| dc.description.abstract | Islamic banking has become popular in the last three decades, not only in Arab and Islamic world but also in other parts of the World. Due to its profit-risk sharing principles, Islamic banks, compared to non-Islamic banks, seek for a just and an equitable distribution of resources. This caused non-Muslims to also adopt Islamic banking in different parts of the world. However, despite over four decades of experience of Islamic banking and finance, the industry had its critics, both Muslim and non-Muslims due to low market share rate of Islam banking in Kenya as compared to conventional banks. This study aimed to examine relationship between Islamic financial instruments and financial performance of banks in Isiolo County Kenya. The study had specific objectives such as measuring the influence of Islamic home, auto, personal and trade financing instruments on financial performance of commercial banks in Isiolo County Kenya. This study was guided by three theories; assimilation theory, Solow Swan class growth theory and social exchange theory. Assimilation theory guided the survey into Islamic home and personal instruments. Solow Swan class growth theory will guide the survey into Islamic automobile financing instruments and social exchange theory guided the survey into Islamic trade financing theory. Descriptive research design was used in the study. The respondents were customer service officers and loan officers in the ten commercial banks in Isiolo County. They were be selected using census method. Data collection was done using closed-ended questionnaires and secondary data collected through analysis of report from 2017 to 2020. To ensure validity and reliability, pre-testing of questionnaires was done at Kenya Commercial Bank in Meru town. Coded data in SPSS 24.0 computer program analyzed quantitative and qualitative data using the descriptive statistics such as mean, percentage and standard deviation. Multiple regression was used to test hypothesis of the study. Tables, graphs and detailed explanations were used to present the final results of the study. The study found out that the problem was not in provision of home financing instruments by the bank but untimely re-payment on the issued financing. In addition, the respondents did not tally that having sharia committee in disbursing car loans had enabled clients have confidence with the automobile loans. Further on, most Islamic personal products were almost similar to conventional products hence clients did not really distinguish between the two. In addition, it could also mean that Islamic personal products were very complicated for clients to understand them hence preferring the conventional personal products. The results further indicated that the community around Isiolo county did not actually know there were such kind of products that would be of benefit to them. The study recommends that the bank management should provide training to banking staff on how to administer Know Your Customer procedures when administering various Islamic financing instruments. There should marketing drives to educate the community more on these financing instruments. | en_US |
