MUDARABA FINANCIAL PRODUCT AND PERFORMANCE OF COMMERCIAL BANKS IN GARISSA COUNTY.

Abstract

ABSTRACT

Financing is the engine of any business irrespective of its nature and therefore should be a top priority to any firm’s management. A lot of debate on the subject of Islamic finance which is highly inclined on the Islamic religion has therefore been a contemporary issue in the field of finance. This research aimed to investigate the influence of Mudaraba Islamic Financial Product on the Performance of Commercial Banks in Kenya. The study was guided by One Tier Mudaraba Model. Descriptive research design was employed. The study population was 138 employees from 6 Commercial Banks in Garissa, Kenya offering Islamic finance products namely, Absa bank, Commercial Bank, Equity Bank, National Bank of Kenya, Gulf African bank and Premier Bank. The study used primary and also secondary data with questionnaires being used in collection of primary data and data collection sheet utilized in the collection of secondary data. After collection, the data was coded and edited before being analyzed through SPSS tool. Descriptive statistics alongside inferential statistics were generated. Mudaraba financing was found as having positive significant relationship with commercial banks performance and as explaining 55.6% variations in commercial banks performance.  Recommendations of the study is for the banks to enhance this Islamic product especially in terms of information to customers and public. Data was presented via tables and graphs and the study will be useful to management of Commercial Banks, key policy makers’ scholars and other researchers.

Keywords: Mudaraba Financial Product, Performance of Commercial Banks, Garissa County