The effects of agency banking on the financial performance of commercial banks in Kenya
The purpose of this study was to determine effects of agency banking on the financial performance of commercial banks in Kenya. The study was based on the following three theoretical foundations; agency theory, bank led theory and nonbank-led theory. This study adopted a descriptive research design. This study focused on all 43 commercial banks which are fully registered by CBK as at 31 December 2014. Secondary data was collected using desk review of published banks annual financial statements. The review covered a period spanning five years (2010 – 2014). The data considered was quantitative in nature. Data collection specifically entailed a review of the annual financial statements of each of the 43 banks during the period 2010 – 2014. The obtained data was analyzed using Microsoft Excel and the Statistical Package for Social Sciences (SPSS) and was presented in graphs, and tables to enable effective and efficient interpretation. It was established that all the measures of agency banking analysed (including asset Quality, capital adequacy, transaction commissions made through agents, and Point- of- sale banking) had a significant effects on financial performance of commercial banks in Kenya. The study concluded that introduction of banking agency in Kenya has brought tremendous improvements. The study also recommended that commercial banks should fully embrace agency banking through adoption of improved technology for information security to make it more reliable to the customers. This will increase volume of transactions which will lead to financial performance.