The Influence of Lending Innovations on Growth of Commercial Banks in Kajiado County, Kenya

Abstract

Commercial banks have been adopting technological digital banking platforms to improve in serving their customers and one aim of technological advancement is to leverage on credit facilities or finance for businesses and personal bankers. As a result, this research delved to discover the impact of lending innovations and their influence on growth of Commercial Banks in Kajiado. The research employed neoclassical growth theory as well as the lending without access to collateral theory. The design employed was descriptive survey design. The respondents were sampled from 10 Commercial Banks operating within Kajiado County. Stratified sampling was used in the study as it provides accurate results and each subgroup of research gets represented. Data collection was by questionnaires in a Likert scale format. The data was analyzed quantitatively through descriptive and inferential analysis such as means, standard deviation, and regression analysis. The statistical packaged was adopted to streamline study analysis. The regression analysis findings showed that innovations in lending have significant impact to growth of Commercial Banks in Kajiado County which implies that an increase in lending innovations leads to an increase in growth of Commercial Banks in Kajiado County. The findings led to the conclusion that lending innovations have a positive and significant impact growth of Commercial Banks in Kajiado County in Kenya. The impact is also significant since in this era of digital banking, offering loans through digital means is important in enhancing easy access thus readily availing funds to SMEs and for personal use. It was therefore concluded that lending innovations such as extending loans through mobile platforms, loans through software applications (apps) and online loan applications affect commercial banks growth significantly. The study findings led to the recommendations that Commercial Banks should enhance technological adoption of lending which are easily accessible to borrowers so as to use it to boost their operations and enhance their growth. Further, the study recommends commercial banks to provide more digital loan platforms and increase awareness regarding digital loans especially to small businesses and personal users so as to enhance utilization of such platforms which will improve operations and growth of the commercial banks.