| dc.description.abstract | This study sought to identify the factors that determine trends in the commercial banks'
fee based income. Whilst some studies have been carried out on risk diversification and
non-interest income in the Kenyan banking sector, there has been insufficient information
on the factors that affect fees and commissions charged by commercial banks.
This study identified four factors as having a significant influence over fees and
commissions. These are market share, investment in technology and other assets, cost of
service and risk.
To facilitate in explaining the changes in the fees and commissions with that of the
factors identified, regression analysis was used. Data of a five-year period between 1999
and 2003 was employed to form an equation after which market share was identified as
the most important factor in determining fees and commissions. Two other factors
namely investment in technology and other assets and cost of service were found to be
important in only two of the five years of analysis. Investment in technology was found
to have positive relationship with fees and commissions in 2001 and a negative
relationship in 2003. These mixed results could be interpreted to mean that while
technology and other assets cost banks a great deal, they also result to significant savings
on part of the banks. The impact of additional cost and savings probably cancel out and
the customer neither benefits from investment in technology and other assets nor suffers
from the cost of the technology and other assets. Cost of service had a positive
relationship with fees and commissions in 1999, but it did not have a statistically
significant relationship between 2000 and 2002 and had a strong positive relationship in
2003. This could be interpreted to mean that by 2003, cost of service had become an
important determinant of fees and commissions charged by banks in Kenya. Risk did not
have a significant relationship with fees and commissions in any of the five years of
analysis. | en |
