Significance of bank assurance on financial performance of commercial banks in Kenya
Bank assurance is one of the products offered by commercial banks under „Universal Banking‟. It is a combination of two words „bank‟ and „assurance‟ which refers to banks selling insurance products. Bank assurance arrangements take three forms; strategic alliance, full integration; and the mixed model. The objective of the study was to determine the significance of bank assurance on financial performance of Kenyan commercial banks. The study was anchored on three theories: financial intermediation theory, market power hypothesis and efficient market structures. The study adopted a correlation research design. The study population of the study was all the commercial banks in Kenya (43). The study used both primary and secondary data. Secondary data was from published financial reports of the Kenyan banks. The drop and pick method was used to collect primary data. The study used CAMEL MODEL (Capital Adequacy, Management performance, Earning performance and liquidity) to determine the financial performance of the commercial banks. Data collected was analysed using regression analysis and correlation coefficient was used to test for significance between the variables. The findings of the study were presented using frequency tables and pie charts. The study established that bank assurance had improved Return on Assets of the bank which translated in improved profit margins, this shows an indication that bank assurance had improved profitability of the banks. The study also established that variations in the financial performance of commercial banks was attributed to the combined effect of the predictor variables namely administration costs and market share. The study therefore concluded that there was a significant relationship of bank assurance to commercial banks financial performance since there was an increase in market share and an improvement of financial performance with increased return on assets. The study recommends that more banks actively take bank assurance on all insurance policies available so as to increase the revenue base of the bank. The study also recommended that banks take up banks- insurance firms‟ strategies so as to generate more revenue and increase profitability.