international journal of academics & research (ijarke) · 2019-08-29 · international journals...
TRANSCRIPT
INTERNATIONAL JOURNALS OF ACADEMICS & RESEARCH ISSN: 2617-4138 IJARKE Business & Management Journal DOI: 10.32898/ibmj.01/2.1article07
www.ijarke.com
69 IJARKE PEER REVIEWED JOURNAL Vol. 2, Issue 1 Aug. – Oct. 2019
Influence of Cultural Integration on Institutionalization of Islamic
Banking Model in Kenya
Sami Athman Kivatsi, Jomo Kenyatta University of Agriculture & Technology, Kenya
Dr. Fridah Simba, Jomo Kenyatta University of Agriculture & Technology, Kenya
Dr. Fred Mugambi, Jomo Kenyatta University of Agriculture & Technology, Kenya
1. Introduction
According to Ali (2015), Islamic system of finance emphasizes risk sharing which provides Islamic financial methods such as
murabaha, mudaraba, ijarah, musharakah, salam and istisna which are guided by the Islamic principles derived from the Holy
Quran and the Sunnah (Practice of the Prophet of Islam, Muhammad (PBUH)) to eventually facilitate trade and business in the
society and to consequently bring economic well-being and prosperity. The origin of Islamic trade dates back to the dawn of
Islam over 1,400 years ago. However, Islamic Banking is approximately three decades old. Dubai Islamic Bank (DIB) from
United Arabs Emirates, UAE, entered the banking market early in the nineteen seventies taking deposits under the current account
proposition as well as investment banking accounts making it among the pioneers of Islamic Banking in the world. Issak &
Kwasira (2012) further explains DIB began engaging in profit-making activities either directly or through working partners. In
1975 Islamic Development Bank (IDB) entered into the market. IDB was designed to serve Muslim countries and communities by
arranging finance for trade and development on non-interest basis. The trend continued and by late nineteen-seventies there were
half a dozen more non-conventional banks in the private sector in Egypt, Jordan, Kuwait, and the Gulf States. According to
Siddiqi (2006), the subsequent decade saw a rapid expansion of Islamic Banking model bringing the number of Islamic banks to
dozens by the end of the decade.
According to Parashar & Venkatesh (2014), Islamic Banking model gained more visibility during the global financial crisis
(GFC) in 2008. It became more prevalence in the rest of the world. According to KPMG Financial Service Report (2012),
authorities around the world are determined to avoid a repeat scenario of the banking crisis of 2008 hence an emergence of more
and tougher regulatory changes in the offing, most of which are already implemented with a view to tightening up regulation and
compliance to avoid another „too big to fail‟ situation. The 2008 GFC brought to the fore the vulnerability of conventional banks.
As much as it is a general belief that the crisis did not affect the Islamic banks as much as conventional banks. Research studies
prior to the global financial crisis also generally concluded that the performance of Islamic banks was less affected by interest
rates fluctuations than conventional banks. However, the general argument is that the history of Islamic Banking is too young to
authentically conclude as above stated.
INTERNATIONAL JOURNALS OF ACADEMICS & RESEARCH (IJARKE Business & Management Journal)
Abstract
Islamic Banking model has been in existence for approximately five decades since its introduction in the late sixties. In Kenya
the model is approximately three decades old. Out of the 43 operating banks so far there are only three fully fledged Islamic
Banks in Kenya. While a number of banks offer at least a window of Islamic Banking service in Kenya, they form 16% of the
total Kenyan banking population. The purpose of this study was to determine the influence of the cultural integration on
institutionalization of Islamic Banking Model in Kenya. Descriptive survey method was used for this research. The population
was drawn on all the employees of all the eight purposively sampled banks. Purposive sampling and Slovin‟s formula was
again used to help in computing and sampling respondents from the eight banks. Data collection was undertaken using special
drawn questionnaires distributed to 400 respondents. 327 questionnaires were received back for analysis but 2 were spoilt and
only 325 were subjected to study analysis. Data was analyzed using both qualitative and quantitative methods. Statistical
linear regression model was used to establish the relationship between the independent and the dependent variables while
reliability coefficient of the research instrument was assessed using Cronbach‟s alpha. ANOVA was used to test the
hypotheses between the independent and the dependent variables. Correlation analysis was also applied in testing the
significance of the study. The findings of the study indicated that cultural integration as a strategic management determinant,
influence institutionalization of Islamic Banking Model in Kenya. The study recommended adoption of the findings by all
Banking sector players and specifically those who offer Islamic Banking service to the market.
Key words: Cultural Integration, Islamic Banking Model, Strategic Management
INTERNATIONAL JOURNALS OF ACADEMICS & RESEARCH ISSN: 2617-4138 IJARKE Business & Management Journal DOI: 10.32898/ibmj.01/2.1article07
www.ijarke.com
70 IJARKE PEER REVIEWED JOURNAL Vol. 2, Issue 1 Aug. – Oct. 2019
Samad (2013) elaborates further that Islamic banking was resilient to the global financial crisis in 2008. He based his argument
on the basis of the mode of operation of interest based (conventional) banks explaining how different it is from that of interest free
(non-conventional) Islamic banks. The distinguishing feature of non-conventional Islamic banks is the profit and loss sharing
where asymmetric information that results adverse selection and moral hazard is significantly reduced. While conventional banks
faced serious problems during the GFC, Apps (2008) claimed that Islamic banks (IB) were stable and continued to perform well
and therefore, should be considered as an alternative option to conventional banking.
Issak & Kwasira (2012) defines Islamic Banking as any financial institution whose rules and procedures clearly state
commitment to principles governing Islamic Shari’ah law which bans payment or receipt of interest on its operations. The two
further explain that Islamic banking, just like any conventional banks is a financial intermediary and at the same time a trustee and
custodian of customers‟ money or financial assets with the main disparity being the payoff of its clients as a share in profits and or
loss and where its operations are entirely governed by the principles of Shari’ah law. Haron (2004) explains that since the first
non-conventional Islamic banking & finance institution was established in 1963, Islamic banking model has gained a footing in
almost every majority Muslim country in the world and in a few non-Muslim countries. Not only do non-conventional banks
provide profit-sharing (instead of pre-determined interest payments) banking facilities, but they are also expected to undertake
business and trade activities on the basis of fair and legitimate profits. Siddiqi (2011) also acknowledges that Islamic Banking and
finance practice is over 30 years old. Institutionalization of Islamic Banking model in Kenya therefore formed the basis of this
research as an alternative to the traditional conventional banking model in Kenya. The study attempted to assess the influence of
strategic management determinants on institutionalization of Islamic banking model in Kenya.
1.1 Islamic Banking
Islamic banking is not much different from other conventional financial institutions models in terms of legal modalities,
constitutive structures, objectives and the means to achieving those objectives (Kahf, 2004). The only difference comes in the
conduct of all business transactions under the Islamic Shari’ah guided by the Holy Quran and the teachings of Prophet
Muhammad (PBUH) which is referred to as Sunnah. Hakala & Kettis (2013) define Islamic banking as a financial institution
whose statutes, rules and procedures expressly state its commitments to the principles of Islamic Shari’ah. It bans receiving and
payment of interest on any of its operations. Kahf (2004) put emphasis on the maximization of profit as the ultimate and major
objective for all financial institutions regardless of whether they are conventional or faith based. It is perceived as a compliment
rather than a substitute of conventional banking where interest rates tend to have a negative effect on its diffusion across the
world. Imam & K‟podar (2010) further explain that while Islamic Banking responds to the needs of the Muslim faithful, it is not a
religious institution itself.
Islamic banks are profit maximizing entities just like any business organizations and their core business is to act as
intermediaries between savers and investors and they offer custodial services as well just like in conventional banking (Hakala &
Kettis, 2013). As a departure from the traditional Islamic banking markets of the Middle East and Malaysia, many countries in
Asia and Africa are now accepting and recognizing Islamic banking model as a more prudent and stable banking system. Unlike
conventional banking, which follows the directives of banking regulations in a given jurisdiction, Islamic banking model strictly
adheres to the principles of Shari’ah law as provided in Islam which makes this banking model boarder-less. According to
Kadubo (2010), Islamic banking is intertwined within its religion and the basis of the religion affects non-conventional Islamic
banking in two ways; while Islam aims at building socio-economic order based on justice of mankind, it also considers economic
activity as a means to an end and not an end in itself. Islamic banking is built on the principles of banking without giving or
receiving interest payments. It seeks to invest in Islamic Shari’ah law abiding enterprises.
Moody (2008), explains that non-conventional Islamic banking model is increasingly becoming a visible alternative to the
conventional banking especially in countries with large Muslim populations like the United Kingdom, Middle East and Northern
Africa regions. Kenya Bankers Association, KBA (2015) further describes non-conventional Islamic banking as a system of
conducting trade and banking activities in line with the principles of Islamic Shari’ah while avoiding all the prohibited activities
such as interest or riba and gharar, and financing of haram (unlawful) trade and businesses. Interest free banking is therefore a
subset of Islamic banking concept which in turn is an alternative to the conventional commercial banking model.
1.2 Commercial Banking in Kenya
According to Badrudin (2011), Commercial Banking sector in Kenya is governed by the Companies Act, the Banking Act, the
Central Bank of Kenya (CBK) Act and the various prudential guidelines issued by the CBK. The CBK, which falls under the
ministry of finance in the Kenya government, is responsible for formulating and implementing monetary policy and fostering the
liquidity, solvency and proper functioning of the financial system. Commercial banks in Kenya operate under one association,
Kenya Bankers Association, KBA, which serves as a lobby for the banking sector‟s interests. Cytonn‟s report (2015), explains that
Kenya financial sector has a total of 43 commercial banks, 10 microfinance banks and 1 mortgage finance institution which is
equally making plans to join the mainstream commercial banking. The report further explains; all banks are regulated by the
Central Bank of Kenya, CBK. All banks are required to adhere to certain prudential regulations such as minimum liquidity ratios
and cash reserve ratios with the CBK.
INTERNATIONAL JOURNALS OF ACADEMICS & RESEARCH ISSN: 2617-4138 IJARKE Business & Management Journal DOI: 10.32898/ibmj.01/2.1article07
www.ijarke.com
71 IJARKE PEER REVIEWED JOURNAL Vol. 2, Issue 1 Aug. – Oct. 2019
According to Ahmed (2015), existing Banks in Kenya are under CBK directive to build their minimum capital reserve to
KES.5 billion from the initial KES.1billion. Kenya also has a high relative ratio of banks to the total population, with the 43
commercial banks serving a country of approximately 44 million people, compared with other Cytonn‟s report, (2015), further
explains that African markets such as Nigeria‟s 22 banks for 180 million inhabitants and South Africa‟s 19 banks for a population
of 55 million. Central Bank of Kenya (CBK) annual report (2017), show that 35% of the Kenyan commercial banks, majority of
which being medium sized, are locally owned. The industry is however dominated by a few large banks most of which are
foreign-owned, bringing about a state of heavy competition for the already existing traditional market drawn from both within
Kenya and the diaspora at large.
Over the last 10 years, the banking sector in Kenya has continued to grow in assets, deposits, profitability and products
offering. Its aggregate balance sheet grew by 3.4% from KES.3.26 trillion in December 2014 to KES.3.37 trillion in March 2015
(Cytonn‟s report, 2015). In addition to the highlighted figures, there are three fully fledged Islamic banks operating in Kenya
namely Gulf African Bank, First Community Bank, and Dubai Islamic Bank (DIB) Kenya with the first two having a deposit
balance sheet totaling KES.7.5 billion made of a customer base of 27,270 accounts. Dubai Islamic Bank with its operations largely
in United Arab Emirates and Middle East was the third fully fledged Islamic bank that came into the Kenyan market in March
2017. The Kenyan Islamic banking untapped market niche comprises of largely Muslims market estimated to make up at least
10% of Kenya‟s population of over 44 million people. Given the above statistics, this study therefore sought to assess the
influence of strategic management determinants on institutionalization of Islamic Banking model in Kenya.
2. Statement of the Problem
According to Farooq & Zaheer (2015), even as Islamic banking covers quite a scope and imprint on the global economy,
it remains poorly understood both at theoretical and practical level. This unique model of banking in general faces several
ideological and structural determinants issues that influence its full institutionalization in the globalized economy. A study carried
out on the factors influencing development of Islamic banking in Kenya by Kadubo (2010) explains that Islamic banking is
driven by religious compliance and the customers need that are being met. Therefore continuous review and improvement of
Shari’ah compliant products together with diversifying market niche will lead to drastic development and marketing of Islamic
banking products (Salim, 2014). On the other hand, Ayub (2015) argues that conventional financing is a recipe for disaster. He
argues that the interest-based financial system in conventional banking is a major hurdle in achieving distributive justice in the
world of financing. Unlike in Islamic banking model where borrowers are cushioned against interest rates turbulence by
predetermined contracts, borrowing under conventional banking models create un-repayable debts. According to Usmani (2015),
all interests based banking models, whether simple or compound; whether at very low rates or very high rates, grow so fast that
borrowers simply cannot keep up. Ayub (2015) introduces all the essential elements of growing non-conventional Islamic market
by providing an in-depth background to the subject and clear descriptions of all the major products and processes associated with
non-conventional Islamic banking.
Globally, Islamic banking has been experiencing growth in the last decade with footprint in over 51 countries in the world
(IMF, 2014). However, despite these consistent growth and outreach in many countries, many supervisory authorities and
financial practitioners are unfamiliar with this banking model. This problem seems to be replicated in many relatively new
markets like Kenya and the East Africa at large. As financial systems become more complex over time, Islamic finance structures
begin developing even further (Mahomed, 2015). Ahmed (2015) on the other hand cites Kenya & Nigeria in Africa, and the
United Kingdom & Luxembourg in Europe are revitalizing their efforts in developing their financial centres as regional hubs for
non-conventional Islamic banking. The understanding of Islamic banking as a non-conventional banking model is popularly
limited to the local market perception that its participants should only eschew interest (Gachuri, 2016). Given the adverse attention
that Shari’ah compliant banking and finance has received among the Kenyan citizenry as fuelled by misinformed and related
malpractices perpetuated by some rogue banking industry players, the assertion that there indeed exists a knowledge gap both in
its application and the governing tenets would suffice. Only by bridging these gaps shall the full benefits of Shari’ah compliant
banking model be fully appreciated and the same adopted to provide dignified financial services to the unbanked masses.
According to the United States Government report (2013), Kenya‟s population is estimated at 44 million. Muslims constitute
10% of the total population. The 4.4 million Muslims in Kenya are mostly concentrated in North Eastern, Coastal parts of Kenya
and Nairobi with other cities like Kisumu, Nakuru, Eldoret, Kitui, Machakos and Kakamega hosting a substantial population of
Muslims as well. Despite such a substantial Muslim market in Kenya only three fully fledged Islamic banks have been instituted
in the last two decades; The Gulf African Bank, First Community Bank and the recent entrant Dubai Islamic Bank (CBK Report,
2017). The three fully fledged non-conventional banks have spread their footprint across fewer cities in Kenya mainly in Nairobi,
Mombasa, Kisumu and North Eastern parts of Kenya contrary to the conventional banks which have branches across the country
(Cytonn‟s report, 2015). Of the three Islamic banks, First community Bank (FCB) has had a slow growth in the previous four
years registering Kes.10.7 million profit before tax (PBT) in 2015 down from Kes.293 million in 2012 (FCB Financial Audited
Report, 2012 – 2015) (CBK Report, 2017). Gulf African Bank Ltd (GAB) on the other hand has been stagnating for the last three
years posting PBT of Kes.434 million in 2013, Kes.615 million in 2014 and Kes.616m in 2015 (GAB Audited Annual Reports,
INTERNATIONAL JOURNALS OF ACADEMICS & RESEARCH ISSN: 2617-4138 IJARKE Business & Management Journal DOI: 10.32898/ibmj.01/2.1article07
www.ijarke.com
72 IJARKE PEER REVIEWED JOURNAL Vol. 2, Issue 1 Aug. – Oct. 2019
2015). DIB Bank is till new in Kenya. Siddiqi (2006) further emphasizes that despite Islamic banking model being in existence for
over three decades, as of this day its theory and model is yet to be fully and well developed in the Kenyan industry.
3. Objective of the Study
The general objective of the study was to determine the influence of cultural integration on institutionalization of Islamic
banking models in Kenya.
4. Review of Literature
4.1 Theoretical Review
4.1.1 Islamic Banking Theory
When the market is passionate about non-conventional financial institutions, the question of compliance to Shari’ah guideline
from the non-conventional financial institutions is bound to arise. Such questions as whether those institutions apply the
guidelines as ordained by the Quran and Sunnah will be key in influencing the Muslim faithful and those who wish to try non-
conventional Islamic banking model experience (Wardhany & Arshad, 2012). The uniqueness of the spiritual values based on the
Quran and Hadith forms the basis of financial trust in non-conventional banking environment (Ahmad, Rahman and Valie, 2015).
The identity of Islamic Shari’ah therefore should not have any doubt in non-conventional banking set up.
According to Samad, Gardner, and Cook (2005), non-conventional Islamic banking refers to a system of banking or banking
activity that is consistent with the principles of Islamic law or Shari’ah guideline and its practical application through the
development of Islamic economics. Shari’ah guideline as guided by the Muslim holy book, the Quran, prohibits the payment or
acceptance of interest (riba or usury) for the lending and accepting of money respectively, for specific terms, as well as investing
in businesses that provide goods or services considered contrary to its principles. Such forbidden goods or services are referred to
as haram. Samad (2005), further asserts that while these principles were used as the basis for a flourishing economy in earlier
times, it is only in the late 20th century that a number of non-conventional Islamic banks were formed to apply these principles to
private or semi-private commercial institutions within the Muslim community Tohirin & Ismail (2016) illustrates that Islamic
banks are based on the abolition of interest as prescribed by Shari’ah law which requires a complete restructuring and innovations
in the financial services. To replace interest-based modes of financial services, experts in non-conventional commercial banking
come up with financial contracts to satisfy the various banking needs. In non-conventional Islamic banking operation, deposits
are treated as capital, or borrowed funds. Imam & Kpodar (2010) further explain that for mudharabah deposit contract, Islamic
banks are usually treated like entrepreneurs. Similar approach is applied on the asset side where non-conventional Islamic bank
creates several contract with customers. For example in contract referred to as musharakah mutanaqisah mortgage financing, the
bank becomes the partner of the house owner.
The principle of mudaraba as a basis of financial intermediation usually is offered as an alternative of interest-free banking
system (Ahmad, 2015). In mudaraba the creditor does not earn interest on a fixed rate, but participates in the business risk and
earns a share of profit. It is worth noting also that under non-conventional Islamic banking model, the cost of capital is not zero as
it may wrongly seem due to zero interest rate. The only difference between this model of banking and interest- based banking is
that cost of capital in the interest-based banking is expressed in terms of a predetermined fixed rate while in non-conventional
Islamic banking, it is expressed as a ratio of profit (Saiti, 2017), Thus in this theory, profit-sharing ratio could work as an
allocative device as well as a control variable in the performance of a non-conventional banking model. Islamic banking theory
was applied in this study to demonstrate the influence of Shari’ah compliance on institutionalization of non-conventional Islamic
banking model in Kenya.
4.1.2 Chaos Theory
According Al-Naimee (2018) originally chaos theory is asserted to have been discovered by Henry Poincare in his famous
memoir on the 3-body problem. Gleick (2011) simplified the theory when he explained it in layman‟s terms by focusing on the
stories of those scientists like Poincare who were pioneers in the field. Chaos Theory began as a concept developed in the physical
sciences, which maintains that disequilibrium is a necessary condition for the growth of dynamic systems. As Lessem (2015)
comments, these systems are called “dissipative” structures because they dissipate their energy in order to re-create themselves
into new forms of order. Faced with increasing levels of disturbance (meaning competition and need for growth) these systems
possess innate properties to reconfigure themselves so that they can deal with new information. The application of Chaos Theory
to this study and all organizations is based on the notion that the environment in which organizations have to develop has become
more and more chaotic and unpredictable, and that organizations have to develop self-renewing or self-organizing properties if
they are to survive.
The theory of organization has therefore long been dominated by a paradigm that conceptualizes the organization as a system
that „processes‟ information or „solves‟ problems. Central to this paradigm is the assumption that a fundamental task for the
INTERNATIONAL JOURNALS OF ACADEMICS & RESEARCH ISSN: 2617-4138 IJARKE Business & Management Journal DOI: 10.32898/ibmj.01/2.1article07
www.ijarke.com
73 IJARKE PEER REVIEWED JOURNAL Vol. 2, Issue 1 Aug. – Oct. 2019
organization is how efficiently it can deal with information and decisions in uncertain environmental changes (Nonaka, 2003).
This paradigm suggests that the solution lies in the „input-process-output‟ sequence of hierarchical information processing of the
organization in question (Gleick, 2011). Chaos theory in our study topic gives an insight on the unpredictability of the Kenyan
banking market with respect to its influence on institutionalization of non-conventional Islamic banking model in Kenya. Chaos in
the Kenyan banking sector comes in such forms as competition, price capping, technological changes, price wars, cultural issues,
Shari’ah compliance issues, regulatory procedures by Central Bank of Kenya, etc.
4.2 Conceptual Framework
Imenda (2014) highlighted that both theoretical and conceptual frameworks give life to a research. According to Adam,
Hussein & Agyem (2018), a research without the theoretical or conceptual framework makes it difficult for readers in ascertaining
the academic position and the underlying factors to the researcher's assertions and/or hypotheses. Therefore, the overall aim of the
two frameworks is to make research findings more meaningful, acceptable to the theoretical constructs in the research field and
ensures generalizability. With the help of literature review, this study sought to prove the hypothesis built on the developed
independent variable cultural integration and its influence on the dependent variable, institutionalization of Islamic banking model
in Kenya.
Independent Variable Dependent Variable
Figure 1 Conceptual Framework
4.3 Discussion of Key Variables
4.3.1 Cultural Integration and Institutionalizing Islamic Banking Model in Kenya
Among myriad definitions on culture House & Javidan (2001), define culture as shared motives values, beliefs, identities, and
interpretations or meaning of significant events that result from common experiences of members of collectives and are
transmitted across age generations. Further, Dlabay & Scott, (2011) look at it in general as the accepted behaviors, customs, and
values of a given society or environment. In a business set up, culture plays a vital role in determining the success or failure of the
business. Cultural diversity will in most cases bring about confusion, resistance and challenges to execution of the overall business
strategic goals. Islam as a faith has its own culture while the organization as an entity will always have its cultural orientation built
over time. According to Vasudeva (2007) within organizational culture diversity attitude plays a central role in institutionalization
of a given model. Attitude and beliefs of the host dominant race, religion or country in which the business entity operates, forms
the major strategic impact on the institution‟s behavior. Since attitude and beliefs have influences on all aspects of human
behavior, providing organization and directions to employees and customers alike of the affiliate countries, identifying the
difference in attitudes and beliefs among various countries, business and institutions assist greatly in achieving cultural
integration.
On the other hand and in dominance to organizational culture, Islamic culture in Muslims dominated environments has also
shaped the largely Muslim market to perceive non-conventional banks as less harsh and approachable in times of difficult in
servicing loans. For instance on matters of interest, Saiti (2017) quotes the holy Quran to have commanded against charging
interest; “Whatever you give for interest to increase within the wealth of people will not increase with Allah.” (Chapter 30, Ar-
Room, Verse 39). This means Islamic banks can at most collect the principal amount of loan when a debtor is struggling and able
to agree on repayment modality in those times of distress. If things get worse financially, the Quran commands the debtor to either
be given more time or forgiven the debt as seen in Chapter 2 of the holy Quran, Al-Baqarah verse 280; “If the debtor is in
difficulty, grant him time until easiness. But donating is better for you, if only you knew”. Many previous researches demonstrate
that quite a substantial market of non-Muslims use products offered by Islamic banks and „Islamic banking windows‟ in the
conventional banking model (Ayub, 2007). Cultural diversity of the staff in Islamic banks may have an influence on the
perception of both Muslims and non-muslim potential clientele. Similarly, organizational cultural behavior based on the diverse
traditions, faiths, beliefs, process adherence and business models often have a strategic influence on the overall acceptability of a
given business. This study sought to test whether cultural integration from the given diversity influences institutionalization of
Islamic banking model in Kenya.
4.3.2 Institutionalization of Islamic Banking Model in Kenya
Cultural Integration
Company values
Islamic trading culture
Office culture
Institutionalization of Islamic Banking Model
Number of Islamic banks
Volumes of Shari’ah account holders
Change in revenue
Change in the value of accounts.
INTERNATIONAL JOURNALS OF ACADEMICS & RESEARCH ISSN: 2617-4138 IJARKE Business & Management Journal DOI: 10.32898/ibmj.01/2.1article07
www.ijarke.com
74 IJARKE PEER REVIEWED JOURNAL Vol. 2, Issue 1 Aug. – Oct. 2019
Kenya was the first country in the East and Central African region to introduce non-conventional Islamic banking in the year
2007 (Kinyanjui, 2013). Gulf African Bank Ltd, First Community Bank Ltd and Dubai Islamic Bank Kenya Ltd are the three fully
fledged non-conventional Islamic banks among eight banks that offer non-conventional Islamic banking services in Kenya. The
three currently have a total loan portfolio of over 4.9 billion shillings, deposits totaling 7.5 billion shillings and 27,270 deposit
accounts. Influential strategic management determinants play a key role along avoidance of interest in influencing
institutionalization of Islamic banking model in Kenya (Rashid & Hassan, 2009). However, Shari’ah compliance in non-
conventional banking can be a futile exercise when the purpose of the Shari’ah itself is overlooked since there is much more to
Islamic banking than the elimination of interest (Ariff & Rosly, 2011). Their argument is that key strategic management
determinants play a center role in influencing non-conventional Islamic Banking practice. This study examined the four strategic
management determinants influencing institutionalization of non-conventional Islamic banking model in Kenya namely; Shari’ah
compliance, Regulatory framework, Cultural integration, and Product diversification.
4.4 Empirical Review
Rabaa and Younes (2016) studied the impacts of the Islamic banks performance on economic growth using panel data. This
research work was aimed at providing empirical evidence on the performance of non-conventional banking model. Their study
findings indicated that the strategic effects were positive and significant on economic growth during the period 2001-2012 in term
of financial liberalization. Aziz, Husin, and Hashmi (2016) looked into Performance of Islamic and Conventional Banks in
Pakistan. This study was conducted to find out financial performance of Islamic and conventional banks operating in Pakistan for
the year 2006-2014. For comparison purpose five Islamic and five similar sized conventional banks were selected. The
comparison was made on average values of different ratios of both Islamic and conventional banks. The comparison showed that
non-conventional Islamic banks performance was better in terms of efficiency, return and asset quality.
Alawode (2015), researched on Unlocking Islamic Finance for Long-Term Growth and Development. His research relates
growth and developments to non-conventional Islamic Banking in Africa. Parker (2015) examined on the pattern of growth of
non-conventional Islamic Banking in Africa by mapping Africa‟s Islamic Economy right from the Northern Africa to sub-Sahara
Africa. His research concluded that in serving the growing demand of the financial industry, non-conventional Islamic finance and
its offerings could act as catalysts to facilitate the country‟s economy as well as being one of the impetuses for growth of the
region. Aden (2014) studied factors influencing Islamic banking in Kenya. The study sought to assess what socio-cultural factors
influence the choice of Islamic banking or financial services in Kenya and how government regulations affect Islamic banks
in Kenya. Kinyanjui (2013) studied on Challenges Facing the Development of Islamic Banking under the Kenyan Experience. He
touched on socio-cultural factors among other determinants.
In 2013, Wasiuzzaman & Gunasegavan gave a comparative study of the performance of non-conventional Islamic banks and
conventional banks in Malaysia. On the other hand Chatti, Kablan and Yousfi (2013), looked into empirical analysis on eight
Islamic banks in Malaysia to find out if non-conventional banks are strategically and sufficiently diversified to cope with the
market trend. They used the Herfindahl-Hirschman Index (HHI) to measure the degree of asset/liability diversification and risk-
adjusted performance as criteria of assets allocation and management compensation. Masiukiewicz (2014) studied multicultural
issues in the development of Islamic banking. He concluded that non-conventional banking often offers products which comply
with the prohibitions of riba, maysir, gharar and that the dynamic development of this banking in the word is the consequence of
its opening to culturally diverse clients, and not only Muslims.
Hassan (2013) looked into Corporate Governance in Islamic financial institutions: An ethical perspective. His findings was that,
contrary to the ideal assumption that Islamic finance is about belief, Shari’ah and ethics, it is observed nevertheless that Islamic
finance is more anxious on the legal and mechanistic aspect of Shari’ah compliant. According to him, Islamic finance is now
experiencing a “formalist deadlock” where the industry is more concerned with formal adherence to Islamic law instead of
promoting Islamic ethical values. Most of the studies carried out in Kenya mainly look into either comparison between non-
conventional and conventional banking, the growth of Islamic banking or factors that affect Islamic Banking in Kenya. Ongore &
Kusa (2013) were closest to this study by looking at the determinants of financial performance of commercial banks in Kenya by
analyzing some strategic factors affecting bank‟s performance although their study was on conventional banking. On the other
hand, Kenya Bankers Association (2015) looks at the connection between non-conventional Islamic financing and the growth of
infrastructural projects like the ports, roads, housing and dams.
5. Research Methodology
The study used correlational descriptive research design. This study employed descriptive survey research design because it
involved collecting data aimed at determining the extent of causal influence that two or more quantifiable variables have over
each other. Therefore correlational descriptive survey research design helped in finding out the influence of each independent
variable on the dependent variable. Some of the researchers who applied this design in their study include; Mulonzi (2014) whose
application of this research design was in examining factors influencing students‟ choices of universities in Kenya. Liepenberg
(2010) used correlational survey research design in his assessment of the link between ERM (Employee Relationship
Management) strategies to the organizational performance, Smiley (2011) used correlational survey research design to investigate
INTERNATIONAL JOURNALS OF ACADEMICS & RESEARCH ISSN: 2617-4138 IJARKE Business & Management Journal DOI: 10.32898/ibmj.01/2.1article07
www.ijarke.com
75 IJARKE PEER REVIEWED JOURNAL Vol. 2, Issue 1 Aug. – Oct. 2019
on gender based compensation in the construction industry, Grove (2005) also used correlational research survey design in
successfully conducting a research on the relationship between invented spelling and beginning of reading.
There are 44 banks in Kenya (CBK, 2016). Only 8 banks offer non-conventional Islamic Banking services. Currently, there are
only three fully fledged non-conventional Islamic banks among the eight. The eight banks were purposively sampled among the
43 banks whose staff formed the study population. The study population was therefore the total number of employees in the eight
purposively sampled commercial banks. Table 1 exhibits the total number of employees that are in the eight commercial banks
that offer at least a window of non-conventional Islamic banking services.
Table 1 Study Population
Bank offering Islamic Banking Services Target Population
Kenya Commercial Bank - Window 7,409
Barclays Bank (ABSA Kenya) -Window 3,882
National Bank (Window) 934
Chase Bank (SBM Kenya ) - Window 1,359
Gulf African Bank - Fully fledged Shari’ah 342
First Community - Fully fledged Shari’ah 560
Standard chartered bank - Window
Dubai Islamic Bank - Fully fledged Shari’ah
1,685
116
Total population 16,287
The eight banks that offer non-conventional Islamic banking services had a total of 16,287 employees which formed the study
population.
The study was restricted to Branch Managers, Operations Managers, Supervisors and all employees at an officer status level
who work in any of the commercial banks in Kenya that offer at least a window of Islamic Banking. The sampling frame
consisted of all commercial banks in Kenya offering at least a window of Islamic Banking at the period of this research work as at
30th
June 2019. There were eight commercial banks that offered at least a window of Islamic Banking as listed in Table 1 above at
the time of this study.
The sample size is a subset of the population that is taken to be representatives of the entire population (Onabanjo, 2010).
Kothari (2004) illustrates that a sample is the selected respondents who represent the entire population. According to Mugenda &
Mugenda (2003) purposive sampling allows a researcher to use cases that have the required information with respect to the
objectives of the study. This study was confined to Branch Managers, Assistant Branch Managers, supervisors and any employees
in the Banking sector. This study survey used purposive sampling to select eight commercial banks out of the total of 43
commercial banks in Kenya from which the total study population was drawn. In this case, the study purposed to select only the
commercial banks in Kenya that offer at least a window of non-conventional Islamic banking. The total number of employees
from the eight sampled commercial banks formed the study population. Slovin‟s sampling formula was then used to compute a
good and effective sample size from the total number of employees in the eight purposively sampled banks.
Palys (2008) compares purposive sampling to qualitative research. He argues that the two are synonymous. This study also
looked at qualitative analysis of the influence of strategic management determinants on institutionalization of non-conventional
Islamic banking model in Kenya. Equation 3.1 illustrates the Slovin‟s formula that was applied in determining the study sample
size;
n = N / (1 + N e2)
Where;
n = Will be the number of samples determined,
N = Will be the total population and
e = Error tolerance
Given the study population drawn from the eight purposively sampled banks is 16,287 as illustrated in table 1, computation of
the exact sample size (n) will obtained using Slovin‟s formula where; e = 0.05, and N = 16,287;
n = N / (1 + N e2)
n = (16,287 / (1+16,287 x 0.052))
n = 399.9
n ≈ 400
INTERNATIONAL JOURNALS OF ACADEMICS & RESEARCH ISSN: 2617-4138 IJARKE Business & Management Journal DOI: 10.32898/ibmj.01/2.1article07
www.ijarke.com
76 IJARKE PEER REVIEWED JOURNAL Vol. 2, Issue 1 Aug. – Oct. 2019
Therefore, the sample size under this research from the total population of 16,287 employees of the eight commercial banks
was 400 respondents. For quality and efficient feedback, questionnaires were only given to employees of the sampled banks who
held positions in the bank above supervisory level.
6. Data Analysis and Research Results
6.1 Cultural Integration Results
6.1.1 Sample Adequacy Results of Cultural Integration
The study applied KMO and Bartlett‟s test in examining correlation of Cultural Integration with respect to Institutionalization
of Islamic Banking model in Kenya. The results were displayed on Table 2. In order to measure the overall relation between the
variables, we tested the determinants of the correlation; Company Values, Islamic Trading Culture and Office Culture against the
dependent variable. According to Owuor and Kiirithio (2014), the Bartlett's Test of Sphericity should be significant (p-value<.05)
for factor analysis to be suitable. The p-value obtained from the data should give an idea of how plausible the hypotheses under
evaluation are. KMO test results values should range between 0 and 1 for it to be considered suitable for factor analysis. However,
a value above 0.5 on Measure of Sampling Adequacy would be a desirable value. The statistical result from Bartlett‟s test done in
this study was a significant p-value of 0.000 and a KMO value of 0.502. Both were acceptable results. The Bartlett‟s Test of
Sphericity results (p-value = 0.000) indicated a high significance while the KMO results value at 0.502 indicated a satisfactory
level for factor analysis.
Table 2 KMO & Bartlett’s Test of Sphericity Results of Cultural Integration
Kaiser-Meyer-Olkin Measure of Sampling Adequacy. .502
Bartlett's Test of Sphericity
Approx. Chi-Square 135.982
Df 15
Sig. .000
6.1.2 Normality Test Results of Cultural Integration
The study measured significance and confidence interval estimates of the components using Normality Test with an
assumption that the variables are normally distributed. To examine the normality, Skewness and Kurtosis tests were done on the
components of the variables.
According to Kothari (2004), while Skewness is measured by statistical mean and median, Kurtosis is measured by the
peaked-ness of the statistical curve of the frequency distribution. Table 3 gives the results from the Skewness and Kurtosis test
done on Cultural integration. Skewed-ness result was 0.724 and Kurtosis result was 0.032. The values obtained were between -1
and +1 hence the distribution considered normal.
Table 3 Skewness & Kurtosis Test Results of Cultural Integration
N Skewness Kurtosis
Variable Sample
Size
Statistical
Results
Standard
Error
Statistical
Results
Standard
Error
Cultural
Integration
325 .724 .135 .032 .270
Excessive correlations among residuals in any set of regression data tend to cause inefficiency in its test results (Owuor &
Kiirithio, 2014). Durbin – Watson‟s test was used in this study to check the level of correlation in the regression data set of
Cultural Integration sub-variables under examination. The ideal value of Durbin-Watson test results should be in a range of 0 to 4
with a value of 2 being a point where there is no correlation in the error and values between 1.5 to 2.25 being an acceptable value
in a study (Omar et al., 2017). The results of the test were captured in Table 4. The outcome of the test was a Durbin-Watson Test
of 1.701 which fell within the acceptable range of between 1.5 to 2.25 making it acceptable. From the achieved results it can be
deduced that the model did not suffer any auto-correlation errors.
Table 4 Durbin-Watson (Auto-correlation) Results of Cultural Integration
Model R R
Square
Adjusted
R Square
Std. Error of
the Estimate
Durbin-
Watson
1 .453a .205 .203 .18722 1.701
a. Predictors: (Constant) – Cultural Integration
b. Dependent Variable: Institutionalization of Islamic Banking model
6.1.3 Factor Analysis Results of Cultural Integration
INTERNATIONAL JOURNALS OF ACADEMICS & RESEARCH ISSN: 2617-4138 IJARKE Business & Management Journal DOI: 10.32898/ibmj.01/2.1article07
www.ijarke.com
77 IJARKE PEER REVIEWED JOURNAL Vol. 2, Issue 1 Aug. – Oct. 2019
A principle component analysis test was undertaken on the components of Cultural Integration for purpose of identifying the
key factors that had the highest influence on the variable. The result of the factor analysis is exhibited on Table 5. The results of
the factor analysis done on all the measures of Cultural integration pointed out three extracted factors that could explain Cultural
Integration variable. The extracted factors had an accumulative percentage of the total variance of 67.191% and individual factor
score of 26.137% for the first one, 20.732% for the second factor and the third factor had 20.321% of the total variance. The three
factors had eigenvalues of 1.568, 1.244 and 1.219 respectively which were all above the minimum expected eigenvalue of 1. They
therefore demonstrated a greater influence on the cultural integration as a determinant to institutionalization of Islamic Banking
model in Kenya.
Table 5 Total Variance Explained for Cultural Integration
Component
Initial Eigenvalues Rotation Sums of
Squared Loadings
Total % of
Variance
Cumulative
%
Total % of
Variance
Cumulative
%
1 1.568 26.137 26.137 1.534 25.571 25.571
2 1.244 20.732 46.870 1.254 20.893 46.464
3 1.219 20.321 67.191 1.244 20.727 67.191
4 .756 12.594 79.785
5 .665 11.089 90.873
6 .548 9.127 100.000
Extraction Method: Principal Component Analysis.
6.1.4 Rotated Component Matrix Results of Cultural Integration
In the study variable Cultural Integration there were three components or factors which were extracted through Rotated
Component Factor Matrix loadings. The extracted factors were Company values denoted as CV, Islamic Trading Culture denoted
as ITC and Office Culture denoted as OC. The results as seen on Table 6 indicated the first component CV with two factor
loadings of 0.405 and 0.838, Component ITC with two factor loadings of 0.772 and 0.815, and Component OC with one factor
loading of 0.762. The five extracted factors are highly interrelated with each other as given by the Rotated Component Matrix
values of factor loading higher than 0.4. Any factor loading under Rotation Component Matrix of more than 0.4 indicates a high
level of interrelation between themselves and the variable under study (Omar et al., 2017).
Table 6 Rotated Component Matrix of Cultural Integration
Statement
Component
CV ITC OC
1. The bank‟s sustainable business is dependent on
organization‟s set of values
2. Due to the Company Values our Bank‟s staff remains
focused to company goals.
3. The Bank‟s business culture has been a key guidance to our
bank-customer relations
.405
.838
.772
4. In this Bank Islamic trading culture has a significant
influence in customer acquisition.
.815
5. The bank service delivery is influenced by our organizational
culture.
.762
Extraction Method: Principal Component Analysis.
Rotation Method: Varimax with Kaiser Normalization.
Rotation converged in 5 iterations.
KEY: CV – Company Values, ITC – Islamic Trading Culture, OC – Organizational Culture
6.2 Descriptive Results of Cultural Integration
The factors that were used to assess Cultural integration were Company Values (CV), Islamic Trading Culture (ITC) and
Organizational Culture. Likert scale of 1 to 5 was used to seek opinion of the respondents to collect the descriptive data where the
extreme values 5 represented an opinion of Strongly Agree and 1 represented a Strongly Disagree opinion. Scale 3 represented
Neither Agree nor Disagree view of the respondents. Table 7 summarizes the findings of the descriptive analysis of Cultural
Integration.
Reliability of Cultural Integration as a strategic management determinant influencing institutionalization of Islamic banking
model in Kenya was examined through Cronbach alpha. The outcome on this study variable was an overall Cronbach alpha value
of 0.799. Being higher than minimum suggested Cronbach alpha value of 0.7 was an indication that the study was reliable. The
INTERNATIONAL JOURNALS OF ACADEMICS & RESEARCH ISSN: 2617-4138 IJARKE Business & Management Journal DOI: 10.32898/ibmj.01/2.1article07
www.ijarke.com
78 IJARKE PEER REVIEWED JOURNAL Vol. 2, Issue 1 Aug. – Oct. 2019
three components; Company Values, Islamic Trading Culture, and Organization Culture had an average mean score of their five
constructs of 4.42 and individual constructs‟ mean scores between 4.3 and 4.54.
Table 7 Descriptive Results of Cultural Integration
Components of Variable Mean Std.
Deviation
Company Values (CV)
4.43 .496
4.44 .498
Islamic Trading Culture (ITC) 4.30 .460
4.54 .500
Organization Culture (OC) 4.40 .490
KEY: Overall Cronbach alpha = 0.799 Overall Mean = 4.42
This described a positive relationship between the components and the study variable. It was observed that Company values,
Islamic Trading Culture and Organization Culture were key strategic factors in Cultural Integration as a strategic management
determinant influencing institutionalization of Islamic Banking model in Kenya. This finding is in agreement with that of
Harinoto, Sanusi and Bogetriatmanio (2018) whose research explain that organizational culture and work commitments become
benchmarks for Islamic Work Ethic to improve employee performance, reflected by interpersonal, with cooperation. Their finding
asserts that organizational culture functions to forming attitudes and behavior to force employee performance.
6.3 Inferential Statistics
6.3.1 Goodness-of-fit Model Results of Cultural Integration
Table 8 indicated that the three measures under Cultural Integration namely; Company Values, Islamic Trading Culture and
Office Culture had a variability percentage score of 20.5% given by R square 0.205 in the given model summary. This was an
indicator of a weak but positive relationship between Cultural Integration and Institutionalization of Islamic Banking Model in
Kenya. The model is therefore a good for fit for the data.
Table 8 Goodness-of-fit Model Summary of Cultural Integration
Model R R
Square
Adjusted R
Square
Std. Error of the Estimate
1 .453a .205 .203 .18722
a. Predictors: (Constant) – Cultural Integration
b. Dependent Variable: Institutionalization of Islamic Banking model
6.3.2 ANOVA Results of Cultural Integration
The findings on analysis of variance for cultural integration variable i.e. Company Values, Islamic Trading Culture and
Organization Culture were tabulated in Table 9.
Table 9 ANOVA Results of Cultural Integration
Model Sum of
Squares
Df Mean
Square
F Sig.
1 Regression 2.924 1 2.924 83.424 .000b
Residual 11.322 323 .035
Total 14.246 324
a. Predictors: (Constant), Cultural Integration (CV, ITC & OC)
b. Dependent Variable: Institutionalization of Islamic Banking model
According to Omar et al., (2017), any significance p-value of less than 0.05 is suitable in explaining the variation of the
variables under reference. The statistical p-value for this study variable model was less than 0.05 at a significance value of 0.000
hence it indicated that the predictor variable, Cultural integration through its measuring components, effectively explain the
variation in the dependent variable. The statistical F-test value of 83.4 on the regression model indicates presence of variation
between the two variables. From the F Value and the sig. p value observed, it was noted that the measures of cultural integration
differ between one another and so is their influence on institutionalization of Islamic Banking model in Kenya.
6.3.3 Regression Results of Cultural Integration
Regression analysis was conducted to measure the level of influence for Cultural Integration measures i.e. Company values,
Islamic trading culture and Organization culture. To establish the influence of these measures, a null hypothesis was tested;
INTERNATIONAL JOURNALS OF ACADEMICS & RESEARCH ISSN: 2617-4138 IJARKE Business & Management Journal DOI: 10.32898/ibmj.01/2.1article07
www.ijarke.com
79 IJARKE PEER REVIEWED JOURNAL Vol. 2, Issue 1 Aug. – Oct. 2019
H03 Cultural integration has no significant influence on institutionalization of Islamic banking model in Kenya.
The finding of the regression analysis was tabulated and posted on Table 10 of regression coefficients. Coefficient β was found
to be 0.453 and Significance p value was 0.000. The results indicate statistical significance in the relationship between Cultural
Integration measures and institutionalization of Islamic Banking model in Kenya.
Table 10 Regression Coefficient Results of Cultural Integration
Model Unstandardized
Coefficients
Standardized
Coefficients
t Sig.
B Std.
Error
Beta
1 (Constant) 2.614 .200 13.093 .000
Cultural Integration .412 .045 .453 9.134 .000
a. Dependent Variable: Institutionalization of Islamic Banking model
Since β ≠ 0 and Significance p value is less than 0.05 the null hypothesis H03 was rejected and the regression model was
summarized as follows;
Y = 2.614 + 0.412X3
Where;
Y = Institutionalization of Islamic Banking model and X3 = Cultural integration
The model indicated that cultural integration measures such as company values, Islamic trading culture and organization
culture determine institutionalization of Islamic Banking model in Kenya.
The finding of the regression analysis for regression coefficients of Cultural Integration as earlier presented in Table 10
indicated a coefficient β of value 0.453 and significance p-value of 0.000. The results indicated statistical significance in the
relationship between Cultural Integration measures and institutionalization of Islamic Banking model in Kenya therefore rejecting
the third hypothesis H03.
The measures of cultural integration in this study were Company Values, Islamic Trading Culture and Organization Culture.
According to Harinoto et al. (2018), Cultural integration in general plays a significant role in shaping up organizational
commitment in any organization. Islamic Cultural integration as reflected in the ongoing commitment will therefore improve the
employee performance and send out an influencing perception to the banking wider market. It was observed that the Islamic
cultural work ethos tends to give an influence, through the communicative nature that reflects work ethos, and improve the
overall organization performance in Islamic Banking model. This third study hypothesis H03 was rejected after the survey
observed that cultural integration has a statistical significance influence on institutionalization of Islamic banking model in Kenya
7. Conclusions and Recommendations
7.1 Conclusions
The study finding indicated that cultural integration measures (company values, Islamic trading culture and organization
culture) had a significant and positive association with institutionalization of Islamic Banking model in Kenya. It was also
concluded from the study findings on regression analysis that the relationship was a statistically significant positive and linear.
The key contribution to this outcome was the belief that cultural integration builds a strong team at work. Company values serve
as a constant reminder of positive behaviors of staff while the Islamic trading culture instills a sense of trust in this relatively new
model of Banking. Hypothesis testing indicated a rejection of null hypothesis. The conclusion was that cultural integration
influences institutionalization of Islamic Banking model in Kenya.
7.2 Recommendations
It was concluded that company values, Islamic trade culture and organization culture play a key role in influencing
institutionalization of Islamic Banking model in Kenya. Company values should be the key drivers of employee behaviors that
will enable customers gain confidence and trust of Islamic banks. They are the daily reminders of the bank behavior and general
perception. Winning cultures should be enhanced and bad cultures discouraged. Banks embracing this model of banking should
have an in depth knowledge of Islamic trading culture for purpose of fair trade and gaining market confidence. Organization
culture dictates performance of an institution. It is therefore recommended based on the research findings herein that Islamic
Banking model should introduce the three measures of cultural integration; uphold and practice company values, watch out to
avoid flouting key Islamic trading culture on daily transactions and reinforcement of good organization culture across all
INTERNATIONAL JOURNALS OF ACADEMICS & RESEARCH ISSN: 2617-4138 IJARKE Business & Management Journal DOI: 10.32898/ibmj.01/2.1article07
www.ijarke.com
80 IJARKE PEER REVIEWED JOURNAL Vol. 2, Issue 1 Aug. – Oct. 2019
departments and employees. Cultural integration is therefore recommended as a key strategic management determinant
influencing institutionalization of Islamic Banking model in Kenya.
References
1. Adom, D., Agyem, J. & Hussein, K., (2018). Theoretical and Conceptual Framework; Mandatory Ingredients of
a quality research. International Journal of Scientific Research, 6(10), 38-41.
2. Ahmed, B., (2015). The Growth of Islamic Finance and Globalization Prospects, 5th
Edition, Islamic
Development Bank, Islamic Research Training Institute. Journal of world economic forum foundation, UAE,
1(6), 63-81.
3. Ahmad K., Rahman K., & Valie, A., (2015). Elimination of Riba; Concepts and Problems, Islamic Markets
Journals, 8(16), 12-34.
4. Alawode, A., (2015). Unlocking Islamic Finance for Long-Term Growth and Development, Journal of Finance
of the World Bank Group, 2(11), 1-42.
5. Al-Naimee, M., (2018). Chaos Theory & Butterfly Effects in Times of Competition and Bank Crush, Thai Qar
University, Baghdad, pp. 235-297.
6. Ali, A., (2015). The Roots & Development of Islamic Banking in the World & in Pakistan. South East Asia
Journal of Contemporary Business, Economics and Law, 7(5), 21-23.
7. Ansoff, I., (1965). Strategies for Diversification, Harvard Business Review, 35(5), 113-124.
8. Apps, P. (2008), Global Financial Centers Battle for Islamic Markets. International Herald Tribune, 25(11), 3-
17.
9. Ariff, M. & Rosly, A., (2011). Islamic Banking in Malaysia: Unchartered Waters. Asian Economic Policy
Review, 6(2), 301–319.
10. Ayub, M., (2007). Realizing the Potential of Islamic Finance: Can Islamic Finance Help Minimize Such Crisis
in the Future? Paper for the Forum on the Global Financial Crisis, Islamic Development Bank, Jeddah.
11. Ayub, M., (2015). Understanding Islamic Finance. John Wiley & Sons Ltd, The Atrium, 5th
Ed. Southern Gate,
Chichester, West Sussex, U.K.
12. Aziz, S., Husin, M. & Hashmi, H., (2016). Performance of Islamic and Conventional Banks in Pakistan: A
Comparative Study. International Journal of Economics and Financial Karachi, 6(4). 383-391.
13. Aziz, A., (2010). Building a Sound Global Islamic Financial System. Islamic Financial Services Board (IFSB)
Report, Kuala Lumpur, 9(36), 113-118.
14. Badrudin, E. S., (2011). Challenges of Strategy Implementation at First Community Bank, Kenya. Unpublished
Thesis, University of Nairobi.
15. Banking Act (2009). The Laws of Kenya, Chapter 488, Revised Edition (of 1991) Published by The National
Council for Law Reporting with the Authority of the Attorney General, www.kenyalaw.org, retrieved on 23rd
July 2018.
16. Central Bank of Kenya, (2017). Bank Supervision Report. Trend in the Kenyan Banking Market. Central Bank
of Kenya.
17. Cytonn Investments Report, (2015). Technology and Performance in the Kenyan Banks, Banking Sector Report,
Nairobi.
18. Cytonn Investments Report, (2016). Kenya Listed Commercial Banks, Q1 Banking Sector Report – Abridged
Version, Nairobi.
19. Farooq, M & Zaheer, S. (2015), Are Islamic Banks more Resilient during financial panic? IMF working Paper,
15(41), 9-17.
20. FCB Audited Annual Report, (2012). Financial Results, www.firstcommunitybank.com, retrieved on 24th
July
2016.
21. FCB Audited Annual Report, (2015). Financial Results, www.firstcommunitybank.com, retrieved on 24th
July
2016.
22. GAB Audited Annual Report, (2013). Financial Results, www.gulfafricanbank.com, retrieved on 24th
July
2016.
23. GAB Audited Annual Report, (2014). Financial Results, www.gulfafricanbank.com, retrieved on 24th
July
2016.
24. Gachuri, B., (2016). Understanding of Shari’ah Compliant Banking is Crucial. Islamic Banking Model and
Finance Paper, Warwick Business School. 31(16), 87-90.
25. Gleick, J., (2011). The Information: A History, a Theory, a Flood. New York Times, 3rd
Ed. Harvard School of
Business.
26. Grove, J., (2005). A Correlation Study Examining the Relationship Between Invented Spelling and the
Beginning of Reading, Unpublished PhD Dissertation, Faculty of the Louisiana State University and
Agricultural and Mechanical College, The Department of Curriculum and Instruction, Louisiana.
27. Hakala, P. & Kettis, A. (2012), Islamic Banking: Problems and Prospects, Journal of Islamic Banking &
Finance, pp. 76-93.
INTERNATIONAL JOURNALS OF ACADEMICS & RESEARCH ISSN: 2617-4138 IJARKE Business & Management Journal DOI: 10.32898/ibmj.01/2.1article07
www.ijarke.com
81 IJARKE PEER REVIEWED JOURNAL Vol. 2, Issue 1 Aug. – Oct. 2019
28. Harinoto, T., Sanusi, A. & Bogetriatmanio, T., (2018). Organizational Culture and Work Commitment Mediate;
The Islamic Work Ethos on Employee Performance, Academy of Strategic Management Journal, 5(17), 1-7.
29. Haron, S., (2004). Determinants of Islamic Bank Profitability, Global Journal of Finance and Economics. 1(1),
43-48.
30. House, J., Javidan, M., & Dorfman, P., (2001). Project Glove: An introduction of applied Psychology, New
Delhi.
31. Imam, P. & Kpodar, K., (2010). Is Islamic Banking Good for Growth? IMF Working Paper, 15(81), 12-34.
32. Imenda, S., (2014). Is There a Conceptual Difference Between Theoretical and Conceptual Frameworks?
International Journal of Science Research, 2, 67-89.
33. IMF Working Paper, (2014). Islamic Banking Regulation and Supervision: Survey Results and Challenges;
Monetary and Capital Markets Department, Authorized for distribution by Michaela Erbenova, International
Monetary Fund Working Paper, WP 14(3).
34. Issak, S. & Kwasira, J., (2012). Strategic Factors Influencing the Growth of Islamic Banks in Nakuru Sub-
County, Kenya, International Journal of Science and Research (IJSR), 3(1), 36-43.
35. K‟podar, K., (2010). Islamic Banking; How Has It Diffused? International Monetary Fund, Working Paper,
10(1), 195-201
36. Kablan, S., Chatti, A. & Yousfi, O., (2013). Are Islamic Banks Sufficiently Diversified? An Empirical Analysis
of Eight Islamic Banks in Malaysia. Journal of Islamic Economic Studies, 21(2), 23-54.
37. Kadubo, S., (2010). Factors Influencing Development of Islamic Banking in Kenya, Unpublished Thesis,
University of Nairobi.
38. Kahf, M., (2004). Islamic Banking & Finance; Fundamentals and Contemporary Issues, Islamic Research &
Training Institute and University, Seminar Proceeding no.47 (6), 37-42.
39. Kahf, M., (2004). Success Factors of Islamic Banks; Based on a Study of the Actual Conduct of some Islamic
Banks, A Research Paper Prepared for the Brunei Symposium on Islamic Banking and Finance, 7(18), 267-288.
40. Kenya Bankers Association, (2015). Islamic Banking glossary, http://www.kba.co.ke/consumer-
information/islamic-banking-glossary, retrieved on 15th
July 2015.
41. Kenya Bankers Association, (2015). Islamic Banking glossary, http://www.kba.co.ke/consumer-
information/islamic-banking-glossary, retrieved on 15th
July 2015.
42. Kinyanjui, N., (2013). Challenges facing the developments of Islamic Banking; Lessons from the Kenyan
experience, European journal of Business Management, 5(2), 94–102.
43. Kothari, R., (2004). Research Methodology: Methods and Techniques, 2nd
Ed. New Age International
Publishers, New Delhi.
44. KPMG Financial Services Report, (2012). Optimizing Banking Operating Models – From Strategy to
Implementation. KPMG International Cooperative publishing, Geneva.
45. Lessem, R., (2015). Management Development through Cultural Diversity. 4th
Ed., London: Routledge.
46. Mahomed, N., (2015). Connecting Africa to the World of Islamic Finance, Journal of Centre in Islamic Finance
for Africa, Creative Services, 106-115.
47. Masiukiewicz, P., (2014). Multicultural Issues in the Development of Islamic Banking. Journal School of
Islamic Finance, 6(3), 10-23.
48. Moody, S., (2008). Islamic Finance Explores New Horizons in Africa, http://www.moodys.com. Retrieved on
14th
June 2015.
49. Mugenda, M., (2008). Research Methods; Qualitative and Quantitative Approaches: African Centre for
Technology Studies, Nairobi.
50. Mugenda, M. & Mugenda, G., (2003). Quantitative and Qualitative Approaches, 2nd
Ed. Nairobi, Acts Press.
51. Mulonzi, M., (2014). Factors Influencing Students‟ choice of Universities in Two Selected Universities: South
Eastern Kenya University and University of Nairobi, Kenya, Unpublished Thesis, University of Nairobi.
52. Omar, N. A., Namusonge G. S. & Sakwa, M. M., (2017). Influence of Financial Management Practices on the
Growth of Family Business in Kenya. Unpublished Ph.D. Thesis, Jomo Kenyatta University of Agriculture &
Technology.
53. Onabanjo, V., (2010). Local Government Investment Outreach and Sustainability of Microfinance Institutions:
A case study of BURO, Bangladesh. The Journal of Social, Political, and Economic Studies, 34, 310-347.
54. Ongore, O. & Kusa, B., (2013). Determinants of Financial Performance of Commercial Banks in Kenya.
International Journal of Economics and Finance, 3(1), 237-252.
55. Owuor, N. & Kiirithio, N., (2014). A Statistical Method for Analyzing Data from National System of Innovation
Surveys, Journal of Semantic Scholars.
56. Palys, T., (2008). Purposive Sampling, In L. M. Given. The Sage Encyclopedia of Qualitative Research
Methods. Los Angeles.
57. Parashar, P & Venkatesh, J., (2014). How Did Islamic Banks Do During the Global Financial Crisis? Banks and
Bank Systems, 5(4), 10-14.
58. Parker, M., (2015). Mapping Africa‟s Islamic Economy, Journal of The Economist Intelligence Unit, 6, 5-22.
59. Rabaa, B. & Younes, B., (2016). The Impact of the Islamic Bank Performance on Economic Growth; Using
Panel Data, International Journal of Economics and Financial Studies, 8(1), 101-108.
INTERNATIONAL JOURNALS OF ACADEMICS & RESEARCH ISSN: 2617-4138 IJARKE Business & Management Journal DOI: 10.32898/ibmj.01/2.1article07
www.ijarke.com
82 IJARKE PEER REVIEWED JOURNAL Vol. 2, Issue 1 Aug. – Oct. 2019
60. Rashid, M. & Hassan, K., (2013). Customer-Centric Corporate Social Responsibility: A Framework for Islamic
Banks on Ethical Efficiency, Management Research Review, 36(4), 359–378.
61. Saiti, B., (2017). Introduction to Islamic Banking Products (Deposit & Financing), Research Gate, 14 – 20.
62. Salim, I., (2014). The Effect of Short-term and Long-term Financial Instruments to the Financial Performance
of Islamic Banks in Kenya. Unpublished Thesis, University of Nairobi.
63. Samad A., Gardner, D., & Cook J., (2005). Islamic Banking and Finance in Theory and Practice: The
Experience of Malaysia and Bahrain, The American Journal of Islamic Social Sciences 22(2). 69-86.
64. Samad, A. (2013), Are Islamic Banks Immuned from Global Financial Crisis? Evidence from 16-Cross-Country
Islamic Banks. Global Journal of Management and Business Research Finance, 13(8), 26-33.
65. Siddiqi, N., (2006). Islamic Banking and Finance in Theory and Practice. A Survey of State of the Art Islamic
Economic Studies, 13(2), 79-89.
66. Siddiqi, M., (2011). Islamic Finance in the Modern World. Market Driven Banking versus Shari’ah Law, 3rd
Ed.
Lahore.
67. Smiley, A., (2011). A Correlation Study of Gender Based Compensation in the Construction Industry. A PhD
Dissertation for Doctor of Management in Organizational Leadership, University of Phoenix.
68. Tohirin, A. & Ismail, M., (2016). Financial Constraints and Islamic Finance; Lesson learned from External
Financing Perspective, Research Gate Journal, 3(2), 56-89.
69. United States Government, (2013). International Religious Freedom Report. United States Department of State,
Bureau of Democracy, Human Rights and Labor, 23-36.
70. Usmani, T., (2015). An Introduction to Islamic Finance (Arab & Islamic Laws Series), Islamic Studies. BRILL
Publications, London, 45-69.
71. Vasudeva, E., (2007). Organizational Transformation and the Culture of Interdisciplinary, Forum for Health
Economics and Policies, 165-208.
72. Wardhany, N. & Arshad, S., (2012). The Role of Shari‟ah Board in Islamic Banks: A Case Study of Malaysia,
Indonesia and Brunei Darussalam, Colloquium, 2nd
ISRA.
73. Wasiuzzaman, S. & Gunasegavan, N., (2013). Comparative Study of The Performance of Islamic and
Conventional Banks: The Case of Malaysia‟, Humanomics, 29(1), 43–60.