dc.description.abstract | Over the last years there have been many changes in the Kenyan banking sector and these
changes have been attributed to the various innovations adopted by banks. These innovations
were categorized into product, process and institutional. Thus, this study sought to determine the
impact of financial innovation on the financial performance of commercial banks in Kenya.
The population of this study consisted of 44 commercial banks in Kenya. Out of these, a sample
of 20 commercial banks was randomly sampled. 20 questionnaires were sent out to the top and
middle level management of these organizations because they are most likely to be the ones who
make the final decisions. 18 commercial banks of the 20 sampled responded and were used in
this study. Data collected was edited for accuracy, consistency, uniformity and completeness to
enable coding and tabulation before analysis. Data was analyzed and presented using descriptive
statistics, tables, graphs and pie-charts, by the use of Statistical Package for Social Sciences
(SPSS) version 17.
The study concluded that adoption of financial innovations in the operations of commercial
banks has a positive effect on their financial performance. This can be supported by the fact that
financial innovations also increases banks' profitability, gives banks competitive advantage and
increases service quality and efficiency. It was further noted that that there had been a notable
increase in the number of bank accounts opened over a five year period. This could be
attributable to the fact that technological innovations led to increased efficiency in account
processing whereas market innovations led to increased market share. | |