| dc.description.abstract | Greater foreign participation in the banking industry raises a number of important analytical
issues such as; the factors determining a bank’s decision to expand its activities abroad, its
choice of countries to invest in, and the form of participation (branch, subsidiary, ownership of
local banks), differences in the business focus of foreign and domestic banks; and the impact of
foreign-entry on the performance of the domestic banking industry.
This study therefore was set with an objective of assessing the factors that influence commercial
banks investments in Kenya as an emerging economy. The study used descriptive survey as the
research design on the population of 12 foreign commercial banks operating in Kenya. The data
was collected by means of questionnaires consisting of both open and close ended questions. The
data was analyzed using descriptive statistics. Qualitative data was analyzed using content
analysis.
The study identified profitability and credit expansion as the top most factors considered by
foreign banks when investing in Kenya. International competition, technological innovation and
advancement in foreign countries, favorable credit/cash ratio requirements, political stability in
the foreign country, are the other factors that were viewed as critical in bank investment.
However, tax consideration was viewed to have little though considerable influence in
determining the foreign banks investment in Kenya.
It was also established that foreign commercial banks have been operating in Kenya for a
considerably long period. The oldest banks have been operating for over thirty years while the
new entrants are less than five years old. Foreign banks in Kenya like domestic banks have
enjoyed considerable branch networks mainly due to high profitability, relatively easy gain of
market shares, and high level of skilled labour besides the relatively stable economy. Like most
businesses, the foreign commercial banks face various risks that they need to handle in order to
remain afloat on top being the exchange rate risk | en_US |
