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Research Paper | Economics | Kenya | Volume 3 Issue 11, November 2014

Effect of Islamic Banking Financing Strategies on Customer Satisfaction in Kenya

Ali Yarrow Ismael

Abstract: Islamic banks are striving to capture the maximum number of customers to compete with conventional banks by providing a large number of financing strategies as an alternative for interest based products and services. However the providers of Islamic Banking products & services have not done enough in educating customers and marketing their product. Moreover, declining growth rates and eroding profitability suggest it is time to better leverage the Islamic banking potential. In order to do this, Islamic banks should revisit their strategic positioning and improve their customer satisfaction. Hence, the study assessed the effect of Islamic banking financing strategies on customer satisfaction in Uasin Gishu County. The study was guided by assimilation Theory. The study adopted explanatory research design. Simple random sampling technique was used to select a sample size of 226customers. This research utilized both primary and secondary data. The primary data was obtained from questionnaires adopted for the study. This research employed quantitative methods of analyzing data. The study used descriptive statistics such as means, frequencies percentages and standard deviation. In addition, it used inferential statistics such as multiple regressions and correlation as a form of inferential statistical analysis used in determining the relationship between the dependent and independent variable. Findings indicated that partnership financing and cost plus financing have a positive and significant effect on customer satisfaction, however, Lease financing and Liquidity financing have significant and negative effect on customer satisfaction. There is also need for partnership financing to conform to the tenets of Islam and the interest which is illegal should be ridden. There is also need for securitization of Cost plus financing agreement. Lease financing arrangements at the bank should aid corporate planning and budgeting by allowing the negotiation of flexible terms.

Keywords: Partnership Financing, Cost plus Financing Lease Financing and Liquidity Financing

Edition: Volume 3 Issue 11, November 2014,

Pages: 56 - 63