| dc.description.abstract | In a growing number of countries, banks are finding new ways to make money delivering
financial services to "unbanked" people. Rather than using bank branches and their own
field officers, they offer banking and payment services through retail outlets, including
grocery stores, pharmacies, seed and fertilizer retailers and gas stations among others.
The study sought to establish the effect of agency banking on financial performance of
commercial banks in Kenya. This study adopted descriptive research design. The
population for this study was 16 commercial banks that have embraced agency banking.
The study used secondary data and was collected from previously collected data, general
business publications, reports from and by financial institutions and CBK banks
supervision reports. Annual reports of the banks were analyzed for the period between
2012 and 2014, which is the study period of 3 years. The study used both quantitative and
qualitative techniques to analyse data from the questionnaire. The quantitative data
collected was analyzed by using Statistical Package for Social Sciences (SPSS version
22) and presented through percentages, means, standard deviations and frequencies.
Multiple linear regression models were used in measuring each variable and this model.
The study concluded that increase in the number of agents of commercial banks lead to
an increase in the financial performance of commercial banks hence there is a positive
relationship between number of agents and financial performance. The study also
concludes that there is a positive relationship between cash deposits, volume of deposits,
volume of withdraws and financial performance. The study also concludes that bank size
has a positive relationship with financial performance of commercial banks; this is
because as the number of agents increases the size of the assets increase hence financial
performance. The study recommended that; commercial banks should be encouraged to
embrace agency banking through adoption of improved technology; this will increase
volume of transactions and bank size which will lead to financial performance. Security
enhances accessibility and operation of agents’ banks; the government of Kenya should
thus improve security to enhance operation of the agents’ bank. This will enable
commercial banks in Kenya increase the number of agents. This can be done by reducing
the requirements of becoming a bank agent. Commercial banks in Kenya should improve
customers’ perception by making more advertisements and also increase promotion
activities of agent’s banking. By doing this the number of transactions made by
customers will increase. This in turn helps the customers to save more and hence the
amount the bank can loan increases. This helps to improve the financial performance of
commercial banks. The government should support the program of operation of agency
banking. This can be done by reducing the high compliance costs, bureaucracy in
registration and high cost of taxation. This will increase the number of transaction by the
banks hence profitability. | en_US |
