Impact of terrorism in the operations of licenced foreign banks in Kenya
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Date
2015-08Author
Shyamala, Stella K
Type
ThesisLanguage
enMetadata
Show full item recordAbstract
Terrorism has proved to be one of the most difficult problems to deal with by the
entire world, it affects a countries ability to attract and sustain business development
and investment thus affecting its economy and the fight for eradicating poverty.
Terrorism shows a long term disruption trend, among the most hit sectors is the world
economy. Most of the big banks in Kenya are foreign and hence become an easy
target for terrorist. The objective of this study was to establish the impact of terrorism
in the operations of licensed foreign banks in Kenya. This study adopted a descriptive
cross-sectional survey design because it allows for generalization of findings within a
particular parameter. The 7 banks with operating licenses sufficed as the target
population for this study and the study collected both primary and secondary data
where primary data was collected using a semi structured questionnaire then were
coded and analyzed using SPSS. The study found out that terrorism activities
witnessed in the Country drove the cost of insurance for the licensed and foreign
banks in Kenya up. This made operational costs increase thus diluting the operating
profits and that terrorism activities reduced the scope of insurance covers for
commercial banks. The influence that terrorism had on the operations of Licensed
Foreign Banks led to duplication of roles for the sake of creating a back-up team,
increased operational costs, influenced the compliance costs and increased the level of
exposure for licensed foreign banks. The study concludes that terrorism activities
reduced the scope of insurance covers and increased the cost of the banks, thus for
them to fully cover their risks, they need to pay more and re-negotiate with the
insurance industry players and were faced with duplication of roles for the sake of
creating backup team so as to ensure continuity in business operations in case of being
affected by a terrorism event. The study recommends that regulators could ensure that
all banks have in place effective frameworks to identify, assess, monitor, and control
or mitigate material operational risks resulting from terrorism as part of the overall
approach to risk management and foreign banks themselves could take all necessary
steps to ensure their ability to operate on an ongoing basis and limit losses in the event
of severe business disruption, through adequate contingency and business continuity
plans.
Publisher
University of Nairobi