Effect Of Innovation On The Financial Performance Of Commercial Banks In Kenya

Abstract

Kenya has evolved in innovation over the years, her being the home to an early entrant form of mobile money banking with world class standards. This innovation and evolution of other new technologies in Kenya formed the basis for this study. The objective of this study was to determine the effect of innovation on the financial performance of commercia l banks in Kenya. To achieve this objective, secondary data was collected from the Central Bank annual commercial banks supervisory reports, the Nairobi Securities Exchange and from the respective websites of the individual commercial banks. Data was then analyzed by the SPSS using the linear regression analysis. The population used in this study was 15 registered commercial banks in Kenya. From the findings of the study, innovation has a negative effect on the financial performance of the commercial banks in Kenya. An F-test at 5% level of significance was employed in this study and from the findings. Innovation was statistically insignificant in the financial performance of commercial banks. From the correlation analysis, teller machines, mobile banking customers and bank agents were found to be negatively correlated with the financial performance measured by return on assets. The study concluded that innovation has no impact on the financial performance of commercial banks.