Effects of Enterprise Resource Planning on Financial Performance of Financial Institutions in Kenya

Abstract

This research investigated the effects of enterprise resource planning on financial performance of Kenyan financial institutions. A descriptive research design was utilized in this study. The research focused on all the 43 licensed commercial banks and 13 microfinance institutions in Kenya. Both secondary and primary data was utilized in this research to acquire the set objective. The quantitative data acquired was evaluated using Statistical Package for Social Sciences (SPSS) version 23 and results were offered in tables. This study applied multiple regressions to define the impacts of ERP on performance of financial institutions in Kenya. From the regression finding, the research ascertained that the four independent variables studied clarified a significant 65.5 percent of performance of financial institution in Kenya while other features and indiscriminate disparities not studied in this study were found to contribute a measly 34.5%of the financial performance of financial institution in Kenya. The research also determined that ERP play a fundamental supporting role in firms and industries, it is responsible for optimum performance in many organizations and supports a spectrum of activities in modern organizations. It permits the realization of financial performance and institution to create an accurate and timely financial data. Predictions from regression revealed that an adoption of enterprise resource planning cause an enhancement in the performance of the financial institutions performance thus enterprise resource planning has significance and positive influence on financial performance of financial establishments. The research also showed that the sizes of financial institutions have significance and positive effect on the institutions’ performance, that is, an increase in the size of the financial institutions by one unit causes an expansion of the performance of the institutions. It was also noted that management effectiveness has an important and positive impact on financial institutions performance. This implied that an improvement in management effectiveness would cause an improvement in financial institutions performance. Finally, the research showed a positive and important relation between capital adequacy and performance of financial institutions. This implied that an increase of capital adequacy by the financial institution leads to an increase in performance of financial institutions. This study recommends that all financial institution in Kenya to adopt ERP to improve their efficiency and promote their financial performance. Based on the outcome of this research, the policy makers should determine the need for an ERP System as this would guide the successful adoption and implementation of the system. Future research could also look at core challenges of the ERP usage and how they can be resolved.

This research investigated the effects of enterprise resource planning on financial performance of Kenyan financial institutions. A descriptive research design was utilized in this study. The research focused on all the 43 licensed commercial banks and 13 microfinance institutions in Kenya. Both secondary and primary data was utilized in this research to acquire the set objective. The quantitative data acquired was evaluated using Statistical Package for Social Sciences (SPSS) version 23 and results were offered in tables. This study applied multiple regressions to define the impacts of ERP on performance of financial institutions in Kenya. From the regression finding, the research ascertained that the four independent variables studied clarified a significant 65.5 percent of performance of financial institution in Kenya while other features and indiscriminate disparities not studied in this study were found to contribute a measly 34.5%of the financial performance of financial institution in Kenya. The research also determined that ERP play a fundamental supporting role in firms and industries, it is responsible for optimum performance in many organizations and supports a spectrum of activities in modern organizations. It permits the realization of financial performance and institution to create an accurate and timely financial data. Predictions from regression revealed that an adoption of enterprise resource planning cause an enhancement in the performance of the financial institutions performance thus enterprise resource planning has significance and positive influence on financial performance of financial establishments. The research also showed that the sizes of financial institutions have significance and positive effect on the institutions’ performance, that is, an increase in the size of the financial institutions by one unit causes an expansion of the performance of the institutions. It was also noted that management effectiveness has an important and positive impact on financial institutions performance. This implied that an improvement in management effectiveness would cause an improvement in financial institutions performance. Finally, the research showed a positive and important relation between capital adequacy and performance of financial institutions. This implied that an increase of capital adequacy by the financial institution leads to an increase in performance of financial institutions. This study recommends that all financial institution in Kenya to adopt ERP to improve their efficiency and promote their financial performance. Based on the outcome of this research, the policy makers should determine the need for an ERP System as this would guide the successful adoption and implementation of the system. Future research could also look at core challenges of the ERP usage and how they can be resolved.