Effects of agency banking on the financial performance of commercial banks in Kenya
The banking industry is very volatile with innovation and competition taking centre stage. This forces banks to change their strategies to suit the industry and improve their financial performance. In the recent past the banking industry in Kenya has embraced diversification of products and services with the current move being agency banking services that supports branchless banking in commercial banks. The study sought to determine the effects of agency banking on the financial performance of commercial banks. The study variables tested included cash withdrawal; cash deposits and cash transfer through agents with total capital as a control variable. A descriptive research design was adapted that utilised only secondary data from the commercial banks audited financial statements and CBK reports ranging from 2012 to 2015. Data was analysed using SPSS and the results presented in tables. The findings from the analysis indicates that agency banking on its own has minimal effect on the financial performance of commercial banks in fact the correlation depicts an inverse relationship, however when aggregated with other variables that affect commercial banks performance a strong positive correlation is evident.
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