| dc.description.abstract | This study examines the relationship between financial innovation and the efficiency
of commercial banks in Kenya for the period between 2009 and 2012. The banking
sector is one of the fastest growing sectors in the economy registering significance
implementation of innovations. This study therefore seeks to establish the efficiency
status with the view of establishing financial innovation types that can improve banks’
efficiency levels. Relationship between relative efficiency score and total assets
admitted, age and ownership is noted.
This study is designed as a descriptive study. The population comprised of 43
commercial banks out of which 21 were selected, forming the sample size. The DEA
model was used using a DEA computer program. The objective of the study was to
obtain the following information of each firm: Relative efficiency score, peer for each
inefficient bank, objective output and input targets.
The mean relative efficiency score for the selected banks was found to be
approximately 80%. Large banks in terms of assets were found to be relatively more
efficient than small and medium sized banks. Foreign banks were found to have a
higher efficiency score than public and private-domestic banks in terms of ownership.
Banks that had been operational more than 18 years were considered to be old. The
old banks were found to be more efficient than the new ones. This paper concludes
that lack of organizational innovation among banks is a major factor in inefficiency
within the bank. Also, several recommendations both to the banks and researches are
made.
Small and medium banks, new and old banks, public and private-domestic banks need
to compare themselves with their peers in terms of innovation implementation and
operation. This would lead improved efficiency score through introduction of new
and improved innovations, better innovation combination and optimal usage of assets
and capital. | en |
