Exploring the development of Islamic banking in Nigeria using an actor-network theory perspective

Hadiza Sa’id

doi:10.1108/jiabr-02-2018-0027

Abstract

PurposeThe purpose of this paper is to investigate the evolution of Islamic banking in Nigeria.Design/methodology/approachThe paper adopts a qualitative approach using 25 semi-structured interviews together with documentary analysis to analyse how Islamic banking has evolved in Nigeria.FindingsThe paper demonstrates that the evolution of Islamic banking in Nigeria arose from a relationship between various human and non-human actors. The development was shaped by the Nigerian socio-economic environment, particularly the wealthy Muslim segment and the poor performance of the economy.Practical implicationsThe study’s findings have practical implications for how governments in countries with diverse religions or ethnicities should take action when introducing new practices or concepts, such as Islamic finance, that align with one religion or ethnicity. The findings of this study suggest that publicising what the new practice or concept is in advance to the entire populace will enhance understanding and subsequent acceptance.Originality/valueThe paper differs from previous studies on the development of Islamic banking in two ways. First, it provides a contextual account of the various factors that have influenced the development of Islamic banking in Nigeria, a sub-Saharan Africa country for which research on Islamic banking is sparse. Second, the paper is unique in analysing how Islamic banking emerged as a process of actor-network formation.

Highlights

In recent decades, Islamic finance has become a trend in Islamic countries, as well as in some non-Muslim countries
Why would renowned Christians link Islamic banking to terrorism? Why the agitation? I don’t know; I will tell you it is the religious tension that has been in Nigeria for several years. This is similar to the findings reported by Mouawad (2009) and Wilson (2003), as in their studies Islamic banks were seen as a means of financing Islamic political movements that could destabilise the power of the ruling government and could distort the existing economic system
The aim of this study was to investigate how Islamic banking developed in Nigeria, an ethnically and religiously diverse country

Summary

Introduction

Islamic finance has become a trend in Islamic countries, as well as in some non-Muslim countries. Studies have been conducted in countries such as Pakistan (Khan and Bhatti, 2006; Khan, 2008; Rammal and Parker, 2013; Khan and Mirakhor, 1990), Iran (Khan and Mirakhor, 1990), Malaysia (Laldin, 2008; Al Nasser and Muhammed, 2013) Bangladesh (Sarker, 1998), Tunisia (Kaabachi and Obeid, 2016), Jordan (Maali and Napier, 2010), Egypt (Mouawad, 2009) and Algeria (Benamraoui, 2008) These studies highlighted the influence of the social, economic and political environment on the development of Islamic finance. Other researches, such as Laldin (2008), Khan and Mirakhor (1990) and Al Nasser and Muhammed (2013), have explored how the governments in Malaysia and Iran supported the development of Islamic banking and finance in the respective countries. Benamraoui (2008) highlighted how economic changes due to the liberalisation policy adopted by the Algerian government have positively influenced the development of Islamic banking

Objectives

Findings

Discussion

Conclusion