Effects of Innovation on Financial Performance of Commercial Banks in Kenya

Abstract

This research studied innovations in the commercial banks in Kenya. The study focused on innovations and their impact on commercial banks’ key financial performance indicators namely: return on assets, profitability, and total income. The overall objective of this research project was to determine the effect of innovations on financial performance of Kenyan commercial banks. The research adopted a descriptive survey design with questionnaire being the basic tool for collection of primary data. Twenty conveniently selected Kenyan commercial banks formed the target study units for this research paper. The sample of the study with reference to respondents comprised of management only and out of the two hundred and fifty four questionnaires administered, 82% was attained as the response rate. Statistical Package of Social Sciences (SPSS) software was used for statistical data analysis. The results indicated that the effect of bank innovations on profitability, return on assets, and total income in Kenyan commercial banks is statistically significant. This research did not exhaust bank innovations hence gave a recommendation for further study to cover innovations like securitization, credit guarantees and agency banking and their impact on financial performance in banking institutions.