Effect of Islamic Financial Literacy Training on the Financial Performance of Selected Islamic Banks in Kenya

Abstract

Purpose: The purpose of this study was to find out the effect of Islamic financial literacy training on the financial performance of selected Islamic banks in Kenya. The study was anchored on two theories; the reinforcement theory and the theory of human motivation.

Methodology: The study adopted a descriptive statistics methodology. Eight commercial banks offering Islamic financial services in Kenya were targeted, that is; ABC Bank Kenya, Barclays Bank of Kenya, Diamond Trust Bank, First Community Bank, Gulf African Bank, Kenya Commercial Bank, National Bank of Kenya, and Standard Chartered Bank. Secondary data was used in the study. Regression analysis was used to interpret the relationship between financial performance of Islamic banks and Islamic financial literacy training.

Findings: The study established that Islamic financial literacy training had a positive significant effect on financial performance of selected Islamic banks in Kenya.

Implications: The study recommended that commercial banks should establish more training facilities at the grass root level and subsidize attendance fees significantly or offer free financial training in order to increase Islamic financial literacy awareness, accommodate the majority poor and expand their customer base.  The study further suggested use of a larger sample size in order to reduce bias and increase accuracy in future studies. Use of primary data in future researches was also recommended as data collection methods such as questionnaires are more comprehensive and open-ended and their anonymity reduces biases in information given.

Key Words: Islamic Finance, Literacy, Financial Performance