| dc.description.abstract | The purpose of the study was to assess the impact of product innovation on commercial
bank’s financial performance as the key players in the banking sector over a period of 4
years. Kenya’s financial sector has undergone significant transformation in the last few
years. Many new more efficient and real time financial systems have come into place.
Despite the undeniable importance of financial innovation, its effect on financial
performance is not always obvious since there are reported cases of reverse causality
between innovation and performance. The descriptive research design was used to carry
out this study. The population of study was all the 43 commercial banks in Kenya as at
30th June 2011. The study used secondary data from published central banks’ annual
reports. The independent variable was product innovations unique to commercial banks
while dependent variable was consolidated financial performance of all banks. A cross
sectional regression model was adapted. The regressions were conducted using statistical
package for social sciences (SPSS) version 21. Regression results indicate that there is a
positive and significant relationship between innovated products Ratio and ROA. The
study concludes that product innovations positively affect financial performance. Based
on these results, the study recommends that product innovation information should be
available particularly to regulatory and advisory bodies for guidance to the commercial
banks on the need to craft and employ sound strategies geared towards continuously
embracing innovativeness since innovation leads to improved financial performance. In
addition, the study also recommends that firms should create an enabling environment for
the employees to be innovative in their operations in order to utilize its competitive
advantage so as to increase financial performance and growth of the sector. | en_US |
