Discover, Read, Share

This Knowledge Repository aims to provide the long-term preservation, organization and distribution of digital knowledge products published by KCAU.

KCA University Campus
 

Browse by Community

Select a community to browse its collections.

Now showing 1 - 6 of 6

Recent Submissions

No Thumbnail Available
Item
Role of fintech in fostering innovation and economic resilience within Islamic banking: a bibliometric and systematic literature review
(International Journal of Accounting and Finance Analytics, 2026) Njogo, Michael N.; Dallu, Abdallah M.; Korir,Fiona J.
In light of growing economic uncertainty, Islamic banking institutions are increasingly adopting financial technologies (Fintech) to enhance economic resilience and sustainability. This study explores the role of Fintech in fostering innovation and economic resilience within Islamic banking through a combined bibliometric and systematic literature review. Guided by the PRISMA framework, 98 peer-reviewed articles from 2019–2025 were analyzed, with bibliometric mapping conducted using VOSviewer. The findings reveal a growing interdisciplinary nexus between Islamic finance, digital innovation, and governance, with key themes including Shariah-compliant innovation, financial inclusion, and crisis resilience. Technologies such as blockchain, AI, and mobile banking have enhanced operational efficiency, customer engagement, and ethical compliance. However, regulatory fragmentation, cybersecurity risks, and Shariah harmonization remain persistent challenges. The study offers strategic recommendations for policymakers, financial institutions, and researchers, emphasizing adaptive regulation, user-centric innovation, and inclusive digital infrastructure. By integrating Islamic ethical principles with digital transformation, this review provides original insights into how Islamic fintech can support sustainable, inclusive, and resilient financial ecosystems globally.
No Thumbnail Available
Item
Liquidity management constraints and operational efficiency in Islamic banking systems in Sub-Sahara Africa
(Fakultas Ekonomi dan Bisnis Islam, 2026) Njogo, Michael Njoroge.; Korir, Fiona Jepkosgei.; Dallu, Abdallah Mambo.
This study examines whether liquidity management enhances or constrains the operational efficiency of Islamic banks operating in SSA, where Sharīʿah-compliant financial infrastructure remains underdeveloped. Using panel data from 35 fully fledged Islamic banks over the period 2010–2024, the study employs a bias-corrected two-stage Data Envelopment Analysis (DEA) framework with Simar–Wilson bootstrap procedures, followed by fixed-effects regression to ensure consistent inference. The findings reveal that, despite maintaining relatively high liquidity buffers, Islamic banks in SSA operate significantly below the efficiency frontier, with average bias-corrected efficiency levels of 31.8%. Contrary to conventional banking theory, liquidity exhibits only a weak and marginal relationship with efficiency. This result reflects structural features of SSA Islamic financial systems, including shallow sukuk markets, limited Islamic interbank activity, and the absence of effective Sharīʿah-compliant lender-of-last-resort facilities, which collectively constrain the productive deployment of liquidity. By conceptualising liquidity as a binding monetary constraint rather than a discretionary management tool, this study offers a novel contribution to Islamic banking and monetary economics, particularly in the context of institutionally incomplete markets. The results further show that asset quality and institutional maturity play a more decisive role in shaping efficiency outcomes once liquidity constraints bind. The findings highlight that improving efficiency in SSA Islamic banking systems requires system-level reforms, underscoring the need for Islamic monetary authorities to prioritise the development of Sharīʿah-compliant liquidity infrastructure, including active sukuk markets, Islamic interbank facilities, and credible lender-of-last-resort mechanisms.
No Thumbnail Available
Item
Income stability, earnings volatility, and efficiency in Islamic banks: evidence from Sub-Saharan Africa
(EJIF, 2026) Njogo, Michael Njoroge.; Dallu, Abdallah Mambo.; Korir, Fiona Jepkosgei.
This study examines the relationship between earnings volatility and operational efficiency in Islamic banks in SSA, addressing a key methodological limitation in the Islamic banking efficiency literature. Conventional Data Envelopment Analysis (DEA), widely used in prior studies, produces upward-biased efficiency scores and invalid second-stage inference when efficiency is linked to stochastic variables such as earnings volatility. This limitation is particularly consequential in Islamic banking, where income streams are structurally volatile due to profit-and-loss sharing and asset-backed financing arrangements. Methodologically, this study demonstrates the necessity of bias correction and applies the Simar–Wilson two-stage DEA framework to obtain statistically valid efficiency–volatility estimates. Using a balanced panel of fully-fledged Islamic banks in SSA from 2010 to 2024, operational efficiency is measured as income-generation efficiency based on non-interest revenue streams. First, operational efficiency is estimated under alternative returns-to-scale assumptions using non-interest operating expenses as inputs and Shariah-compliant non-interest income components as outputs. In the second stage, bias-corrected efficiency scores are regressed on earnings volatility—measured as the rolling standard deviation of return on assets (ROA), which captures earnings volatility relative to asset utilization and aligns with operational efficiency—using truncated regression with bootstrapping. The results reveal a statistically significant negative relationship between earnings volatility and operational efficiency, indicating that earnings volatility weakens Islamic banks’ capacity to efficiently transform operating costs into Shariah-compliant income. Robustness checks confirm the stability of the findings across efficiency specifications. Beyond its empirical contribution, the study shows that efficiency levels reported in prior Islamic banking studies relying on conventional DEA may be systematically overstated in volatile-income environments, with important implications for supervision and policy in emerging Islamic finance markets.
No Thumbnail Available
Item
Prudential calibration and regulatory infrastructure in emerging Islamic banking systems: evidence and policy implications from Sub-Saharan Africa
(AREBUS Journal, 2026) Njogo, Michael Njoroge.; Dallu, Abdallah Mambo.; Korir, Fiona Jepkosgei.
This study addresses the prudential calibration challenge in emerging Islamic banking systems by examining whether prevailing capital, liquidity, and governance thresholds are proportionately aligned with operational productivity. Focusing on Sub-Saharan Africa (SSA), it reframes financial soundness indicators as regulatory design variables rather than isolated performance determinants. The study employs a bias-corrected two-stage Data Envelopment Analysis (DEA) on a balanced panel of 35 fully fledged Islamic banks in SSA over the period 2010–2024. Efficiency scores are estimated under variable returns to scale and subsequently analysed using truncated regression against CAMELS-based prudential indicators. The findings are interpreted through a regulatory calibration framework grounded in efficiency–stability trade-off theory. Results reveal persistent inefficiencies primarily driven by scale constraints rather than managerial deficiencies. Capital adequacy does not exhibit proportional efficiency gains, liquidity strength shows only modest productivity alignment, and asset quality demonstrates a more consistent association with operational performance. The evidence suggests that mechanical prudential reinforcement in structurally shallow markets may yield diminishing productivity returns. The study proposes a proportional prudential calibration approach integrating capital design, liquidity infrastructure development, and governance strengthening to align stability objectives with productive intermediation better. This paper advances Islamic banking research by positioning operational efficiency as a regulatory diagnostic tool and introducing an empirically grounded prudential calibration framework for emerging financial systems.
No Thumbnail Available
Item
Asset quality, non-performing financing, and early-warning indicators of operational stress in Islamic banking systems: evidence from SSA
(Journal of Islamic Economic Studies, 2026) Njogo, Michael Njoroge.; Dallu, Abdallah Mambo.; Korir, Fiona Jepkosgei.
This study examines whether Non-Performing Finance (NPF) functions as an early-warning indicator of operational stress in Islamic banks operating in SSA. Departing from conventional efficiency-determinant approaches, the study conceptualises operational efficiency as a diagnostic manifestation of internal stress transmission rather than a measure of managerial performance. The analysis employs a Simar–Wilson two-stage Data Envelopment Analysis framework to generate bias-corrected efficiency scores for a balanced panel of fully fledged Islamic banks over the period 2010–2024, followed by two-way fixed-effects panel regression to assess the early-warning role of lagged NPF. The results show that increases in NPF systematically precede subsequent declines in operational efficiency, indicating that asset quality deterioration is transmitted internally through higher monitoring, restructuring, and Sharīʿah governance costs. The findings further reveal that such asset-quality-induced operational stress is persistent and more pronounced in structurally constrained banking environments. By reframing NPF as a forward-looking supervisory trigger and efficiency as a stress indicator, the study provides novel evidence for regulators and monetary authorities seeking to enhance early-warning frameworks in Islamic banking systems globally today.