School of Business & Public Management
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Item Financial soundness and operational efficiency of Islamic banks in Sub-Saharan Africa: evidence from a bias-corrected DEA and panel regression framework(Emerald Publishing., 2026) Njogo, Michael Njoroge.; Dallu, Abdallah Mambo.; Korir, Fiona Jepkosgei.Purpose This study examined the effect of financial soundness on the operational efficiency of Islamic banks operating in Sub-Saharan Africa (SSA), a region characterized by emerging Islamic banking systems and constraints. It focused on how capital adequacy, asset quality, earnings quality and liquidity management influence efficiency outcomes. Design/methodology/approach The study applies a Simar–Wilson two-stage data envelopment analysis framework to a balanced panel of 35 fully-fledged Islamic banks in SSA from 2010 to 2024. Bias-corrected efficiency scores are estimated under variable returns to scale and subsequently analyzed using a panel regression framework with two-way fixed effects and robust standard errors to control for unobserved heterogeneity across banks and time. Findings The findings revealed a heterogeneous relationship between financial soundness and operational efficiency: asset quality was positively and significantly associated with efficiency, whereas earnings quality exhibited a negative relationship, indicating a profitability–efficiency trade-off. Capital adequacy showed no direct effect, while liquidity management demonstrated a weak and context-dependent influence. Practical implications The analysis is limited to fully-fledged Islamic banks with complete data. The findings suggest that regulators and managers should prioritize asset quality improvement and efficiency-oriented strategies over balance-sheet expansion. Originality/value The study provides one of the first ever comprehensive, bias-corrected DEA empirical assessments of operational efficiency in Sub-Saharan Africa in Islamic banking. By distinguishing operational efficiency from traditional profitability measures, it challenges the assumption that improved financial soundness inherently enhances efficiency in emerging Islamic banking markets.Item Bank size as a mediating mechanism between financial soundness and operational efficiency: evidence from Islamic banks in sub-Saharan Africa(Emerald Publishing., 2026) Njogo, Michael Njoroge.; Dallu, Abdallah Mambo.; Korir, Fiona Jepkosgei.Purpose This study examines whether bank size mediates the relationship between financial soundness and operational efficiency of Islamic banks in sub-Saharan Africa (SSA), where the sector remains small despite growing policy relevance. Design/methodology/approach Panel data from 35 Islamic banks (2010–2024) were analysed using bias-corrected Variable Returns to Scale scores from the Simar–Wilson two-stage Data Envelopment Analysis. A panel-based mediation model with two-way fixed effects was employed, with bank size (log of deposits) as the mediator. Findings Financial soundness significantly improves operational efficiency, with asset quality exerting a negative effect and earnings stability a positive effect. However, financial soundness does not significantly influence bank size, and bank size does not significantly affect efficiency once soundness is controlled for. Consequently, the mediation hypothesis is not supported, indicating that scale does not function as a transmission mechanism in SSA Islamic banking. Research limitations/implications The findings caution against consolidation-led efficiency strategies and support policy emphasis on governance, regulatory infrastructure and operational capacity building to enhance inclusive and sustainable Islamic banking development. Originality/value This study provides one of the first empirical assessments from SSA that explicitly tests the mediating role of bank size in the soundness–efficiency relationship. The findings show that scale expansion does not operate as a transmission mechanism, suggesting that scale-driven efficiency strategies may have limited applicability.Item Debt recovery practices and loan performance of deposit-taking microfinance banks in Kenya(IJSSME, 2024) Ondabu, Ibrahim Tirimba.; Kamanda, Cynicah Nyaboke.; Teimet, Paul.; Matanda, Joshua.This study explored the relationship between debt recovery practices and loan performance for deposit-taking microfinance banks in Kenya. The study is guided by agency theory and risk shifting theory. The objectives of this study include determine the effect of third-party credit and analyze the effect of collection agencies on loan performance. This research adopted a descriptive approach, the research meticulously captured numerical data for rigorous statistical analysis, aligning with the study’s objective. This study used census survey, all 14 microfinance banks licensed and operational by the Central Bank of Kenya were included. This study used self-administered questionnaires. In this study diagnostic tests were performed to validated the robustness of statistical analysis using SPSS. Validity and reliability were ensured through content validity guidelines and expert assessments where reliability has shown an average Cronbach alpha of 0.7 for all the variables. The study conducted a detailed analysis of the relationships between various elements related to loan performance surveyed microfinance banks. In this study the correlation matrix revealed strong positive correlations between third-party credit guarantees, and collection agencies. Regression analysis showed a significant impact of these factors on loan performance, with an R Square of 0.416. The study’s hypotheses regarding the influence of third-party credit guarantees, and collection agencies on loan performance were tested and supported. This study concluded that effective debt recovery practices significantly enhance loan performance in MFBs. Recommendations included reassessing debt policies, focusing on equity policies, and streamlining policy implementation concerning loan defaulters. The study also identified areas for further research to deepen understanding of loan performance dynamics in the microfinance sector. The study highlighted the importance of proactive debt recovery strategies and risk mitigation measures in enhancing the financial sustainability of MFBs in Kenya.Item Key drivers of public sector audit effectiveness in Kenya and lessons for developing economies.(IISTE, 2024) Ondabu, Ibrahim Tirimba.; Kanini, Joyce Mueni.; Njuguna, Peter.; Kithuka, Geoffrey.This study explores the key factors influencing the effectiveness of public sector audits (PSA) within Kenya's national government and affiliated entities. Focusing on the role of institutional corporate governance, professional and technical competence, resource availability, and internal control processes, this research analyzes data from the Office of the Auditor General's 2021/2022 audit reports. Using a descriptive design and content analysis, 43 financial statements were examined to assess how these determinants impact audit outcomes. Findings indicate that professional and technical competence has the most significant positive impact on PSA effectiveness, followed by strong corporate governance and robust internal controls. Interestingly, resource availability showed a negative correlation, suggesting that merely increasing resources without strategic allocation may not enhance audit performance. These insights highlight the need for targeted training and improved governance structures to strengthen Kenya's audit capabilities and enhance public accountability.Item Government funding, institutional size, and student enrolment in public TVET institutions: evidence from Nairobi Metropolitan, Kenya(African Development Finance Journal, 2025) Ondabu, Ibrahim Tirimba.; Macharia, Alice N.This article examines the influence of government funding, specifically Higher Education Loans Board (HELB) loans and capitation, on student enrolment in public Technical and Vocational Education and Training (TVET) institutions in Nairobi Metropolitan, Kenya. Using longitudinal panel data from 2019–2023 across 12 institutions, the study analyzes how institutional size moderates the relationship between funding and enrolment. Results show that HELB, capitation, and institutional size jointly explain 66.9% of the variance in enrolment rates, with all predictors exerting significant positive effects. Larger institutions benefit disproportionately due to economies of scale and stronger absorptive capacity. The findings highlight the centrality of coordinated demand- and supply-side financing models in promoting equitable access to technical education. Policy recommendations include strengthening funding frameworks, expanding capacity in smaller TVETs, and improving administrative efficiency to maximize the impact of public financing.Item Fiscal framework and economic growth of East African member countries(African Development Finance Journal, 2025) Ondabu, Ibrahim Tirimba.; Kuir, Mayen Kuir.This study examined the relationship between public debt and economic growth in EAC member states. Using a longitudinal research design and secondary data from Kenya, Uganda, Tanzania, Burundi, and Rwanda. The research uses data collected from 2014 to 2023 for countries that were members of the EAC block by the year 2023. The analysis applied the Arellano-Bover System Generalized Method of Moments (GMM) to address endogeneity and dynamic panel concerns. To ensure reliability, diagnostic tests such as the Breusch-Pagan test for heteroscedasticity, the Hausman test, and the Arellano-Bond test for serial correlation were conducted, with results evaluated at the 5% significance level. The findings show that government expenditure has a positive but statistically insignificant effect on economic growth, reflecting the limited impact of recurrent-heavy spending on productivity, tax revenue has a negative and significant effect, suggesting that high tax rates coupled with a narrow tax base reduce private investment and household consumption and also that public debt has mixed outcomes: domestic debt had a positive though insignificant effect on growth, while external debt negatively and significantly influenced growth due to high servicing costs and currency risks.Item Factors Influencing Absorption of Budgeted Funds in the Kenyan Public Sector(International Journal of Finance and Accounting, 2024) Nakitare, Isokat T.; Bunyasi, Gladys N.; Mwangi, Renson M.Purpose: The main objective of this study was to analyse factors influencing absorption of budgeted funds in the Kenyan ministries. Specific objectives were to establish the influence of budgeting and planning processes influencing the absorption of budgeted funds, to establish the effect of the ministries staff capacity on the absorption of budgeted funds, to establish the influence of private sector capacity on absorption of budgeted funds and to establish the influence of donor funding on absorption of budgeted funds. Methodology: Cross-sectional research design was used in this study. This research design was adopted since it leads to an in-depth survey reviews, allows for the integration of writing and also carrying out a pilot study within the data collection process. For the purpose of this study, the target population was the 21 government ministries which are funded. Purposive sampling was used to arrive at the sample size. The sample was selected for ministries which had published their relevant information is readily available and those who finance their projects. A sample size of 21 ministries was used as ranked on the performance contract scores published annually. Secondary data was used in this study. The secondary data was collected from questionnaires; printed estimates and corporations published statements from Treasury and Division of Performance Contracting and the Ministry of Devolution and Planning. The data collected was analysed using SPSS version 29. Descriptive and inferential statistical analysis were conducted using SPSS.The study employed tests of significance at 95% and t-tests. Findings of the analysis were presented using tables and graphs. Findings: From the analysis of findings, strong and positive linear association was established between the independent variables (Budgeting process, staff capacity, private sector capacity, donor funding) and absorption of budgeted funds. An R-square value of 0.727 was established depicting that this relationship was very strong and the budgeting process, staff capacity, private sector capacity and donor funding accounted for 72.7% of the changes in the dependent variable i.e absorption of budgeted funds. Unique Contribution to Theory, Practice and Policy: The study prescribes that the National Government of Kenya ought to decrease the sum for donor funding each year and result to other forms of subsidies to fund both development and recurrent expenditure. Government of Kenya ought to plan compelling arrangements for establishing better source of financing their development and recurrent expenditure. They ought to receive cheaper sources of funds for their financing alternatives as they maintain a strategic distance from overreliance on donor financing. This study was grounded on agency, institutional and stewardship theories which supported each of the predictor and dependent variables.The government of Kenya should review anb re-design financing policies to ensure that the debt capital amount is reduced. They should be design effective mechanism to avoid the overutilization of the total debt financing. Government of Kenya should evaluate the available option and devise effective financing mechanisms.Item Financial development and economic development in Africa: a systematic review on the mediating role of fintech(MDPI, 2026) Githira, Charles.; Simiyu, Christine.; Simiyu, Denis.This systematic review examines the mediating role of financial technology (FinTech) in the relationship between financial development and economic development across African economies. It draws on 34 empirical studies published between 2019 and 2026, identified through a structured search of six electronic databases, namely Scopus, ScienceDirect, JSTOR, DOAJ, SciELO, and ERIC. The search was supplemented by manual reference screening. The review synthesises evidence on how digital financial innovations, including mobile money, digital banking, and electronic payment systems, expand financial inclusion and influence economic outcomes. Grounded in Financial Intermediation Theory, Financial Development Theory, Financial Inclusion Theory, and the Technology Acceptance Model, the review provides a coherent framework for understanding FinTech as a structural mediator rather than an independent growth driver. Studies were assessed using the Mixed Methods Appraisal Tool (MMAT, 2018). The findings indicate that FinTech significantly amplifies the positive effects of financial development on economic growth, poverty reduction, and financial inclusion, though these effects are often nonlinear and context-dependent. Institutional quality, regulatory frameworks, and technological infrastructure emerge as critical moderating conditions. This review contributes to the literature by providing the first systematic synthesis that explicitly classifies included studies by their capacity to formally test mediation versus those that imply indirect mechanisms, offering a more precise account of the FinTech–financial development–economic development nexus in Africa. The findings yield targeted policy recommendations for central banks, financial regulators, commercial banks, telecommunications providers, and government policymakers.Item Agri-insurance financing and the resilience of smallholder farmers in Nakuru County, Kenya(African Development Finance Journal, 2025) Ondabu, Ibrahim Tirimba.; Abdi, Hassan Abdullahi.Agricultural insurance has increasingly become a critical tool for stabilizing smallholder farmers’ livelihoods, particularly in regions affected by climate variability and market shocks. This paper examines the influence of Agri-insurance financing on the productivity and resilience of smallholder farmers in Nakuru County. Using a descriptive quantitative design and data from 272 respondents, findings show that insurance significantly enhances productivity (β = .258, p < .001) by reducing farmers’ risk exposure, strengthening investment confidence, and promoting adoption of new technologies. Despite high awareness levels, insurance uptake remains low due to unaffordable premiums, low trust in insurers, and limited experience with claim processing. The study recommends subsidized index-based insurance, bundling insurance with credit and inputs, digital claim-processing mechanisms, and cooperative-based outreach.Item Digital finance as a catalyst for economic growth, innovation, and regulatory evolution(IDEAS, 2025) Ondabu, Ibrahim Tirimba.; Choi, Alfonce Nyambane.; Ngila, Samuel.; Rikilem, Paul L.Purpose: This study examines the impact of digital financial services on economic expansion, technological advancements, and financial regulations. It explores how digital finance drives financial inclusion, enhances access to credit, and fosters economic growth while also addressing the associated challenges. Methodology: A systematic review approach was employed to analyze existing literature on digital finance, focusing on its influence on financial innovation, transaction efficiency, and regulatory adaptation. The study synthesizes findings from academic research, industry reports, and policy papers. Findings: The study reveals that digital finance significantly enhances financial inclusion by reducing transaction costs and expanding credit access. Technologies such as artificial intelligence, blockchain, and big data analytics have revolutionized financial services, improving efficiency, security, and accessibility. However, challenges such as cybersecurity risks, fraud, and regulatory inconsistencies persist. Regulatory bodies are adopting adaptive measures, including regulatory sandboxes and central bank digital currencies, to balance innovation with consumer protection. Unique Contribution to Theory, Policy, and Practice: This study contributes to the theoretical understanding of digital finance’s role in economic transformation. It provides policy insights for governments and regulatory bodies to design frameworks that promote financial innovation while ensuring security and stability. Additionally, it offers practical guidance for financial institutions on leveraging digital technologies to enhance service delivery and economic development.