| dc.description.abstract | Islamic banking is banking business whose aims and operations do not involve any element
which is not approved by the religion of Islam. While the aim of both conventional and Islamic
banks is profitability, the former heavily relies on interest for profits while the latter does not
charge interest. The general objective of this study therefore was to evaluate the determinants of
financial performance of conventional and Islamic banks in Kenya. This study adopted an
explanatory research design. From the population of 43, a sample of 20 was selected comprising
the commercial banks listed as small by the CBK bank supervision; this comprised the 2 fully
Shari‟ah compliant banks (Gulf African Bank and First Community Bank) and 18 other
conventional banks. Secondary data was used for this study by reviewing both empirical and
theoretical data from books, journals, dissertations, magazines and the internet. Data analysis
involved multi-variate analysis using Statistical Package for Social Sciences (SPSS). The study
findings indicated that capital adequacy and asset quality were high in most of the banks as
indicated by their average means. The findings further show that conventional banks showed
high means in all financial performance determinants as compared to Islamic banks. For
instance; First community bank limited and Gulf African bank had the lowest Return on Assets
as compared to other banks.The study recommends that Islamic banks should manage risks
involved during their operation to minimize potential risks and loses involved. The study also
recommends that dividends paid to shareholders should be well managed to maximize the
profits, and that banks should maximize lending to customers and scrutinize their financial
ability to repay before advancing loans to them to avoid default loans in order for them to
maximize profits especially in the case of Islamic banks. | en_US |
