The effect of mobile money on the financial performance of commercial banks in Kenya
In an attempt to achieve high levels of performance, Commercial Banks have undergone a number of challenges. Financial innovation in banking has been a relevant topic since mid ‘70s. Nowadays, also due to the present financial system situation, it comes to further relevance. Despite the relevance of financial innovation and ever changing world, it’s hard to list all financial innovations specifically. Adequate performance of financial institutions is of crucial importance to their customers. Commercial banks like many other financial service industries, facing a rapidly changing market, new technologies, economic uncertainties, competition and demanding customers have created an unprecedented set of challenges. The study sought to establish the effects of Mobile money on the financial performance of the commercial banks in Kenya. The study Objective was to determine the effects of mobile money on the financial performance of commercial Banks in Kenya. The study target population was the 43 Commercial banks in Kenya of 31st December 2013. The study used a descriptive survey design. The data collection was secondary based where the mobile money data as calculated in of the statement of the financial statement was obtained on the website and the statement of comprehensive income from the annual financial statement reports of the commercial banks on the website and the bank supervision annual report from 2008-2013 as organized by the Central bank. The collected data was analysed using descriptive statistics and multiple regression analysis. The study established that the financial performance of the 43 commercial banks under study as represented by ROA values increased by a mean ratio of 1.98 over the 5 year period. This is as represented by the difference between the lowest mean of 2.14 in year 2009 and the highest mean of 4.12 in year 2013 for the return on assets. Therefore, mobile money enhanced the financial performance of commercial banks in Kenya. The study found out that there was a steady decrease in the commercial banks’ capital expenses management ratio as reflected by the decrease in mean values from 0.32 in year 2009 to 0.25 in year 2013. Therefore, the expenses management ratio negatively affected the financial performance of the commercial banks in Kenya over the 5 year period. Given that the mobile money of the commercial banks steadily increased over the 5 year period and the commercial banks’ financial performance also steadily increased over the same period, the study concludes that mobile money positively affected the financial performance of the commercial banks in Kenya. From the findings the significance value was .004 which is less that 0.05 thus the model is statistically significant in predicting how mobile money, capital ratio, liquidity ratio, efficiency ratio, expenses management ratio and bank size affect financial performance of commercial banks in Kenya. The F critical at 5% level of significance was 3.23. Since F calculated (value = 8.64) is greater than the F critical (3.23), this shows that the overall model was significant.