dc.description.abstract | The study sought to investigate the effect of financial innovations on financial
performance of commercial banks in Kenya. The main problem was that there is an
increase in the number of financial innovations, but whether the innovations in banking
industry are the main determinants of financial performance is a hard to tell. Despite the
significance of financial innovation, the effect of innovation on financial performance is
still misunderstood. Therefore the study sought to investigate the effect of effect of
financial innovations on financial performance of commercial banks in Kenya. The study
adopted an explanatory research design. The population of the study wasall the 43
commercial banks operating in Kenya in the study period. The study conducted a census
on all the 43 commercial banks .The study usedprimary data. An ordinary linear
regression model was used. The regressions were conducted using statistical package for
social sciences (SPSS) version 20. The study findings indicated that there is a negative
and significant relationship between product innovation and ROA. The relationship
between service innovation and ROA and also organizational innovation and ROA was
found to be positive and significant. Based on the findings, the study concluded that
commercial banks in Kenya in the study period had unsteady trends in ROA despite the
fact that more financial innovations were taking place in the sector. The study also
concluded that the relationship between product innovation and financial performance of
commercial banks is negative and significant. Based on the study findings, the study also
concluded that the relationship between service innovation and ROA and also
organizational innovation and ROA is positive and significant. The study recommended
that Commercial banks should effect effective product innovation strategies that won’t
increase their operational risks which in turn affects their financial performance. The
study also recommended that commercial banks should focus more and invest more in
both service and organization innovation as the two will lead to better financial
performance. | en_US |