Effect Of Islamic Micro Finance On Financial Performance In Kenya
Abstract
The objective of the study was to evaluate the effect of Islamic micro finance on
financial performance. This study employed a descriptive research. The study utilized
secondary data. Annual data on Islamic finance was sourced from the financial
statements of the fully-fledged Islamic banks. The gathered covered a period of 10 years
that is, 2009 – 2018. Data analysis was done using Statistical Package for Social
Sciences (SPSS) to generate quantitative reports which were presented in the form of
tabulations, percentages, mean and standard deviation in presenting a clear picture of
the effects of Islamic finance on financial performance. To test the statistical
significance the F test was used to test the overall importance of the whole model whiles
the t – test was used to test the importance of the coefficients at 5% level of significance
level. To ascertain this chi-square test and a comparative analysis of the trends in
financial performance for the seven-year average of the financial performance using.
There was a weak positive correlation between Islamic finance and financial
performance. This is an indication of a strong correlation an indication that Islamic
finance lead to improved financial performance. A regression model was applied to
determine the relationship between Islamic finance and financial performance. From
the regression model, the study found out that adoption of Islamic finance enhances
financial performance. The independent variables that were studied explain a
substantial 21.55% of the changes in financial performance. This therefore means that
the independent variables contribute 25.5% of the financial performance while other
factors and random variations not studied in this research contribute 74.5% of the
financial performance. The study therefore, recommends that a legislative framework
should be put in place to enhance the regulation of the industry as well as amendment
of the Banking Act to incorporate Islamic Banking concepts.
Publisher
University of Nairobi
Rights
Attribution-NonCommercial-NoDerivs 3.0 United StatesUsage Rights
http://creativecommons.org/licenses/by-nc-nd/3.0/us/Collections
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