The Effect of Product and Service Innovations on the Financial Performance of Commercial Banks in Kenya

2020 ◽  
Vol 2 (1) ◽  
pp. 56-68
Author(s):  
Gladys Chepngetich Tonui; Patrick Kibati; John Kipkorir Tanui
Keyword(s):  
Financial Performance ◽  
Financial Institutions ◽  
Commercial Banks ◽  
Banking Sector ◽  
New Technology ◽  
New Products ◽  
Secondary Data ◽  
Internet Banking ◽  
Primary Data ◽  
Product Service

The objective of this study was to establish the effect of product /service innovations on the financial performance of commercial banks in Kenya. The 40 commercial banks was the population of this study which were in operation in Kenya as at December, 2017. Both primary and secondary data were used in the study. Explanatory research design was used. Questionnaires were used to gather primary data. Secondary data was collected from Central Bank annual report to validate communicative and validity of primary data. Quantitative analysis in the research was facilitated by Statistical Package for Social Sciences (SPSS), the completed questionnaires was examined and the information for each item was further processed and analysed. The results obtained was further presented in charts and tables. Regression and correlation analysis were used to study the relationship between the dependent and the independent variables of the study. These were employed to analyze the data and find out whether financial performance of commercial banks was influenced by banks innovations. The results showed that most commercial banks have concentrated on their profits by creating new products and services which have minimized their operational costs. This study used Cronbach Alpha test of internal consistency to analyze the accuracy of the research tool based on pilot data.  The study recommended that banks should consider incorporating the new technology as it will increase the firms’ performance and to ensure their new products and services, are readily available in the market. The study recommended that the banking sector ought to continue investing on more innovative delivery channels since this improves banks capability to regulate expenditure. These will in turn, facilitates reduction in cost in every unit of service thus improved return on assets to financial institutions effective monitoring of accounting and auditing. Financial institutions should ensure that the banking innovations are well secured for customers to have confidence in using mobile banking and internet banking.

scholarly journals EFFECT OF CASH RECONCILIATION ON THE FINANCIAL PERFORMANCE OF COMMERCIAL BANKS IN KENYA

2017 ◽  
Vol 2 (7) ◽  
pp. 13
Author(s):  
Mactosh Onwonga ◽  
Prof. George Achoki ◽  
Dr. Bernard Omboi
Keyword(s):  
Financial Performance ◽  
Financial Institutions ◽  
Commercial Banks ◽  
Multiple Linear Regression Model ◽  
Secondary Data ◽  
Primary Data ◽  
Multi Stage ◽  
Handling Practices ◽  
Comparison Of The Results ◽  
Descriptive Survey

Purpose: The main aim of the study was to examine the effect of cash reconciliation on the financial performance of commercial banks in Kenya.Methodology: The research was carried out through a descriptive survey research design. The study population was all the 43 commercial banks registered and licensed to operate in Kenya. A multi stage sampling approach was used. In the first stage, a census of all the 43 commercial banks was conducted, that is, the units of analysis were the commercial bank. In the second stage, purposive sampling was used where two respondents from every organization were taken. The study used both primary and secondary data for analysis. Primary data was collected using questionnaires while secondary data was obtained using secondary data collection template. A multiple linear regression model was used to link variables.Findings: The study findings indicated a positive correlation between cash reconciliation and financial performance of commercial banks. Cash reconciliation was positively and significantly related to both ROE and ROA. The study concluded that cash reconciliation is positively and significantly related to financial performance of commercial banks in Kenya.Unique contribution to theory, practice and policy: The study recommends that commercial banks and other financial institutions involved in handling of cash should put in place proper reconciliation practices. The commercial banks should focus on increasing the number of times books are reconciled, increase the regularity of auditing the cash books, put in place and implement a policy on cash reconciliation, training its staff on conducting cash reconciliation and segregating the duties of cash reconciliation other duties so as to evolve specialization. The study recommended further studies to establish the effect of cash handling practices on financial performance of other financial institutions other than commercial banks. This will be crucial in comparison of the results and identification of more research gaps for future studies.

scholarly journals Assessment of CSR Practices in Nepalese Commercial Banks (A Comparative Study of RBBL, SCBL & NABIL)

2019 ◽  
Vol 22 (2) ◽  
pp. 11-20
Author(s):  
Kapil Khanal
Keyword(s):  
Financial Performance ◽  
Commercial Banks ◽  
Banking Sector ◽  
Secondary Data ◽  
Commercial Banking ◽  
Annual Reports ◽  
Primary Data ◽  
Secondary Source ◽  
Secondary Sources ◽  
Questionnaire Method

 Objective: To assess the corporate social responsibility practices in Nepalese commercial banking sector. Methods and Materials: Primary and secondary sources of data were used in the study. The primary data were collected through direct questionnaire method from 60 employees of sampled commercial banks. The secondary source was through journals, textbooks and annual reports of Nepal Rastra Bank. SPSS and Microsoft excel were used to analyze the collected data. The value of Cronbach’s Alpha (α) of overall questionnaire is 0.92, which suggests the reliability of primary data. Descriptive and explorative research designs were used to analyze the primary and secondary data. Results and Conclusion: Responses from all the respondents of commercial banks regarding CSR and Non-Financial Performance clearly imply that CSR has an influence on the Non-Financial Performance. In terms of ‘R2’, CSR impacts both Brand Image and Brand Awareness (i.e. 0.987). This clearly indicates that more than 98.7% variance of both non-financial performances has been explained by CSR. In terms of ‘R2’, CSR impacts less in financial performance (i.e. 0.149). This clearly indicates that only than 14.9% variance of financial performance has been explained by CSR.

scholarly journals Impact of Bancassurance on Financial Performance of Private Commercial Banks in India

2019 ◽  
Vol 8 (6S3) ◽  
pp. 2027-2034
Keyword(s):  
Financial Performance ◽  
Financial Institutions ◽  
Commercial Banks ◽  
Secondary Data ◽  
Primary Data ◽  
Best Management ◽  
Regulatory Policies ◽  
Private Banks ◽  
Current Scenario ◽  
The Impact

In order to get competitive advantage, many Financial Institutions are sharing resources in the current scenario. To ward off competition Financial Institutions have tied up with the banks which is termed as bancassurance. The present study is focused on studying the impact of bancassurance on the financial performance of the privately owned commercial banks in India full stop the data was collected from 180 respondents working in 6 private banks of India. With the help of a questionnaire the primary data is collected and the secondary data was collected from the respective Bank sites. It was found that banks should come up with optimum optimal regulatory policies that won't allow them to compromise with the banks performance. And they have to recruit the best management talents so that right decision, smooth handling of the risk can be done by the banks

scholarly journals Assessment of CSR Practices in Nepalese Commercial Banks (A Comparative Study of RBBL, SCBL & NABIL)

2019 ◽  
Vol 22 (1) ◽  
pp. 11-20
Author(s):  
Kapil Khanal
Keyword(s):  
Financial Performance ◽  
Commercial Banks ◽  
Banking Sector ◽  
Secondary Data ◽  
Commercial Banking ◽  
Annual Reports ◽  
Primary Data ◽  
Secondary Source ◽  
Secondary Sources ◽  
Questionnaire Method

 Objective: To assess the corporate social responsibility practices in Nepalese commercial banking sector. Methods and Materials: Primary and secondary sources of data were used in the study. The primary data were collected through direct questionnaire method from 60 employees of sampled commercial banks. The secondary source was through journals, textbooks and annual reports of Nepal Rastra Bank. SPSS and Microsoft excel were used to analyze the collected data. The value of Cronbach’s Alpha (α) of overall questionnaire is 0.92, which suggests the reliability of primary data. Descriptive and explorative research designs were used to analyze the primary and secondary data. Results and Conclusion: Responses from all the respondents of commercial banks regarding CSR and Non-Financial Performance clearly imply that CSR has an influence on the Non-Financial Performance. In terms of ‘R2’, CSR impacts both Brand Image and Brand Awareness (i.e. 0.987). This clearly indicates that more than 98.7% variance of both non-financial performances has been explained by CSR. In terms of ‘R2’, CSR impacts less in financial performance (i.e. 0.149). This clearly indicates that only than 14.9% variance of financial performance has been explained by CSR.

scholarly journals Credit Information Sharing Practices and Financial Performance of Commercial Banks in Kenya

2019 ◽  
Vol 3 (VI) ◽  
pp. 67-82
Author(s):  
Felix Ouma Odhiambo ◽  
Fredrick Ndede
Keyword(s):  
Financial Performance ◽  
Information Sharing ◽  
Data Sharing ◽  
Commercial Bank ◽  
Commercial Banks ◽  
Banking Sector ◽  
Secondary Data ◽  
Target Population ◽  
Primary Data ◽  
Loan Default

The banking sector in Kenya suffered increased non-performing credits which prompted collapse of certain banks with an upsurge of loan defaulters. This was mainly attributed to the continued information asymmetry in the industry because of absence of a credit data sharing component. Commercial banks in Kenya have continued to encounter a number of challenges in obtaining information on customers’ payment history that helps guide on determining their ability to access and re-pay loan advancements. This has made more commercial banks to subscribe to credit reference bureaus since its establishment in 2008. As a result, commercial banks in Kenya have been experiencing high rates of Non-Performing Loans advanced to customers. The general objective of the study was to determine the effect of credit information sharing practices on financial performance of commercial bank in Kenya. The study specific objectives were to determine the effect of information accuracy, volume of lending and customer credit reports on financial performance of commercial bank in Kenya. The study was anchored by adverse selection theory, moral hazard theory and asymmetry theory. The researcher used a descriptive research design. The target population was five banks within Nairobi County including KCB, Equity Bank, Family Bank, Cooperative Bank and Barclays Bank. Primary data was collected using questionnaires and secondary data using financial statements of the commercial banks performance for the past 5 years. Data was analysed using descriptive statistics and inferential statistics. The study found that information accuracy, volume of lending and customer credit reports were positively and significantly related to the financial performance of the commercial banks. The study concludes that information accuracy increases the banks ' understanding of the applicants’ features and allows a more precise forecast of their probabilities of repayment, it decreases the information rents that banks could otherwise obtain from their clients and it can function as a borrower discipline tool. Lending volume enhances business banks ' enhanced operations, which in turn leads to banks’ enhanced economic results. Sharing of credit information has made commercial banks grant more loans on the basis of their reputation to deserving clients, thereby improving their profitability. When extensive consumer credit history information are easily accessible, it considerably decreases the cost of entering loan markets for fresh lenders, enhances competition and lowers credit rates. The research recommends that for enhanced results, all financial institutions in Kenya need to protect the precision of their platforms for data sharing. Regular site visits should offer credibility to the precision of the borrowers’ data. The data supplied by CRB should be used efficiently by commercial banks to lend to prospective borrowers. Only borrowers with a strong history of credit should be permitted access to the loans. The research also proposes that Kenya's commercial banks should base credit awards on the borrowers’ reputational assets, ensuring that the loan default rate is small, thus enhancing commercial bank performance.

scholarly journals The Effect of Branchless Banking Strategy on the Financial Performance of Commercial Banks in Kenya

2017 ◽  
Vol 8 (4) ◽  
pp. 167 ◽  
Author(s):  
Gift Kimonge Dzombo ◽  
James M. Kilika ◽  
James Maingi
Keyword(s):  
Financial Performance ◽  
Commercial Banks ◽  
Banking Sector ◽  
Secondary Data ◽  
Exploratory Research ◽  
Electronic Banking ◽  
Economic Activities ◽  
Significance Level ◽  
Negative Effect ◽  
The Individual

The Banking sector acts as the life blood of modern trade and economic development. Commercial banks influence, facilitate and integrate the economic activities like resources mobilization, poverty elimination, production, and distribution of public finance. The financial performance of commercial banks has great implications in the financial sector and in the country at large, and will still remain an important subject of concern by all the stakeholders in the banking industry. In the last two decades, a lot of banking innovation has taken place in order to improve commercial banks financial performance. Branchless banking which involves the use of agency banking and electronic banking channels in the distribution of banking products and services is one such innovation. This study purpose was to evaluate the effect of branchless banking on the financial performance of commercial banks in Kenya. The specific objectives of the study were to analyze the individual effects of agency banking and electronic banking channels on the financial performance of commercial banks in Kenya and the combined effect of both agency and electronic banking on the financial performance of commercial banks in Kenya. The study adopted an exploratory research design. A survey of all the 42 licensed commercial banks in Kenya was done. Both primary and secondary data on branchless banking and financial performance of banks was obtained from the individual commercial banks, Central Bank of Kenya banking annual supervision reports respectively. Return on Assets (ROA) was used as the main indicator of commercial banks financial performance. The amount of investment in agency and electronic banking was used as indicator for agency and electronic banking. Data analysis was done using SPSS and STATA statistical softwares. Descriptive statistics, diagnostic tests and tests of hypothesis were done. Data was presented using tables and charts. Study findings indicated that when used in isolation; both agency and electronic banking had a significant negative effect on the financial performance of commercial banks at 5 percent significance level. However, when agency and electronic banking channels were used together as a multichannel strategy, they had a significant positive effect on bank’s financial performance at 5 percent significance level. The study recommends that for positive returns, commercial banks should invest in both agency and electronic banking as a multichannel strategy since these channels are complimentary to each other.

scholarly journals Credit Management Practices and Loan Performance: Empirical Evidence from Commercial Banks in Kenya

2020 ◽  
Vol 2 (1) ◽  
pp. 51-63
Author(s):  
Irene Muthoni Mburu ◽  
Lucy Wamugo Mwangi ◽  
Stephen M.A Muathe
Keyword(s):  
Commercial Banks ◽  
Management Practices ◽  
Banking Sector ◽  
Banking System ◽  
Secondary Data ◽  
Bank Loan ◽  
Primary Data ◽  
Credit Management ◽  
Lending Policy ◽  
Debt Collection

Commercial banks in Kenya as per the World Bank report were recording higher non-performance in loans over the study period than the standard globally in spite of Kenya having the most stable and developed banking system in East and Central Africa region. Commercial banks non-performing loans for five years from 2015 to 2018 averaged eleven percent which was higher than the recommended rate of one percent. In Kenya, commercial banks’ non-performing loans remain higher than the recommended rate which could be due to inadequate credit management practices. The study therefore aimed at examining the effect of credit management practices on loan performance of commercial banks in Kenya. Specifically, the study sought to establish the effect of debt collection policy, client appraisal and lending policy on the loan performance of commercial banks in Kenya. The underpinning theory of the study was the 5Cs model for credit. The study used explanatory research design and the research philosophy adopted was positivism. The target population was 44 commercial banks in Kenya and a census approach was used. Both primary and secondary data were used. Primary data was collected through structured questionnaires and related to credit management practices while secondary data was obtained from review of existing bank loan records in relation to loan amount advanced and non-performing loans for a period of four years from 2015-2018. The data collected was analyzed using both descriptive and inferential statistics with the help of SPSS version 22. The study found out that debt collection policy and lending policy had a positive significant effect on loan performance of commercial banks in Kenya. However, client appraisal had no significant effect on loan performance of commercial banks in Kenya. Therefore, the study concluded that commercial banks’ loan performance could be largely attributed to the efficiency of the credit management practices put in place at the institutions. The study recommended that commercial banks to regularly evaluate and update practices relating to debt collection policy, client appraisal and lending policy that are capable of ensuring that credit risks are identified and recorded from departmental level to the institution at large. This is vital in light of technological innovations in the banking sector like mobile lending that may limit commercial banks’ ability to evaluate and manage credit using traditional methods.

scholarly journals Financial and Non-Financial Measures in Evaluating Performance: The Role of Strategic Intelligence in the Context of Commercial Banks in Kenya

2020 ◽  
Vol 13 (10) ◽  
pp. 130
Author(s):  
Blandina Walowe Kori ◽  
Stephen M. A. Muathe ◽  
Samuel Mwangi Maina
Keyword(s):  
Balanced Scorecard ◽  
Commercial Banks ◽  
Banking Sector ◽  
Secondary Data ◽  
Annual Reports ◽  
Primary Data ◽  
Balanced Score Card ◽  
Financial Measures ◽  
Strategic Intelligence

This study provides comprehensive discussion on role of strategic intelligence in commercial banks, in Kenyan context. The primary focus was to evaluate the performance of commercial banks using both financial and non-financial performance measurers. The financial measurers comprised return on equity (ROE), while non-financial measures were customer satisfaction, learning and growth, and internal processes. The study was anchored on resource-based view and balanced scorecard model. The target population comprised 40 commercial banks. Additionally, the sample size 181 was selected proportionately through stratified sampling procedure. Data collection instruments comprised closed and open -ended questionnaires and online review. The study used both primary and secondary data, where primary data was obtained from Kenya commercial banks head offices, while secondary data, for the year 2016 – 2018, was obtained from the annual reports of the central bank of Kenya. Data analysis was done using descriptive statistics and linear multiple regression analysis. Findings of the study indicate that strategic intelligence has a statistically significance on the performance of commercial banks in Kenya. Moreover, both financial and non-financial measures of performance are relevant in the banking sector and growth of Kenyan economy. The study recommends that commercial bank in Kenya should integrate their training focus and strategy implementation with investors interests based on balanced score card.

scholarly journals Perlindungan Hukum Terhadap Nasabah Perbankan Pengguna CRM (Cash Recycling Machine)

2019 ◽  
Vol 8 (3) ◽  
pp. 286
Author(s):  
Hari Sutra Disemadi ◽  
Paramita Prananingtyas
Keyword(s):  
Data Collection ◽  
Financial Institutions ◽  
Banking Sector ◽  
Legal Protection ◽  
Secondary Data ◽  
The Other ◽  
Primary Data ◽  
Strategic Role ◽  
Approach Method ◽  
User Protection

Banks are financial institutions that play a strategic role to advance the economy of a country. Indeed, in its development, the banking sector plays a very important role in the economy of a country. The role can be seen with the banking innovation developing Cash Recycling Machine (CRM). CRM is one of the banking products that can facilitate customers in conducting financial transaction activities, for example, the money withdrawal transactions and depositing money without having to go through a teller at the bank. However, on the other hand, customers as users of CRM products can suffer losses due to CRM damage. This article aims to describe and explain the protection of customers as CRM users, as well as the bank's responsibility for losses suffered by customers due to CRM damage. The empirical juridical approach method was used in this study because this study emphasized the facts obtained from the results of the study, the research specifications used were descriptive-analytical. This study uses data collection techniques based on primary data and secondary data. The results of the study show that CRM user protection is preventive legal protection and repressive protection. Preventive legal protection is carried out through Act Number 10 the year 1998 about Banking and Act Number 8 the year 1999 about Consumer Protection. While repressive legal protection is carried out by banks in the form of responsibility for losses suffered by CRM users. Bank merupakan lembaga keuangan yang berperan strategis untuk memajukan perekonomian suatu negara. Sejatinya, dalam perkembangannya sektor perbankan memainkan peranan yang sagat penting dalam perekonomian suatu negara. Peranan tersebut dapat dilihat dengan adanya inovasi perbankan mengembangkan Cash Recycling Machine (CRM). CRM merupakan salah satu produk perbankan yang dapat mempermudah nasabah dalam melakukan aktivitas transaksi keuangan, contohnya adalah transaksi penarikan uang dan penyetoran uang tanpa harus melalui teller di bank. Akan tetapi di sisi lain nasabah sebagai pengguna produk CRM dapat mengalami kerugian akibat kerusakan CRM. Artikel ini memiliki tujuan mendeskripsikan dan menjelaskan perlindungan nasabah sebagai pengguna CRM, serta tanggung jawab pihak bank terhadap kerugian yang diderita nasabah akibat kerusakan CRM. Metode pendekatan yuridis empiris digunakan dalam penelitian ini, karena penelitian ini menekankan pada fakta-fakta yang diperoleh dari hasil penelitian, spesifikasi penelitian yang digunakan adalah deskriptif analitis. Penelitian ini menggunakan teknik pengumpulan data didasarkan pada data primer dan data sekunder. Hasil penelitian menunjukkan bahwa perlindungan nasabah pengguna CRM adalah perlindungan hukum preventif dan perlindungan represif. Perlindungan hukum preventif dilaksanakan melalui Undang-Undang Nomor 10 tahun 1998 tentang Perbankan dan Undang-Undang Nomor 8 tahun 1999 tentang Perlindungan Konsumen. Sedangkan perlindungan hukum secara represif dilakukan oleh pihak perbankan berupa pertanggungjawaban atas kerugian yang dialami oleh nasabah pengguna CRM.

scholarly journals Internet Banking and its Impact on the Service Quality of the Banks in Punjab

2014 ◽  
Vol 5 (2) ◽  
pp. 748-757
Author(s):  
Rajni Bhalla ◽  
Inderpal Singh
Keyword(s):  
Service Quality ◽  
Banking Sector ◽  
Positive Impact ◽  
Secondary Data ◽  
Internet Banking ◽  
Annual Reports ◽  
Primary Data ◽  
Probability Method ◽  
The Impact

The changes in IT sector constantly influencing the performance of banking sector in the world. The emergence of internet banking has changed the way of banks of how to offer the products and services to the customers. In order to survive in the rapidly changing technological environment, the banks are required to adapt such changes and to maintain and improve the services which they are offering to their customers in order to attain the customers satisfaction. Now the term quality does not only include the products but also the services. This paper deals with the internet banking operations and how it affects the service quality of the banks in Punjab. The research is much more of qualitative nature but to prove facts and figures quantitative approach is also used in the paper. The research is descriptive as well as explanatory. In order to arrive at the sample size, non probability method has been used. For the primary data collection a structured questionnaire is used to record the response of various respondents. Secondary data has been collected from annual reports, other published literature of the banks etc. In order to test the impact of internet banking on the service quality of banks seven service quality dimensions model is used. A model with seven dimensions service quality named reliability, assurance, responsiveness, empathy, tangibility, security and communication is used to complete the study. In these seven dimensions 37 variables are covered. For the data analysis the statistical package SPSS 20 is used.  Descriptive statistics is used to analyse the data. The research proves that all the dimensions which are included in the study have a positive impact on the service quality of banks providing internet banking services to their customers in Punjab. The recommendations are also discussed with which the service quality and customers satisfaction can be improved.

Sign in / Sign up

Export Citation Format

Share Document