Commercial Banks In Kenya Research Articles

Product Leadership and Competitive Advantage of Commercial Banks in Kenya

Purpose: Due to increased competition, the Kenyan banking system has had erratic performance in recent years. As a result, the major question is whether Kenyan commercial banks can use value disciplines to help them maintain their competitiveness. The study aimed to investigate the effect product leadership on competitiveness of Kenyan commercial banks.
 Methodology:. The research used a descriptive research design. The study comprised of businesses rendering commercial banking services in Kenya. A non-probability method of sampling was utilized. Structured questionnaires were used as applicable. The study targeted all the 42 Kenyan commercial banks/lenders. The 42 commercial bank managers were targeted as the unit of observation and the 42 commercial banks as the unit of analysis. Since the population in the current study was small but adequate for study research, that is, 42, the study used a census survey (thus no sampling was done) and thus the targeted population were still the commercial banks. Questionnaires were the instruments of data collection. The SPSS application was used to help with this analysis (v.25.0). Descriptive analytics and inferential metrics were used to analyze the data. Charts, graphs, tables, diagrams, and illustrations were used to present the findings.
 Results: The findings indicated that product leadership has a positive and significant relationship with the competitive advantage of Kenyan lenders (β =0.359, p=0.000). This implies that gains in a single unit of product leadership result in a 0.359-unit shift in the competitive edge of Kenyan lenders.
 Contribution to policy and practice: The study reveals a positive and significant connection between product leadership and the competitive advantage of Kenyan commercial banks/lenders. This suggests that banks that focus on developing innovative products, offering unique value propositions, and staying ahead in terms of product offerings are more likely to attain a competitive advantage. This finding contributes to knowledge by emphasizing the importance of product innovation and differentiation for achieving a competitive edge in the banking industry.

Analysing the influence of accounting conventions on the financial performance of commercial banks in Kenya

The collapse of some commercial banks in Kenya in the recent past has raised the question of the credibility of financial information as a tool for investors to make informed decisions. The study sought to analyse the disclosure practices of accounting conventions on the financial performance of commercial banks in Kenya. The following specific objectives guided the study: to establish the influence of the disclosure, consistency, prudence and materiality of financial reports on the performance of commercial banks in Kenya. A cross-sectional survey was adopted. The target population was 42 respondents who formed the sample size by the census method. The data was collected through questionnaires, secondary data and annual reports and analysed quantitatively and qualitatively. Quantitative data was analysed using descriptive statistics and inferential statistics. The finding shows a moderate positive relationship between disclosure and the performance of commercial banks. The relationship is significant (r = 0.322, p>0.01). The result shows a moderate positive relationship between consistency and performance of commercial banks. The relationship is significant (r = 0.369, p>0.01). The results also show a moderate positive relationship between prudence and the performance of commercial banks at a significance of (r=0.500, p>0.01). On establishing the relationship between materiality and performance of commercial banks, it was found there is a moderate positive relationship with a significance of (r = 0.317, p>0.01). Respondents indicated that the consistency of financial reports has little effect on the net profit of commercial banks. Respondents indicated that prudence of financial reports leads to better organisational performance. The materiality of financial reports affects organisation performance. Prudence in financial reporting affected the decision-making among the investors in the banking industry. The study recommends that commercial banks' management ensure transparency, honesty, consistency and reliability during financial reporting.

Bank Characteristics and Financial Performance of Commercial Banks Listed at The Nairobi Securities Exchange in Kenya

Commercial banks in Kenya have recently experienced a steady downturn in their financial performance, mostly as a result of strict regulatory requirements and a changing business environment. The subpar financial performance of numerous lower-tier banks has resulted in significant consequences, including the necessity of placing some of these banks under receivership. The purpose of this study was to look into how various factors influence the financial performance of commercial banks listed on the Nairobi Securities market. In particular, this study looked to see how financial performance was impacted by asset quality and liquidity management. The study employed a descriptive methodology and a target population comprised of 11 commercial banks listed on the NSE were included in the population sample for this study. Secondary data was collected and analyzed using descriptive and inferential statistics. The research exhibited that the financial performance of commercial banks is significantly influenced by quality of their assets. Furthermore, the study revealed a positive and statistically significant impact of liquidity on the financial performance of Kenyan commercial banks The study concluded that financial performance was substantially and positively impacted by the quality of assets and liquidity management practices. Consequently, it is recommended that banks maintain a low level of nonperforming loans, as these loans have adverse effects on bank profitability, which in turn affects overall financial performance. Although the statutory ratio is established at 20%, the central bank might think about increasing this ratio by taking into account the general growth of the banking industry in recent years.

Leverage and Quality of Voluntary Disclosure among Commercial Banks in Kenya

Leverage and Quality of Voluntary Disclosure among Commercial Banks in Kenya

Profitability and Quality of Voluntary Disclosure among Commercial Banks in Kenya

Profitability and Quality of Voluntary Disclosure among Commercial Banks in Kenya

Effect of Macroeconomic Factors on the relationship between Asset Liability Management and Profitability of Commercial Banks in Kenya

Effect of Macroeconomic Factors on the relationship between Asset Liability Management and Profitability of Commercial Banks in Kenya

The Link between Financial Synergy and Financial Performance of Commercial Banks: A Case of Kenya

Despite the significance of commercial banks in Kenya, their financial performance has been fluctuating over the last decade. The overall trend of financial performance (measured by Return on Equity in year 2018 to year 2022) has been inconsistent and largely erratic, with the lowest ratio recorded being 14.1% in 2018: this improved slightly in year 2019 then rose to 14.9% before dropping to 13.9% in 2020. The highest Return on Equity (at 25.6%) was recorded in the year 2022. Although the banking sector has documented growth in Assets, financial performance (in terms of Profitability) has been declining in the recent past. Empirical evidence linking financial synergy and financial performance of commercial banks documents mixed results on the nature and type of relationships. However, it remains an issue for further empirical investigation as to whether financial synergy has a significant effect on the financial performance of commercial banks in Kenya. Hence, the study sought to assess the relationship between financial synergy and financial performance of commercial banks in Kenya. The theories underpinning the study are: synergistic mergers theory and tax incentive hypothesis theory. The target population comprised 13 commercial banks which had undergone mergers and acquisitions in Kenya over the 11-year time scope (2008-2019). Positivism research philosophy and explanatory research design were adopted. The study was a census of the 13 Commercial banks. Panel data was used-the data was obtained from the audited financial statements, and Central Bank of Kenya supervisory reports. The study finds a positive and significant link between financial synergies and financial performance (P = 0.001). In view of the findings, the study recommends that institutions critically evaluate the overall business and operational compatibility of the merging institutions and focus on capturing long-term financial synergies, as this has a positive effect on financial performance. Keyword: Financial Synergy, Financial Performance, Synergistic Mergers Theory, Tax Incentive Hypothesis Theory, Return on Equity and Leverage Ratio.

Spiritual Leadership and Meaningful Work: The Roles of Intrinsic Motivation and Gender

In recent years, many employees have come to view their work not only as a means to earn a living but also as a source of personal fulfillment and purpose. This shift in perception is driven by various factors, including changes in societal values and the human desire to make a difference in the world. As such, organizations with insufficient knowledge of employees’ need for meaningful work suffer reduced performance and productivity, higher employee turnover, and employees’ physical and mental work-related health conditions. Although prior studies have found that spiritual leadership positively and significantly influences employees’ meaningful work, relatively little is known about the underlying mechanism and the condition under which this relationship occurs. This empirical study aims to investigate how and when spiritual leadership relates to employees’ meaningful work focusing on intrinsic motivation as a mediator and employee gender as a moderator using data from employees of public and private commercial banks in Kenya. The study’s cross-sectional design adopted a self-reported data collection approach. The banks were stratified into three tiers: 1, 2, and 3, and 532 questionnaires were distributed to randomly selected respondents from the tiers, and 448 valid responses were received. A semi-structural equation modeling using SmartPLS 4 was used to analyze the data. The results reveal that spiritual leadership, directly and indirectly, impacts meaningful work partially mediated by intrinsic motivation, while gender moderates this relationship. The study contributes to theory by examining intrinsic motivation and gender as the underlying mechanisms of how and when spiritual leadership translates into employees’ meaningful work. Practically, the findings suggest that incorporating spiritual leadership as a potential leader behavior in the banking sector and paying attention to employees’ gender can improve the perception of meaningful work, which has been found to relate to employees’ well-being and positive job outcomes. Implications of our findings and recommendations for future research are further discussed.

Moderating Effect of Interest Rate on the Relationship between Camel Rating Model and Financial Stability of Commercial Banks in Kenya

The study sought to assess the moderation effect of interest on the relationship CAMEL rating system and financial stability of commercial banks in Kenya. The paper originates from the Doctoral dissertation of the first author in which the co-authors served as supervisors. Causal research design was utilized and a census of forty-one commercial banks in Kenya was undertaken for the period 2013 to 2019. Information asymmetry theory and liquidity shiftability were utilized. Interest rate insignificant moderated the nexus between CAMEL rating variables and financial stability with the exception of asset quality. Interest rate only moderated asset quality and financial stability nexus significantly. It was recommended that the Central Bank of Kenya set interest rates in view of the prevailing economic situation. The study further puts forward the recommendation that commercial banks should strive towards reducing non-performing loans which can be through the setting up of effective credit risk management systems. Credit monitoring can be done in order to ensure that loans granted are utilized for the intended purposes. In time of difficult financial conditions, loan restructuring can be considered.

Camel Rating Model and Financial Stability of Commercial Banks in Kenya

The study sought to examine the effect of CAMEL rating model on financial stability of commercial banks in Kenya. This paper was extracted from the Doctoral dissertation of the first author where the co-authors served as supervisors. Buffer capital theory and efficiency structure theory were utilized. Causal research design was used and a census of forty-one commercial banks was undertaken focusing on the period 2013 to 2019. The panel regression analysis revealed that out of the CAMEL rating variables, only earnings ability had significant effect on financial stability of commercial banks in Kenya. It was recommended that the Central Bank of Kenya motivates earnings (profitability) targets to be in accordance with the size (category) of banks. This is as the earnings ability of commercial banks vary from bank to bank. This will in turn facilitate the improvements and sustenance of financial stability by commercial banks. The study recommends that bank managers when setting earnings target should consider their capabilities as a bank by ensuring realistic targets. Higher earnings translate to higher financial stability according to the study findings, hence apart from the traditional intermediation activities, other profitable business ventures can be explored by commercial banks.

Customer Relationship Management and Competitive Advantage of Commercial Banks in Kenya

To meet the changing needs of their customers, commercial banks have been diversifying their services and product offerings. However, increased competition from other financial institution and telecommunication companies has caused commercial banks to fall short of their targets. Therefore, this study sought to investigate the influence of customer relationship management on competitive advantage of commercial banks in Kenya. The specific objectives of the study were to examine the influence of technology, customer orientation, stakeholder involvement and product customization on competitive advantage of commercial banks in Kenya. The study was guided by resource-based view theory, Ansoff matrix theory, diffusion of innovation theory and stakeholder theory. The research used descriptive research design. The target population for this study was four selected commercial banks in Kenya namely, Kenya Commercial Bank, Equity Bank, Cooperative bank, and Family bank. In respect of this study, the total number of respondents was 183 respondents comprising of 145 sales and marketing staff and 38 management staff. The respondents in this study were stratified according to their respective responsibilities. A simple random sampling technique was used to choose the respondents from each stratum. The sample size was 126 respondents. A structured questionnaire was used as data collection instrument. Questionnaires were piloted to 12 respondents from the National bank of Kenya because it is one of the commercial banks in Kenya. Content validity was used to measure research instrument validity. Reliability was measured using Cronbach alpha test. Qualitative data was analyzed qualitatively by organizing data into themes based on study objectives and the results will be presented in narrative form. Quantitative data was analyzed using descriptive statistics such a mean and standard deviation. In addition, inferential statistics was applied using multiple regression analysis because there is more than one explanatory variable involved in this study. The analyzed data was presented using tables and figures. The study found from the regression analysis results that technology, customer orientation, stakeholder involvement and product customization had a positive significant influence on competitive advantage of commercial banks in Kenya. The study concluded that introduction of technology change’s organizational structure and, in so doing, alters the rules of competition, creates competitive advantage by giving companies new ways to outperform their rivals and changes whole new businesses, often from within a company’s existing operations. When customers feel that they are valued and their needs are being met, they are more likely to remain loyal to the bank. Effective engagement helps translate stakeholder needs into organizational goals and creates the basis of effective strategy development. Product customization leads to better customer insights because gaining customer insights provides businesses with a competitive advantage and helps them create products that customers are interested in. The study recommended that commercial banks in Kenya should increase automation of processes to increase efficiency and productivity while reducing costs. Commercial banks should put the customer at the very center of its values and goals and every department must be based on this philosophy. The commercial banks should have a clear vision derived from a robust strategic planning process, and an effective strategic plan or marketing plan can only come from stakeholder engagement. The commercial banks should understand their customers’ desires, preferences, and transaction habits to gain customer loyalty.

Predatory Loan Processing Practices and Their Influence on Loan Performance among Commercial Banks in Kenya

Predatory Loan Processing Practices and Their Influence on Loan Performance among Commercial Banks in Kenya

The Effects of Cost Implications in the Adoption of Biometric Application Banks in Eldoret Town, Kenya

Biometric technology utilizes biological and behavioral characteristics to automatically identify individuals. The paper was guided by the question on how does cost implications affect for adoption of biometric application in authorization and identification in banks in Eldoret Town. Cost of implications does not influence for adoption of biometric application in authorization and identification in banks in Eldoret Town. Thus, this study will help government agencies, financial institutions and other corporate business in adopting biometric systems. The research indicated cost implications affects biometric application in authorization and identification in cyber security in banks where biometric applications in banks have insufficient technical infrastructure hence affecting inefficiency and ineffectiveness of bank operations. In conclusion, the research indicated that cost implications are a major indicator that influenced biometric application in authorization and identification in cyber security in commercial banks in Kenya.

Analysis of Strategic Response on Employee Performance Among NSE Listed Commercial Banks

Globally, the banking business has seen growing rivalry, necessitating the application of important consistent and skilful decisions to boost the survival rate of numerous institutions. The recent failure of some commercial banks demonstrates that strategic responses for boosting employee performance have yet to be implemented. Employee productivity in Kenya's banking sector has also declined significantly over the years. Employees are also stressed, which leads to decreased productivity, increased absenteeism, low levels of engagement, and low retention rates. The main objective of the study was to determine the influence of strategic response on employee performance among NSE listed Commercial Banks in Kenya. The study was guided by the following specific objectives; to establish the effects of market expansion, cost-cutting strategies and strategic leadership on employee performance among NSE listed Commercial Banks in Kenya. The study also investigated the moderating effect of technology adoption on the relationship between strategic response and employee performance among NSE listed Commercial Banks in Kenya. The study followed a descriptive research design approach focusing on commercial banks based in Nairobi. The target population was all the 10 NSE listed commercial banks and the study data was collected using questionnaires for a period of one month. Due to the population being small, the study used a census sampling approach to cover all 10 commercial banks in Kenya. The study used both primary data. Primary data was collected using semi-structured questionnaires containing both open ended and close ended questions. The content analysis method was used to analyse qualitative data. Quantitative data, on the other hand, was analysed using both descriptive and inferential statistics in SPSS in accordance with the research objectives. Correlation and regression analysis were used in inferential statistics to determine the relationship between the research variables. The findings were presented using tables and figures. From the analysis, it was evident that human resource practices such as recruitment of agencies to help in marketing and selling was mostly adopted. The regression analysis confirmed that strategic leadership and cost-cutting strategies are important factors affecting employee performance in the firms and that market expansion strategies may not have a significant impact on employee performance. The study found that technological strategies may not have a significant moderating effect on the relationship between strategic response and employee performance among NSE listed Commercial Banks in Kenya. The study concluded that there is a positive correlation between strategic response and employees’ performance among NSE-listed Kenyan commercial banks. The study also concludes that strategic leadership and cost-cutting strategies are significant factors affecting employee performance in among the firms. Market expansion strategies and technological strategies may not have a significant impact on employee performance in NSE-listed Kenyan commercial banks. The study further recommended that NSE-listed commercial banks in Kenya should focus on fostering a positive work environment and effective leadership to enhance employee performance. The recommended the NSE listed Kenyan Commercial Banks to continue emphasizing and investing in expansion and cost cutting practices. The study suggested that providing leadership training and support to managers and executives can help them become more strategic in their decision-making. Banks should also carefully evaluate their cost-cutting initiatives to ensure that they do not compromise employee morale, job satisfaction, or overall performance Regular evaluation of technological strategies can help identify areas for improvement and potential opportunities to leverage technology for better employee performance.

Impact of Asset Quality Compliance on Financial Performance of Nairobi Securities Exchange Listed Commercial Banks

Asset quality compliance is relatively important; however, the banking sector has undergone major financial shocks due to compliance signals. With losses experienced among commercial banks, for instance, return on assets (ROA) dropped consistently from 29% to 24% in 2019 to 21% in 2020, hence the wrong signals. The decline in the number of assets and low deposits further magnified the challenge; this led to the closure of a number of banks, such as Chase Bank and Charterhouse Bank. Furthermore, a national bank was acquired by Kenya Commercial Bank due to inefficient assets. The purpose of the study was to establish the influence of asset quality compliance requirements on the financial performance of commercial banks listed on the Nairobi Securities Exchange and hence determine the null hypothesis that asset quality compliance requirements have no significant effect on the financial performance of commercial banks listed on the Nairobi Securities Exchange. A mixed research design was applied to a population of 12 commercial banks listed at Nairobi Securities Exchange Kenya. This is comprised of causal research designs and longitudinal designs. The study employed a mixed research design and collected secondary data for a period of 5 years. The study found that asset quality requirements had a significance level of P<0.05, thus P = 0.0268, implying significance. The study concluded that assets have a significant impact on banks financial performance. The study recommends that commercial bank stakeholders should invest in assets since they lead to financial performance. The study may benefit a number of people, including bank management, the government, and future scholars.

Effect of Employee Relations Practices on Employee Performance in Commercial Banks in Narok County, Kenya

Employee performance is a critical factor for the success of commercial banks in Kenya. Commercial banks in Kenya have been facing various employee-related issues that have affected their performance, productivity and turnover. According to a survey conducted by the Central Bank of Kenya in 2019, the average staff turnover rate in commercial banks in Kenya was 14.6%. This has been attributed to various factors, such as inadequate compensation, lack of career growth opportunities, and poor working conditions. The general objective of the study was to establish the effect of employee relations practices on employee performance in commercial banks in Narok County, Kenya. The study was anchored on the Appraisal theory, Reinforcement theory and expectancy theory. The study adopted a descriptive research design. The target population was 336 managers and middle-level workers in 14 commercial banks in Narok County, Kenya. The study adopted Slovins' formula to get a sample of 182 employees. The study further adopted stratified random sampling to get the sample of each category of worker. The study collected primary data using a questionnaire. Content validity was ensured by the opinions of experts and supervisors. The reliability of the study instruments was determined by conducting a pilot test in Narok County, whereby 18 questionnaires were issued to employees in 2 banks. An internal consistency technique was adopted by utilization of Cronbach's Alpha. Data gathered in the study was both quantitative and qualitative in nature. Descriptive and inferential statistics were employed in the study. Descriptive statistics involves the use of percentages, frequencies, and mean and standard deviation. Inferential statistics involves the use of correlation and multiple analyses. After analysis, data were presented in the form of tables. The study concluded that there is a strong positive correlation between employee relations practices and employee performance in commercial banks in Narok County, Kenya. From the findings, the study recommended that commercial banks in Narok County should encourage a two-way flow of communication where employees feel comfortable sharing their ideas, concerns, and feedback with management. Moreover, commercial banks in Narok County should support employees in achieving a healthy work-life balance to prevent burnout and increase job satisfaction.

Effect of Mergers and Acquisition Strategies on Financial Performance of Commercial Banks in Kenya

Effect of Mergers and Acquisition Strategies on Financial Performance of Commercial Banks in Kenya

Corporate Governance and Financial Performance of Selected Commercial Banks in Kenya

The primary purpose of this study was to determine whether or not corporate responsibility had an impact on the bottom lines of a sample of Kenyan commercial banks. The research's specific goal was to ascertain how compensation for boards was calculated, consumer protection, nonperforming loans, and risk management on the financial performance of selected Kenyan commercial banks. This research was based on the following theories: agency theory, resource dependency theory, control theory, public choice theory and bank risk management theory. The present investigation employed an expressive research strategy. The 44 Kenyan business banks that were the focus of this analysis as at December 2022. The target respondents were the chief finance officers and credit officers. This study used a census-style methodology because the quantity of participating banks was manageable. Surveys that were semi-structured with a mix of open-ended and closed-ended questions were used to gather primary data. Descriptive statistics like frequency, average, and deviation from the mean, and inductive statistics like regression and correlation analyses were used to examine the data. After that, we use tables and figures to display the results. While respondents generally accept that board remuneration and consumer protection measures have a good impact, the statistical significance differs. NPLs are found to have a negative impact on financial performance, which is consistent with current research advocating responsible lending practices. Risk management is also seen as important; however, opinions differ. The findings of the study emphasize the significance of risk management and the good impact of board compensation and consumer protection, as well as the negative impact of NPLs. Transparent board compensation schemes, strong consumer protection measures, careful NPL management, and thorough risk management methods are among the recommendations. The study recommends future research areas to further the study on the impact of corporate supremacy in financial success. Keywords: Corporate governance Board compensation, Consumer protection, Nonperforming loans, Risk management, financial performance

Online Banking and Technical Efficiency of Commercial Banks in Kenya

Purpose: The financial sector is being revolutionized as a direct result of technological progress, with banks and other financial institutions embracing new technologies to better serve their customers online. Technological developments in the financial sector are simplifying access to financial services. The study set out to dissect the effects of Fintech on Kenya's commercial banking sector. The general objective was to establish the effect of online banking on technical efficiency of commercial banks in Kenya. The study was anchored on Theory of Constraint-Induced Innovation.
 Methodology: The entire study relied on collecting empirical data and evaluating hypothesis in a positivist way. A causal-comparative research design was used in this research. The study targeted population of Seventeen Kenyan commercial banks from the first and second tiers. The analysis relied on secondary sources of information. The gathered quantitative data was analyzed using both descriptive and inferential statistics. Numbers, medians, and standard deviations were used to characterize the data, and frequency distributions were used to determine the sample size. Models for analyzing correlations and regressions are inferential statistics. STATA was used for the data analysis.
 Findings: The study established that online banking has a positive and significant effect on technical efficiency of commercial banks in Kenya.
 Unique Contribution to Theory, Policy and Practice: The research showed that commercial banks in Kenya could benefit from investing more in their online banking systems to boost their technological efficiency.

Effects of Institutional Governance on Financial Performance of Commercial Banks in Kenya

Although the banking industry is a very important vehicle for spurring economic development and especially in least developed economies, the Kenyan commercial banks are facing financial performance constraints, leading to collapse and liquidation of numerous commercial banks. Accordingly, borrowers, depositors and shareholders are suffering enormous financial losses; which have dramatic implications for the economy of the country. The crisis in this very crucial industry has associated with poor institutional governance. Although various studies have been undertaken on institutional governance and financial performance, majority of the studies have yielded inconsistent result while others have contextual, conceptual and methodological gaps. So, this study analysed the effect of institutional governance on financial performance of Kenyan commercial banks. It adopted descriptive and diagnostic research designs to outline the characteristics of existing phenomenon. The target population was the 43 commercial banks licensed and operating in Kenya. Since the sample size was easily accessible and manageable the study used census. Data was collected using primary sources using a questionnaire, Data was analysed using quantitative analysis approach to produce descriptive statistics and thereafter multiple regressions to estimate a model. The study found that at 5% significance, level board size, ownership concentration, audit structure and, board composition, positively and significantly affects financial performance of licensed Kenyan Commercial Banks. The study recommends that Kenyan Commercial Banks should review their board size policies, largely focus on having audit committee, and strengthen their board composition guidelines to ensure board diversity comprises.