The effect of offering Sharia compliant products on financial performance of commercial banks in Kenya

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Date
2012-11Author
Tuitoek, Josephat K
Type
ThesisLanguage
enMetadata
Show full item recordAbstract
The banking industry is a key sector in the Kenyan economy. As profit seekers,
commercial banks are inclined to formulate policies that aim at diversifying their
portfolio and thus guaranteeing some minimum rate of return. To achieve this objective
of profit maximization, banks make decisions to invest excess cash in varying portfolios,
involving not only the amount to invest but also the types of portfolios in which to invest.
It is estimated 38% of Kenya‘s population is unbanked. Further, the financial exclusion
afflicting Kenya‘s Muslim population who have preference for Shariah compliant
financial products could be significant, hence the likelihood that Shariah compliant
financial services could contribute towards greatly reducing Kenya‘s unbanked
population. It is this motivation that led to the introduction of Shariah compliant products
in the banking industry Kenya. This study adopted a descriptive survey. The population
of the study consisted of all the 43 commercial banks in Kenya. The study used primary
data which were collected using a structured questionnaire. Data presentation was done
using pie charts, bar chart and percentages. The study therefore concluded that indeed
offering new products such as Shariah compliant products really has a positive effect on
financial performance of the bank. It has also broadened investment/innovation
opportunities for the banking sector in Kenya.
Citation
MBA ThesisSponsorhip
University of NairobiPublisher
School of Business, University of Nairobi
Description
MBA Thesis