The Effect Of Agency Banking On The Financial Performance Of Commercial Banks In Kenya
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Date
2019Author
Ombui, Brian Maiko
Type
ThesisLanguage
enMetadata
Show full item recordAbstract
Banks are developing innovative service delivery methods that ultimately lead to growth
in revenue streams or decline in operational costs, and eventually increase in profit. Some
of the innovative ways include adaptation of alternative delivery channels like agent
banking. This research analysed the outcome of agency banking on the financial results of
Kenyan banks. To achieve the purpose of the study, a descriptive research design was used.
The target population comprised 17 commercial banks of Kenya that had adopted the
agency banking model as at December 2017. Secondary data obtained from the CBK Bank
Supervision Annual reports and audited financial statements for the commercial banks
were used. Yearly publications of the banks were analysed for a 6-year duration, from 2012
to 2017. The data collected was analysed via a statistical package called EViews. The
variables used for the study were number of agents and volume of agent transaction (cash
withdrawals and deposits), asset quality, capital adequacy and liquidity, and ROA. The
interconnection between the explanatory and regressand variables was calculated by
multiple linear regression. The study concluded that a positive relation between number of
agents and volume of agent transaction (cash withdrawals and deposits) and ROA. A rise
in the number of agents and volume of agent transactions led to a corresponding rise in the
ROA of commercial banks. The study also found out a positive interrelation between
capital adequacy, liquidity and ROA; whereas a negative interrelation was determined
between asset quality and ROA. Finally, the research recommended that commercial banks
should continue setting up more agents. The regulators were encouraged to broaden the
scope of agency banking framework so that agents can be allowed to offer more banking
services. The study was only aimed the influence of agent banking on financial results of
commercial banks in Kenya. Future investigations can focus on the effect of agent banking
on other financial bodies, for example microfinance organizations, as well as the economy
in general. Other research can also incorporate more variables like mobile banking, SME
banking, E-banking (card and online) to gage the performance and growth of commercial
banks and the economy in general
Publisher
University of Nairobi
Rights
Attribution-NonCommercial-NoDerivs 3.0 United StatesUsage Rights
http://creativecommons.org/licenses/by-nc-nd/3.0/us/Collections
- School of Business [1311]
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