graphs and charts. The study noted that interest rate, inflation rate and exchange rate fluctuation all had statistically significant effect the financial performance. It was concluded that macro-economic variables are significant predictors of financial performance of Islamic banks in Kenya. The study recommends that policy makers working at the Central Bank of Kenya should leverage the existing monetary policies in order to manage inflationary pressure in the country. It is necessary for CBK's policymakers to review the existing monetary policies to counter interest rates which have been found to have significant implication on financial performance. The senior managers working among Islamic banks in Kenya should leverage the macroeconomic variables in order to enhance the financial positions of their banksen_US
dc.description.sponsorshipkenyatta universityen_US
dc.identifier.urihttps://ir-library.ku.ac.ke/handle/123456789/27595
dc.language.isoenen_US
dc.publisherkenyatta universityen_US
dc.subjectMacro Economicen_US
dc.subjectFinancial Performanceen_US
dc.subjectIslamic Banksen_US
dc.subjectKenyaen_US
dc.titleMacro Economic Variables and Financial Performance of Islamic Banks in Kenyaen_US
dc.typeThesisen_US
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