Influence of expansion programs on the performance of commercial banks: the case of banks in Nairobi county, Kenya
Abstract
This study sought to establish the influence of expansion programs on the financial
performance of commercial banks in Nairobi County, in Kenya. The study aimed at
establishing whether the financial performance of the commercial banks is influenced
by the banks decision to invest in expansion programs. The study sought to answer
the following research question, how does Opening of new branches influence the
performance of Commercial banks in Nairobi County? How does Growth in
Customer Base influence the performance of Commercial banks in Nairobi County?
To what extent does Growth in Loan book influence the performance of Commercial
banks in Nairobi County? To what extent does portfolio diversification influence the
performance of Commercial banks in Nairobi County? Descriptive research design
was employed to establish what influence the independent variables have on the
dependent variable. The target population comprised of selected employees in specific
job cadre from the eleven listed commercial banks. All the 55 senior commercial
banks managers were interviewed. For a bank to qualify it needed to have been listed
in the NSE and must have had been in operation during the entire period of the study.
The selection of the respondents followed purposive sampling procedure; this is so as
to ensure only employees conversant with expansion programs were interviewed. The
sample size comprised of the entire populations of 50 respondents. This was so
because the target population was less than 100.The 50 respondents were arrived at
after dropping 5 respondents who took part in the pilot testing. In the study both
primary and secondary data collection techniques were used. Questionnaires were
administered to the sampled group. Document analysis was used to obtain variable
information specifically from audited financial statements. Data collected was
analyzed using SPSS and the findings presented using descriptive statistics.
Frequency tables were used to analyze the background data on age, level of education,
number of years of experience. In the study 47 out of 50 (96%) respondents
responded thus satisfying the data collection criteria. The study found out that there is
a positive relationship between expansion programs and the performance commercial
banks in Nairobi County, in Kenya; however, some of the coefficients were not
significant. Expansion in growth of loan book was found to have the highest influence
on the performance of the commercial banks with a coefficient of 0.502 followed by
growth in customer base at 0.487.Portfolio diversification and Opening of new
branches have the least influence at 0.179 and 0.01 respectively. The coefficients on
Opening of new branches and portfolio diversification were found not to be
significant. The coefficients on both growth on customer base and Loan book are
significant. The study recommends that the banking sector and central government
ensure expansion programs be implemented and an optimal mix be established on a
case by case basis.
Publisher
University of Nairobi
Rights
Attribution-NonCommercial-NoDerivs 3.0 United StatesUsage Rights
http://creativecommons.org/licenses/by-nc-nd/3.0/us/Collections
- Faculty of Education (FEd) [5964]
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