Financial Innovations and Levels of Risks in Commercial Banks in Kenya

Abstract

The commercial banks need to identify the sources of the several financial risks which emanates from financial innovations, as they may affect the banks’ stability. This study sought to determine the influence of financial innovations on level of risks in commercial banks in Kenya. The specific objectives were to determine the relationship between internet banking and financial risks in commercial banks in Kenya; to explore the relationship between mobile banking and financial risks in commercial banks in Kenya; to establish the relationship between agency banking and financial risks in commercial banks in Kenya; and to determine the relationship between electronic cards and financial risks in commercial banks in Kenya. The study adopted a descriptive research design. The target population was all the 42 commercial banks registered with CBK as at December 31st 2016. The unit of observation will be the risk management managers. This was a census study. The study collected both primary data and secondary data. Primary datawas collected from the respondents through a uestionnaire while secondary data was collected from the financial statements. Prior to the actual data collection, the questionnaire was tested for reliability and validity. The collected data was analyzed through descriptive statistics and inferential statistics through aid of SPSS software Version 21. The inferential statistics entailed use of a multivariate regression analysis to establish the relationship between the variables and test hypothesis. The analyzed data was presented using of tables, charts and graphs.