Theory Of Financial Intermediation Research Articles

Financial Technology Services, Government Regulations and Financial Inclusion of Small-Scale Fish Farmers in Homa Bay County, Kenya

This study explored the impact of FinTech and Government Policies on Financial Inclusion for small-scale fish farmers in Homa Bay County, Kenya. The study focused on how access to finance has been widened through agency banking, mobile money and online banking services among these people who had low incomes or were marginalized. The research also examined whether government regulations affect the relationship between fintech channels and financial inclusion. The study was underpinned by Innovation Diffusion Theory, Financial Intermediation Theory, Technology Acceptance Theory and Public Interest Regulation Theory. This study employed causal research design with a sample size of 495 small scale fish farmers using stratified random sampling technique that yielded 144 respondents. Data analysis involved multiple regression, correlation analysis and diagnostic tests that utilized SPSS 26.0 for data analysis. The results showed that agency banking; mobile money services and online banking together explained 58.1% of variation in financial inclusion among the farmers indicated by R squared of 0.581.The findings revealed that Agency Banking had significant effect on financial inclusion (β = .231, p = .001 < .05), as well as Mobile Money Services (β = .196, p = .019 < .05) and Online Banking Services (β = .410, p = .000 < .05). Therefore, the study concludes that Agency Banking; Mobile Money and Online Banking play important role in enhancing financial autonomy among small scale fish farming communities through increased access to bank accounts, secured transactions processes and agent incomes respectively. In view of the findings, the study recommends that financial institutions together with fintech companies should invest in platforms which are user-friendly safe secure meant for use by small holder dairy farmers themselves. Keywords: Agency banking, Mobile money services, Online banking services, Government regulations, Financial technology services, Financial inclusion

IMPACT OF COVID-19 ON THE FINANCIAL STABILITY OF COMMERCIAL BANKS IN KENYA

<p>Countries worldwide were gripped by the COVID-19 pandemic for the greater part of 2020 and 2021. COVID-19 spread to virtually all nations around the globe, causing a contraction of the global economy, and Kenya was no exception. Governments worldwide deployed social distancing, lockdowns, and curfews, which resulted in employee lay-off, business closure, and suppressed demand for commodities and services, eventually trickling down to commercial banks. The Kenyan banking sector experienced deterioration in asset quality which has been worsening since 2014 when it stood at 5.6 percent, reaching an all-time high of 14.5 percent in 2020 whereas Return on Assets which has also been declining since 2014, stood at 4.46 percent dropped to a record low of 2.07 percent in 2020 during the pandemic. This study, therefore, sought to determine how the financial stability of Kenyan commercial banks has been impacted by the COVID-19 shock. The study sought to specifically establish how both Z-score and capital adequacy of Kenyan commercial banks were impacted by the COVID-19 pandemic. Financial intermediation theory, Capital buffer theory, and Financial Instability Hypothesis anchored the study. The research design embraced was non-experimental, while the financial stability proxy was Z-score. The study’s target population was 19 commercial banks in Kenya between the years 2015 and 2022, which had complete data on all the study variables. Annual bank-level data was obtained from Kenya`s Central Bank`s annual supervision reports from 2015-2022. Event study methodology was used while collecting data whereby, the event window was 2020-2021, the period before the event (COVID-19) was 2015-2019, and the period after the event was 2022. The study espoused a panel vector autoregression model in data analysis where the impulse response functions were generated. The researcher discovered that the COVID-19 pandemic adversely impacted Z-score and capital adequacy. Based on the research findings, the Government of Kenya ought to institute non-disruptive pandemic control measures such as proper hygiene and wearing of masks as opposed to quarantines and lockdowns, which are detrimental to commercial banks' operations and other businesses, ultimately leading to a decline in income for commercial banks. Moreover, since capital acts as a shock absorber for banks, Kenyan commercial banks should strive to achieve and maintain the minimum capital adequacy ratios set by the Central Bank of Kenya. This will ensure that commercial banks in Kenya cushion themselves against economic shocks generated by pandemics such as COVID-19.</p><p> </p><p><strong>JEL:</strong> E44, E58, G01, G21, G28, G32</p><p> </p><p><strong> Article visualizations:</strong></p><p><img src="/-counters-/edu/0227/a.php" alt="Hit counter" /></p>

Technological Innovations and Financial Markets Development in Sub-Saharan Africa

The aim of this article is to assess the effect of technological innovations on the development of financial markets in Sub-Saharan Africa over the period 1996-2021. The study was conducted in 48 sub-Saharan African countries. The theory of financial intermediation (McKinnon, 1973 and Shaw, 1973) was used for the entire analysis process. This evaluation was carried out using the ARDL model with the Pooled Mean Group (PMG) estimator. In addition, we develop a composite index of financial development following the work of Čihák et al., (2012) and Svirydzenka (2016). The results from this analysis show that in the short term, all the variables of interest internet, landline and cell phone have no significant effect on the development of direct finance; although in the long term, internet and landline have positive and significant effects. These results argue in favor of investing in technological innovations that are capable of stimulating financial markets, and whose effects can have a positive impact ......

Analysis of banking credit distribution using the vector error correction model

The business model and consequently, the bank’s risk exposure significantly depends on the source of capital (Riabichenko et al., 2019). This research uses vector error correction model (VECM) data analysis to investigate the influence of capital adequacy ratio (CAR), non-performing loans (NPL), loan to deposit ratio (LDR) on the level of credit distribution at commercial banks in Indonesia. Using secondary data, research data was processed using the EViews 12 application with the research population being banking companies listed on the Indonesia Stock Exchange in 2019–2021. The research results show the variables CAR, NPL, and LDR have a significant effect on long-term credit distribution. In addition, the NPL variable significantly influences the credit distribution variable in the short term. The Granger causality test result shows that there is no two-directional causality relationship between the independent variables CAR, NPL, and LDR on the credit distribution variable. The results of this research are in accordance with financial intermediation theory, where the theory explains that savings and loans with high leverage can reduce the possibility of default (payment failure).

INFLUENCE OF MICROFINANCE SERVICES ON FINANCIAL PERFORMANCE OF MICRO, SMALL AND MEDIUM ENTERPRISES IN KIRINYAGA COUNTY, KENYA

<p>This study sought to ascertain the influence of microfinance services on the financial performance of MSMEs in Kirinyaga County. Specifically, the study sought to determine how microcredit services, micro-saving services and business consultancy services offered by Microfinance institutions influenced the financial performance of MSMEs within the county as operationalized by growth in their sales turnover. The study was anchored on the theories of Information Asymmetry and Financial Intermediation. The study’s target population comprised the MSMEs operating within Kirinyaga County and adopted the descriptive research design. The studied MSMEs were purposively selected from the townships of Sagana, Kerugoya, Kutus, Kagio, and Kagumo. Primary data was collected using structured questionnaires and analysis of the collected data was performed using descriptive and inferential statistical techniques. The results were presented using tables and charts. The study found that all the services offered by microfinance institutions had a positive and significant influence on the financial performance of MSMEs. Effectively, the study recommended that the owner-managers of the MSMEs should have more strategic engagement with the Microfinance institutions in tapping the services extended by them. Further, sustained efforts should be made by policy formulators to promote and strengthen microfinancing in pursuit of Vision 2030.</p><p><strong> </strong></p><p><strong>JEL</strong>: L10; L20; M10; G20</p><p> </p><p><strong> Article visualizations:</strong></p><p><img src="/-counters-/soc/0018/a.php" alt="Hit counter" /></p>

Evaluating the Nexus between Digital Transformation and Financial Inclusion: A Fresh Insight from Small and Medium Enterprises in Kenya

Small and medium enterprises are considered vital in Kenya due to the significant role which they carry out towards the attainment of the big four agendas with respect to the country’s vision 2030. Despite this importance, these businesses continue to be financially excluded. Studies relating to digital transformation and financial inclusion are characterized by underlying research gaps cutting across conceptual, contextual to methodological gaps. As such, this study which originates from the Doctoral dissertation of the first author in which the co-authors served as supervisors sought to evaluate the nexus between digital transformation and financial inclusion of small and medium enterprises in Kenya. Diffusion Innovation Theory and Financial Intermediation Theory were utilized and explanatory research design was adopted. The top 100 small medium enterprises in Kenya constituted the target population and the sample size was 200 based on purposive sampling and simple random sampling techniques where two respondents were picked from each of the Small Medium Enterprises of interest. A response rate of 81.5 percent was achieved through the use of questionnaires. The study established a significant nexus between digital transformation and financial inclusion of small and medium enterprises in Kenya. Consequently, the study concluded that digital transformation is important in determining the financial inclusion of small and medium enterprises in Kenya. The study recommended that the management of small and medium enterprises should fully invest in digital transformation so as to maximize its underlying benefits of flexible financial services.

Banking sector development and financial performance of small and medium enterprises in Mogadishu, Somalia

This study attempts to establish the relationship between banking sector development and the financial performance of small and medium enterprises in Mogadishu, Somalia. Financial intermediation theory is adopted to explain this relationship. The study adopted a correlational research design with 55 SMEs operating in Mogadishu city, Somalia. These SMEs were purposively selected. The study adopted a census, and thus, all the SMEs were included in the analysis. Due to the unavailability of secondary data in Somalia, the study relied on primary data, for which questionnaires were carefully designed using the existing scales and available literature. This questionnaire was then administered to the respondents who shared their responses and were analyzed. Before collecting information from the respondents, the study adopted the questionnaire in the pilot testing stage to ensure that it was reliable and valid. The main analysis for this study includes means and standard deviations (descriptive statistics) and correlation and regression analysis. The results were that access to credit (p<0.05), bank deposits (p<0.05), and customer savings (p<0.05) were all significant predictors of increase in profits and stability of sales. The study concludes that banking sector development is a significant predictor of the financial performance of small and medium enterprises.

Financial Technology and Financial Inclusion of Small and Medium Enterprises in Kenya: Do Government Regulations Really Matter?

The study sought to evaluate the significance of government regulations on the relationship between financial technology and financial inclusion of Small and Medium Enterprises in Kenya. This study emanates from the Doctoral dissertation of the first author where the co-authors served as supervisors. Technology, Organization and Environment Theory and Financial Intermediation Theory were utilized. The study adopted explanatory research design. The top 100 Small Medium Enterprises in Kenya constitute the target population and the sample size was 200 based on purposive sampling technique and simple random sampling where two respondents were picked from each Small Medium Enterprises of interest. A response rate of 81.5 percent was achieved. The study used multiple regression analysis and it was established that government regulations had significant moderation effect on the relationship between financial technology and financial inclusion of small and medium enterprises in Kenya. The study recommends that the existing transaction limits should be reviewed in line with economic conditions of the country. Government should ensure that favorable lending rates are put in place so as to further enhance the level of financial inclusion of small and medium enterprises in Kenya. Government guidelines on screening of customers should be favorable to business owners and stringent requirements should be discouraged. Keywords: Government Regulations, Financial Technology, Financial Inclusion, Small and Medium Enterprises

Macroeconomic Factors Affecting Commercial Banks’ Credit to Small And Medium-Sized Enterprises in Kenya.

Bank credit to the SMEs in Kenya remains relatively low by international standards, and by holding other factors constant, there is potential for credit growth. However, several factors come into play with regard to the proportion of credit to the SME sector. From this background, the current study will seek to examine the determinants of bank credit to the SME sector in Kenya. The financial intermediation theory, financial liberalization theory and credit risk theory provided the theoretical justification of the study. This study adopted a causal research design to focus on establishing the causal relationships between the dependent and independent variables. Quantitative secondary data was adopted in this study and collected using a data collection instrument. Monthly time series data for the period 2008 to 2021 retrieved from the Central Bank of Kenya reports, Kenya National Bureau of Statistics, and World Bank reports was used. The study used both descriptive and inferential methods to analyze data. The findings from this study support the intuition from empirical evidence and theoretical framework that credit in commercial banks is determined by macroeconomic factors. This means that commercial credit in Kenya are determined by GDP, Inflation, interest rates & Exchange rates when all working simultaneously.

The impact of bank performance and economic growth on bank profitability: CAMEL model application in middle-income countries

This paper aims to study the impact of both bank performance and economic growth on bank profitability in 8 middle-income countries from the Middle East and North Africa (MENA) region and MINT countries using the Generalized Method of Moments (GMM) model. Bank profitability is measured by return on assets (ROA) and return on equity (ROE), net interest margin (NIM) is measured by CAMEL model, and economic growth is measured by gross domestic product (GDP) growth. The sample period ranges from 2000 to 2020, and data are extracted from the World Bank financial indicators and database. This paper is supported by the financial intermediation theory. By comparing both MINT and MENA regions, the results show that in the MINT region, ROA is affected most by both asset management and capital adequacy ratio (CAR), while NIM is affected by asset management, liquidity, and management. Regarding the MENA region, ROA and NIM are affected by CAR only. No relationship was found between ROE and any of the CAMEL determinants in both regions. The results show superior performance for MINT than MENA; strong and active capital, increment in assets, credits, and deposits, and enhancement in bank profitability that is reflected in economic growth progress. Both MENA and MINT regions’ profitability (ROA and ROE) is affected by GDP, so their economies are restructuring very well and their banking industries are expected to grow rapidly.

Corporate governance and the choice between bank debt and public debt

Purpose This study aims to examine the impact of board characteristics on debt choice. Design/methodology/approach The sample comprises of unique nonfinancial firms listed in the FTSE 350 over the period 2011–2018. This study uses Tobit and OLS regressions to check the impact of board characteristics on debt choice. The results are robust to the battery of robust checks. Findings This study finds that board size and board independence are positively associated with public debt. However, CEO duality and board meetings frequency are inversely associated with public debt. Overall, the findings are consistent with the “financial intermediation theory” that the firms with weak governance rely on bank financing, and firms with better corporate governance go for public debt. Research limitations/implications This study offers significant insights for investors and policymakers. Originality/value This study offers new insights regarding the role of board characteristics in firms’ debt choice by showing the significant impact of board characteristics on debt choice. The findings indicate that the board’s efficient internal monitoring may substitute external monitoring by the bank.

Digital Lending 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 digital lending on technical efficiency of commercial banks in Kenya. The study was anchored on Theory of Financial Intermediation.
 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 digital lending has a positive and significant effect on technical efficiency of commercial banks in Kenya.
 Unique contributions to theory, practice and policy: The results suggests that conventional banks might benefit from forming partnerships with FinTech firms that specialize in digital lending.

Effect of Financial Technology on Financial Performance of Commercial Banks in Kenya

Performance in the financial markets is an essential component in the study of finance. Over the last decade, Kenya's commercial banks have increased their use of different types of financial technology (2011-2021). Mobile banking, agency banking, internet banking, and automated teller machines are just some of the various forms of financial technology available today. The purpose of this study was to evaluate the impact that financial technology has had, if any, on the overall financial performance of commercial banks in Kenya. The specific goals were to establish the effect of mobile banking on financial performance; to determine the effect of internet banking on financial performance; to determine the effect of agency banking on financial performance; to determine the effect of ATMs on financial performance; and to establish the moderating role of bank size on the relationship between financial technology and the financial performance of commercial banks. The research was predicated on the technological adoption model, the financial intermediation theory, the diffusion of innovation theory, and the profit maximization theory. The positivist research philosophy was used for this study, and a panel longitudinal research methodology was used for the research. The population of the study was the 38 commercial banks that have been in continuous operation throughout the last decade. The study was a census. Secondary information was gathered on an annual basis, and it covered a span of ten years (January 2012 to December 2021). The data was evaluated making use of descriptive statistics as well as inferential statistics entailing correlation and panel multiple linear regression analysis. The current research conclusions revealed that financial technology fairly explains financial performance and the current research discoveries also revealed that the financial technology is sufficient in predicting financial performance. Additional study findings were that mobile banking, internet banking, agency banking, adoption of ATMs, and bank size had positive significant correlations with financial performance. Moreover, findings were that adoption of ATMs had a significant negative link with financial performance. Meanwhile, mobile banking and agency banking had negative insignificant link with financial performance. Finally, both internet banking and bank size had a positive insignificant relationship with financial performance. Policy recommendations to the government officials and policy formulators in the Treasury and the CBK to not mainly advocate for financial technology policy as a means of boosting bank financial performance and it is recommended to the policy makers to utilize other policies when aiming to boost bank financial performance. Recommendations are also generated to the bank management and consultants not to mainly consider financial technology will significantly boost the banks’ financial performance. Keywords: Financial Technology, Financial Performance, ATM, Mobile banking, Internet banking, Agency Banking

Determining the effect of money supply as a ratio of GDP on economic growth in Kenya from 1985-2020

The study sought to determine the effect of money supply as a ratio of GDP on economic growth in Kenya from 1985-2020. Data on GDP was used as a proxy for economic growth. The study was based on financial intermediation theory backed up by other theories related to financial deepening. The study adopted a historical research design. A bivariate Autoregressive model (bVAR) was used in the study. Data analysis employed both descriptive statistics and inferential statistics. Economic growth is important, and one of the drivers of economic growth is financial deepening. Kenya has been developing its financial sector in order to achieve economic growth. However, there are controversies on the relationship between economic growth and financial deepening; there are no universal conclusions on the nature of the relationship between financial deepening and economic growth. The study established that money supply has a negative effect on economic growth in the long run in Kenya. In this regard, the study recommends that the government tighten the monetary policy regarding money supply.

Is there an optimal microcredit size to maximize the social and financial efficiencies of microfinance institutions?

Financial intermediation theory posits that a smaller loan size triggers a higher cost per dollar lent. This leads to question whether microfinance can become a self-sustainable industry. Hence, in microfinance innovations like loans without collateral, progressive loans, solidarity groups and relational lending are employed to reduce asymmetric information costs, adverse selection, and moral hazard while serving the poorest people. Crucially, we find a non-linear U-shaped effect of loan size on financial and social efficiencies. This reconciles the two opposite strands of the literature, aligning microfinance and banking central principles. The major implication of this study is that, unlike banking, microfinance institutions can grant small size loans while simultaneously obtaining high levels of financial and social efficiency. Indeed, our findings do not support the widely debated mission drift assumption since loan size does not generate a trade-off between financial and social outcomes. Therefore, loan size is a core management variable.

Loan Uptake and Return on Investment in Commercial Real Estate in Kenya: A Case of Kenya Property Developers Association Premium Members

Real estate commercial environment has guided financial organizations and property developers to examine various financing options given the imperative role that financial markets and developers play in the performance of the real estate sector. The objective of this study was to establish the effect of loan uptake on return on investment in commercial real estate of property developers registered as premium members by Kenya Property Developers Association. The study was anchored on Financial Intermediation Theory and Profit Maximization Theory. The population of interest in the study was made up of registered property developers with Kenya Property Developers Association. The research employed secondary sources to collect data. Information that was relied on included the data from published and audited annual reports of the target group. This study employed a correlational research design and utilized panel data from 2017 to 2021, yielding 30 observations. Data were collected from audited reports deemed reliable and valid and tested for stationarity by Levin, Lin, Chu unit root test. Data were analysed using the ordinary least squares approach at a 0.05 level of significance. Data analysis was done with the help of Eviews and presented in tables. The research findings were that loan uptake has a negative significant effect (β = -0.0099, p = 0.0391) on return on investment in commercial real estate. As the frequency of loan uptake increases, the return on investment tends to decrease. The study concludes that frequent loan uptake reduces the return on investment due to the added cost of borrowing. This research study recommends that awareness be created of the need to use other financing options that are cheaper in the long run. This study contributes to the body of knowledge by providing the link between loan uptake and returns on investment in commercial real estate in Kenya.

Effect of Lending on the Financial Performance of Commercial Banks Listed at the Nairobi Securities Exchange

Purpose: The general objective of this research was to investigate the effects of lending on the financial performance of commercial banks listed at the Nairobi Stock Exchange in Kenya. The specific objectives in this study was to determine how check-off lending, group lending, collateral lending and mobile lending affects the financial performance of commercial banks in Kenya. The study was anchored on Merton’s Default Risk Theory, Financial Intermediation Theory, Stakeholder’s Theory and Task-Technology-fit Theory (TTF).
 Methodology: A descriptive survey research design was employed in the study with the target population comprising of 12 commercial banks listed in Nairobi Securities Exchange. The unit of observation comprised of employees in Credit and Lending Department in the selected commercial banks. Two employees from each department were randomly selected and involved in the study. A total of 48 employees were targeted in the study. This study utilize both primary and secondary data. Primary data was gathered through a five point likert scale questionnaire administered to the unit of observation of the study. Secondary data was collected from audited reports and CBK financial reports for the period between 2017 and 2021. Both descriptive and inferential statistics were utilized in analyzing the data collected. Descriptive statistics comprised of frequency distributions and measures of central tendency (mean and standard deviation). Inferential statistics were used to examine the casual relationships between lending and the banks financial performance. The statistics were generated through SPSS.
 Findings: The results of the study were displayed in form of tables and figures. The study established that check-off lending, group lending, collateral lending, and mobile lending positively and significantly affects financial performance of commercial. The results bear the implications that increasing the each of the independent variable with one unit results to an increase in the levels of financial performance with the respective beta value.
 Unique contribution to theory, practice and policy: The study recommended that NSE listed commercial banks should enhance the lending practices since this practice results in enhanced performance levels. The study recommends further research on non- lending indicators that affect financial performance of the listed commercial banks and which possibly accounts for the remaining percentage of 32.9%.

Impact of Electronic Banking Transactions on the Volume of Trade of Commercial Banks in Kenya

Purpose: Electronic banking is a mechanism that enables a financial institution's clients to conduct a number of financial transactions via an electronic device such as a cell phone or a personal digital assistant. Electronic banking refers to the provision of banking and financial services through electronic devices over a network. Commercial banks have been at the forefront of embracing and assimilating electronic fund transfer technology into their core tasks in order to achieve competitive advantages and manage their overhead operating costs. The purpose of this study was to determine the impact of electronic banking transactions on the volume of trade of commercial banks in Kenya. The research was guided by the following specific objectives: To determine the impact of mobile banking transactions on the volume of trade of commercial banks in Kenya; To determine the impact of Automated teller Machines transactions on the volume of trade of commercial banks in Kenya; To ascertain the impact of electronic fund transfers on the volume of trade of commercial banks in Kenya; To ascertain the impact of online/internet banking activities on the volume of trade of commercial banks in Kenya. Theories are reviewed in this section which will direct the study. It comprises of the theories leading the performance of commercial banks in their operations and precisely in the field of Electronic banking. The section evaluates the financial intermediation theory in particular which deals with the main function of financial institutions which is intermediating between the surplus and the deficit units for sustained economic development. It also reviews the classical economics theory which holds that for a business to make returns, it has to obey the modern economics.
 Methodology: Simple random sampling method was used in this research. 10 representative banks were obtained from a population of 42 banks listed by the central bank of Kenya. In essence the method of statistical enumeration allows all members of the population to be studied. A population refers to the set of all observations under concern.
 A descriptive research design was used. The design allows us, according to Best et al (2003), to capture all relevant aspects of a situation when hiring a research and investigation team. Similarly, Namusonge (2010) states that this approach is best suited to gather detailed information where, by direct request, the researcher will reach all the population. Data for this case was majorly quantitative since it is readily available from the bank records for example the financial statements, publications, transactions. Secondary data is easy model of extracting data especially for quantitative research and this prompted the researcher to utilize it as the immediate tool for data collection. Panel data analysis was applied. This was done using the E-views panel data software.
 Findings: The results showed that there was a partial positive and statistically significant correlation between volume of banks trade and Mobile banking transactions (r= 2.854, p=0.000), Automatic Teller Machines (r=2.314, p=0.000) and usage of internet banking transactions (r=2.442, p=0.000). However, findings also revealed that electronic funds transfer (r=-0.5075, p= 0.000) has no significant influence on banks volume of trade. The null hypothesis Ho1: Mobile banking transactions has no significant influence banks volume of trade was rejected. The null hypothesis HO2: Automatic Teller Machines transactions have no significant influence on the banks volume of trade was rejected. The null hypothesis HO3: electronic funds transfer has no significant influence on banks volume of trade was true and thus was not rejected. Similarly, Null hypothesis HO4: internet banking transactions do not have a significant influence on project performance was not true and thus rejected.
 Unique Contribution to Theory and Practice: The findings of this study will be absolutely relevant to the stakeholders in the banking industry, government regulatory authorities and monetary policy frameworks implementation and monitoring. Banking institutions as well can be able to make decisions on the key areas they will need to improve transactions by customers in order to boost the volume of trade.

Management of Default Risk and Reserve Requirement

This study aims to empirically examine the effect of credit risk on bank performance through capital adequacy (CAR) as a mediator. Where capital adequacy (CAR) is a new concept developed from the synthesis of monetary theory, financial intermediation theory, agency theory and bank risk management, as an effort to mediate the research gap between the influence of credit risk on bank performance. This study uses panel data with 35 companies as samples and uses a research period from 2013 to 2020. The analytical tool used in this research is PLS-SEM with WarpPLS 7.0 application. The results of the study explain the two rejected hypotheses, namely the effect of NPL on ROA and the effect of GWM on CAR, but the role of CAR as a mediator of the research gap in this study is the relationship between the effect of NPL on ROA and CAR as a partial mediator. Keywords: Reserve Requirment, bank risk management, return on asset, financial Intermediation Theory.

Examining the effect of the value of shares traded as ratio of GDP on economic growth in Kenya from 1985-2020

The study aims at examining the effect of the value of shares traded as a ratio of GDP on economic growth in Kenya from 1985-2020. The study was based on financial intermediation theory backed up by other theories related to financial deepening. The study adopted a historical research design. An Autoregressive bivariate model (bVAR) was used in the study. Inferential statistics and descriptive are used in data analysis. This study was conducted in Kenya for the period 1985 to 2020. The study uses a historical research design. Descriptive statistics such as standard deviation, mean and correlation are calculated. Tables and graphs are also used to present the results. Inferential statistics help make inferences and predictions of a population based on the selected sample. The study established a positive effect of the value of the traded share on economic growth both in the long run and in the short run in Kenya. The study recommends that the Kenyan government create policies that would foster participation in the stock market by Kenyan investors and foreign investors.