Effects of Innovation on Financial Performance on Commercial Banks in Kenya

Abstract

Banking sector over the years have undergone drastic changes from being conventional banking to more efficient in diversifications of assets and finance from different sources. This was necessitated by internalization, embracement on the new technological advancement tools, machines and new means on the storage and communication of information. Competitive environments has also played a big role in ensuring better quality of product and services are provided in line to meet the growing complex need of satisfying customer. The research carried out to create association amid financial performance in relation to innovations. The independent variable that was used includes; total transaction through ATMs cards, total transaction from mobile banking and total values from RTGs. The dependent was measured by Return on Asset (ROA). The study was carried out on 4 years period from 2012 to 2015, by obtaining secondary data from Central Bank of Kenya. Descriptive data design was used in the identifications of the characteristics of the variables available from the sample. Statistical package for social sciences (SPSS) was used data analysis and interpretation, Correlation and Regression analysis were carried further in analysis of variables.R2was 0.78 showing that 78% of disparities in dependent variable are clarified by the independent variables. The research also established that the p value of +0.12 showing a significant relationship where the predictor variables have a positive influence on the level of the profit. It was established that there exists positive and strong association amid innovation and financial performance.