| dc.description.abstract | Across the globe, the banking industry today enjoys a number of advantages compared to
past years that would appear to contribute to their ability to generate profits. The importance of
bank profitability can be appraised at the micro and macro levels of the economy. At the micro
level, profit is the essential prerequisite of a competitive banking institution and the cheapest
source of funds. It is not merely a result, but also a necessity for successful banking in a period
of growing competition on financial markets. Hence, the basic aim of a bank's management is to
achieve a profit, as the essential requirement for conducting any business. The objective of this
study was to explore determinant of profitability in the banking industry in Kenya with specific
focus to commercial banks listed in NSE where the variables were ownership, bank size, state of
Information Technology (IT) and labour productivity. This research problem was studied
through the use of a descriptive research design. According to NSE, there are 8 commercial
banks listed in NSE. This study employed stratified sampling technique in coming up with a
sample size of 86 from a total population of 207 respondents. The study relied mostly on primary
data sourges where self-administered questionnaire was utilized as source of data. Data was
collected purely quantitative. Quantitative data was coded and entered into Statistical Packages
for Social Scientists (SPSS Version 17.0) and analyzed using descriptive statistics. The finding
was presented inform of frequency tables and explanation was presented in prose. The
knowledge established from this study would be useful in helping the regulatory authorities and
bank managers to formulate future policies aiming at improving the profitability of the banking
sector. From the study findings, the study concluded that there was a positive relation between
firm ownership and bank profitability. Also the study concluded that bank size determines banks
profitability. The study also concluded that banks with diverse products and services experience
high profitability and that bank with high value of assets accrue more profits. From the findings,
the study concluded that banks that have embraced creativity and innovation influence its
profitability and that application of IT ease the process and procedure of banking. Finally, the
study concluded that banks that promote its staff on merits encourage hard work which in turn
increases its productivity. The study recommends that there is a dire need of involving the bank
owners, bank management and other stakeholders for the welfare of the bank in order to mitigate
perception that banks are for a certain class in society or community. On bank size, the study
recommended that banks open new branches on the untapped potential areas for the banking
services such as by opening more branches and ATM centers as such will enhance their
profitability capacity. The study recommended that due to globalization and technological
innovation in the modern environment, banks should not be exempted from this innovation since
its one of the major drivers of profitability within organizations. On labour productivity, the
study recommended that employees should be motivated in their working both intrinsic and
extrinsic in order to enhance their working attitude for the benefit of the organization,
particularly by increasing its profitability. | en |
