Browsing by Author "Salihu, Ismail"

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    Asset Quality, Revenue Diversification and Profitability of Islamic Banks in Selected African Countries.
    (Superior University, Lahore, Pakistan, 2026) Jimoh, Abdulrazaq Taiye; Salihu, Ismail
    Profit-sharing and trade-based financings are the major means for revenue generation in Islamic banks. Making these financing contracts available in accordance with Shariah principles will not only increase the growth of banking market but also propel the profitability of existing Islamic banks. Profitability of the banks thus depends largely on effectiveness of the revenue models, asset (financing) quality as well as diversification methods employed. Despite the established theoretical link between asset quality, revenue diversification and profitability, empirical relationship between the variables remains underexplored. Therefore, this study examined the effect of asset quality and revenue diversification on Islamic bank profitability in Africa. A sample of five countries were purposively selected for the study from Islamic Financial Services Board (IFSB) member African countries. Country-level Quarterly data were extracted from IFSB database for 11 years from 2013 to 2023. The data were analysed via fixed effects regression technique. Findings revealed that revenue diversification had positive, significant effect (0.69, p<0.05) on return on assets (ROA). Conversely, non-performing financing had negative, significant effect (-0.28, p<0.05) on ROA. The study concluded that Islamic banks’ profitability is significantly affected by revenue diversification and asset quality, in selected African countries. The study recommended diversification to more shariah-compliant products and effective monitoring of financing activities to reduce non-performing facilities that can deplete Islamic banks’ profitability.
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    BANK-SPECIFIC DETERMINANTS OF ISLAMIC BANKING PROFITABILITY: EVIDENCE FROM SELECTED AFRICAN COUNTRIES
    (Published by the Department of Banking and Finance, University of Abuja, 2026) Jimoh, Abdulrazaq Taiye; Salihu, Ismail; Khaleel, Sa’adatu Ibrahim; Afolabi, Hafsat Olatanwa
    The determinants of Islamic bank profitability in Africa remain a subject of empirical investigation as the extent to which bank-specific variables affect performance is underexplored by past studies. This study therefore investigated the effects of bank-specific characteristics on profitability of Islamic banks in Africa. Specifically, the study examined the effects of asset quality, liquidity, operational efficiency, revenue diversification and capital adequacy on Islamic bank profitability is selected African countries. The study population consists of 25 African Islamic Financial Services Board (IFSB) member countries as at January 2026. Purposive sampling technique was used to select 5 countries while quarterly data were collected from IFSB database for period, 2013 to 2024. The data were analysed using Fixed Effect Regression estimation technique. Results showed that capital adequacy (β=0.91, p<0.05), deposit liability (β=0.33, p<0.05), revenue diversification (β=0.69, p<0.05) and total financing (β=0.16, p<0.05) had positive and significant effects on return on assets. Conversely, non-performing financing (β=-0.28, p<0.05), cost to income ratio (β=-1.98, p<0.05), and liquidity ratio (β=- 5.72, p<0.01) had negative significant impact on ROA. It was concluded based on these findings, that bank-specific factors affect profitability of Islamic banks in selected African countries. It is therefore recommended for policy implementation, that the management of Islamic banks in Africa should ensure that the banks are adequately capitalized by maintaining good capital adequacy to enhance their profitability. Islamic banks in Africa should also ensure that their financing activities are efficiently and effectively executed and monitored, to reduce nonperforming facilities that are capable of depleting their profitability