The effect of agency banking on the financial performance of commercial banks in Kenya
Abstract
Access to affordable banking services plays a fundamental role in the development of any
economy. Agency banking has therefore proved to be a successful model in ensuring that
most people who could not access conventional banking services are able to do so
through contracted bank agents. The objective of the study was to determine the effects
of agency banking on financial performance of commercial banks in Kenya. The study
adopted descriptive research design. The target population for this research study was all
commercial banks that have adopted the agency banking concept. The researcher
collected secondary data that was extracted from the CBK’s annual and supervisory
reports. The study used data covering a five year period from 2010 to 2013. Quantitative
analysis was employed to analyze the collected data. This was made possible by use of
(SPSS V.20.0). The findings revealed that there was a positive relationship between
financial performance of commercial banks as measured by ROE and total assets. The
findings further revealed that all the variables of the study were significant throughout the
four year period. 62.3% of changes in the return on equity were attributed to only three
independent variables. The study concluded that agency banking positively affects the
financial performance of commercial banks. The study also concluded that commercial
banks were able to extend their accessibility by citizens thereby improving their market
share and revenue. The study recommended that more banks implement agency banking
as the number of commercial banks that had implemented agency banking were thirteen
out of a total of fourty three commercial banks. The study further recommended that
more commercial banks set up agency banking to tap into the deposits and withdrawals
which are key transaction revenue elements for commercial banks in terms of financial
performance.
Publisher
University of Nairobi
Rights
Attribution-NonCommercial-NoDerivs 3.0 United StatesUsage Rights
http://creativecommons.org/licenses/by-nc-nd/3.0/us/Collections
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