ISLAMIC BANKING INSTITUTIONS IN A SECULAR ECONOMY: CHALLENGES AND PROSPECTS IN NIGERIA

Abstract

Globally, economies are embracing alternative sources of financial intermediation that will reduce the liquidity gap in the financial sector thereby increasing savings mobilization. One such intermediation in Nigeria is the provision of Islamic financial products and services which have followed a gradual process. Jaiz bank is the only full fledge non-interest bank but still the bank faces numerous impediments in terms of regulation, people’s patronage and competition with the fully established conventional banks in the country. Therefore, this study aims to identify the likely challenges and prospects faced by Islamic bank (Jaiz bank) operating in a secular economy like Nigeria. Both primary and secondary sources of data are used. The primary source is an open-ended questionnaire issued to 150 respondents and the secondary data used relate to materials and information from others in the field of studies. The descriptive approach was presented in tables and percentages while the inferential approach was conducted through the use of chi-square statistics. The chi-square coefficients of religion, manpower and moral hazards are significant based on their asymptotic probability values. Thus, we reject the null hypotheses that religion, manpower and moral hazards are significant impediments to the operations of Jaiz International Bank ltd. The logit regression model supports the chi square results. Based on the findings, the study recommended for an increase in enlightenment campaigns to create more awareness on the objectives and modalities of the Jaiz Bank and that there should be intensive manpower training and development in the area of Islamic banking and finance in the country.