Market Forces Motivating Cross-border Banking by Commercial Banks in Kenya: a Case Study of Kcb Group Limited

Abstract

This research sought to understand market forces motivating regional money-lending of Kenyan commercial money-lenders with a specific reference to KCB Limited Group. It was driven by the point that financial markets in Kenya, its legal and institutional structures are seen to be “superior” to the ones of bordering nations, the destructive growth of money-lenders in Kenya across the East African region seemed contradictory. The growth of global money-lending operations by Kenyan money-lenders within and outside East Africa put a need for an inquiry into what stimulates the resolution by a money-lender to venture outside the national borders or invest in their home country. This inquiry was timely given that a bulk of Kenyan populace remained unbanked yet some Kenyan money-lenders were expanding into regional markets thus having not fully exploited the existing domestic market. This research therefore pursued to study the Kenyan domestic-based market forces motivating regional money-lending by Kenyan commercial money-lenders and secondly to define host non-domestic country based market forces encouraging regional money-lending by Kenyan Commercial money-lenders, using KCB Limited Group as a case study. In doing so, the researcher interviewed 3 KCB Limited Group staff in-charge of regional expansion. As at September 2019, KCB Limited Group had 258 branches spread across 5 countries within the East African Market. Content analysis was used to analyze data. The research discovered main reason KCB Limited Group had moved to the 5 countries was prospects for future growth, such as to follow customers, to grow their revenue thus increasing profits, take advantage of governmental incentives, exploit money-lender-specific strengths, for long term growth, enhance competitiveness, spread their business risks, economies of scale and also improve money-lender’s the reputation as customers would view them as a strong brand due to its regional presence.