The effect of bancassurance on the financial performance of commercial banks in Kenya
Abstract
Financial Institutions for a long time have been grappling with the decrease in their
interest margins as a result of the rise in competition, changes in technology and the
deregulation of the Financial Sector as well as globalization. With the rise of financial
innovation, Bancassurance is the way to go. Anja et al., (2010), describes Bancassurance
as the selling of insurance through the bank distribution channel. Bancassurance provides
banks with the opportunity to acquire additional revenue streams while promoting
customer retention. Few studies have been done relating to Bancassurance in its entirety.
The objective of the study was to determine the effect of Bancassurance on the financial
performance of commercial banks in Kenya. Secondary data was collected from Central
Bank of Kenya and Bank Financial reports and multiple regression and correlation
analysis were used in the data analysis.
The study revealed that there was strong positive relationship between the financial
performance of commercial banks and bancassurance, annual interest on loan advances
but a negative relationship with annual inflation rate. Firstly, the study revealed that there
was strong positive relationship between bancassurance and financial performance of
commercial banks in Kenya. The study also found that there was a positive relationship
between annual interest on loan advances and financial performance of commercial banks
in Kenya. In contrast, however, the study revealed there was a negative relationship
between annual inflation rate and financial performance of commercial banks in Kenya.
There is need for a committed top management to show full support in facilitating the
adoption and implementation of bancassurance as there is significant relationship
between bancassurance and financial performance of commercial banks. The study
recommends that the Banking Act should be reviewed with a view of formulating
policies so as to enhance clarity and recognition of this insurance sales channel through
the banks.
Publisher
University of Nairobi