Strategic Factors Influencing Growth of Islamic Banking Uptake in Kenya

Abstract

Islamic banking has been cultivated in Kenya for more than decade, and even though conventional banks still control the country's financial economy, that the assurance of Islamic banking has not yet been fully realized. Globally, the acceptance and importance of Islamic banking is predicted to grow by fifteen to twenty percent yearly; whereas this is not the case in Kenya at this time. More so, notwithstanding the dependence on Islamic banking as a potential alternative financing channel to help expand the unbanked consumer, there is minimal empirical evidence of Islamic banking delivery penetration. The study's main goal was to identify the strategic factors influencing Kenya's adoption of Islamic banking and specifically, establish the effect of product awareness, consumer protection, legal regulatory requirements risk perception on growth of Islamic banking uptake in Kenya. Tie underpinning theories were; by Location Innovation Theory, Finance Theory, Circumvention Innovation Theory, and Theory of Perceived Risk. The present study used descriptive research design. The target population was the 56-marketing manager, sales manager, customer relation manager, chief operations manager, business development manager, product development manager and research development manager from the headquarters of each of 8 banks that was offering Islamic bank products in Kenya. ii. Abstract(s) with detailed references of publications in refereed journals or credible publishers of two publications for PhD and one publication for Master Degree. Because the population was feasible and narrow, a non-probability method called for a census in which all 56 members of the target population took part as respondents was employed. Structured questionnaires that were given to respondents using a drop-and-pick method were used to gather the data. That tool was scrutinized for reliability using the Cronbach alpha test and for validity using content validity. The data received was quantitatively analyzed to generate descriptive statistics, and the investigation performed inferential analysis for the predictive model. Using Analysis of Variance, the study assessed the model's goodness of fit. The research evaluated the data to satisfy basic Classical Linear Regression Model Assumptions in order to maintain the regression model's authenticity and sturdiness. Based on the findings, this research concludes that at 0.05 level of significance, while product awareness has positive moderate significant effect, consumer protection has significantly low positive significant effect, legal regulatory requirements has significantly moderate positive significant effect and there is a significantly moderate positive effect of risk perception on the growth of Islamic banking uptake in Kenya. The study recommends that Kenya banks offering Islamic banking should, build strong customer loyally though product awareness campaigns, ensure effective and total consumer protection reviewing the Government regulation on Islamic banking, review their legal regulatory requirements, and allaying the risk perception Islamic banking in Kenya through effective strategic marketing, customer service quality, corporate governance and developing innovative product portfolio.