Effect of Bancassurance on financial performance of Commercial Banks in Kenya
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Date
2013-07Author
Muunda, Carolyne M
Type
ThesisLanguage
enMetadata
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Bancassurance is viewed as the future of the banking industry. It originates from French
usage of banks to carry out their insurance transactions which has been adopted globally.
Its growth was boosted by fact that household savings have moved from deposits to more
remunerative investments causing a drop in traditional banking profitability forcing banks
to compensate the decrease in their interest margin by offering investment banking or
insurance services to diversify the resources required to manage risk.
The study analysed the effects of bancassurance on performance of commercial banks
and observed that the banking sector in Kenya is very dynamic and highly profitable as
an investment avenue with a declining asset to liability ratio, reducing cost to income
ratio, and an increasing return on assets ratio. An analysis of bancassurance performance
showed an increasing profitability, increasing return on assets and increasing return on
investment where 96% of the banks with bancassurance reported profits within the study
period. A model was created that can be used to analyze the effects of bancassurance on
net profit margins of the banks which is 96.2% efficient and reliable. The study concludes
that profitability of bancassurance has significant effect to the overall profitability of the
banking industry, and has made key findings to support this observation.
The study recommends that the banking sector should invest more into bancassurance by
improving marketing strategies for its products such that more customers are attracted to
these services. The study also observed that the banking sector needs more experts on
bancassurance to help in rolling out better products that suits customer niche and embrace
customer uniqueness in the Kenyan insurance market. The regulators should find ways to
offer solutions to the challenges that were observed to hinder bancassurance investment.
The study found that further research to assess the factors that causes successful
implementation of bancassurance should be carried out and also assess the effects of
bancassurance on the financial performance of insurance firms in Kenya.
Citation
Masters Degree Inbusiness Administration Department Of Finance And Accounting, School Of Business, University Of Nairobi,2013Publisher
University of Nairobi, School of business,