dc.contributor.author | Omarmahat, Musa, I | |
dc.date.accessioned | 2021-01-27T12:56:53Z | |
dc.date.available | 2021-01-27T12:56:53Z | |
dc.date.issued | 2020 | |
dc.identifier.uri | http://erepository.uonbi.ac.ke/handle/11295/154328 | |
dc.description.abstract | Compared with their conventional counterparts, majority of the Islamic financial institutions do
encounter challenges with their profitability. Such challenges are characterized by a relatively
higher proportion of operating expenses relative to their net income. Hence, the motivation of this
study is to seek and establish the determinants of profitability of these Islamic financial institutions
in Kenya. The study adopted descriptive survey design targeting 7 Islamic financial institutions
in Kenya. Census was used and thus all the 7 firms were covered. Primary and secondary data was
collected covering a period of 2010-2019. Descriptive statistics covering means and standard
deviations helped to summarize the data. For drawing of relevant inferences, factor analysis was
used. The study noted that majority of the Islamic financial institutions are posting financial losses
and this is attributed to the following six factors: firm specific factors; regulatory factors &
competition; size, religiosity & regulations; nature of market; investment framework; and tax
regime against zakat. The study concluded that firm specific factors had the largest contribution
towards profitability of the Islamic financial institutions while tax regime had the least effect. The
study recommended that policy makers at the Central Bank of Kenya should establish regulations
and guidelines for Islamic financial institutions that are separate from the other conversional
institutions. In designing investment regulations and policies, the Capital Market Authority (CMA)
should consider the fact that interest (riba) is forbidden Islamic financial institutions. The Kenya
Revenue Authority should give special consideration to these Islamic financial institutions in
regard to taxation since they pay Zakat (which is compulsory) besides the normal tax that is paid
to the government resulting into an incident of double taxation of their incomes. The various
practitioners including Islamic banking scholars should establish a lobby for representation on the
boards of the regulatory bodies in the financial sector in Kenya. The senior management team of
the Islamic financial institutions should capitalize on firms’ specific factors to enhance profitability
of their institutions. The management of the Islamic financial institutions should work to improve
on their firm specific factors like the level of management efficiency and the amount of
Nonperforming loans. The study was limited to a smaller sample size of 7 firms which were the
Islamic financial institutions. The study recommended further studies to be undertaken focusing
on the variables covered but in relation to financial performance unlike profitability. | en_US |
dc.language.iso | en | en_US |
dc.publisher | University of Nairobi | en_US |
dc.rights | Attribution-NonCommercial-NoDerivs 3.0 United States | * |
dc.rights.uri | http://creativecommons.org/licenses/by-nc-nd/3.0/us/ | * |
dc.subject | Determinants of profitability of Islamic Financial Institutions in Kenya | en_US |
dc.title | Determinants of profitability of Islamic Financial Institutions in Kenya | en_US |
dc.type | Thesis | en_US |