Environmental Factors and Performance of Commercial Banks in Kenya
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Date
2019
Authors
Thumbi, Grace Wambui
Ragui, Mary
Journal Title
Journal ISSN
Volume Title
Publisher
IJCAB Publishing Group
Abstract
The performance of commercial banks in Kenya determines the financial position of the nation.
This performance, over the past period, has not been inspiring and various reforms have been put
in place in to increase it. Yet, performance of commercial banks on average has been erratic. The
business environment in which the commercial banks function is turbulent, and it is through
understanding the environmental forces, that they can improve their performance. The study’s
general objective involved finding out the impact of environment factors on Commercial bank’s
Performance. Specifically, the study focused on the following objectives; to find out the influence
of the organizational resources on the performance of the commercial banks in Kenya; to
determine how organizational structure influences the performance of commercial banks in
Kenya; to establish the influence of competition on the performance of the commercial banks in
Kenya; and to establish the moderating effect of government policies on the influence of
environmental factors on performance of commercial banks in Kenya. The contingency theory,
resource based view and the theory of competitive advantage informed this study. The research
employed a descriptive research design. The population of this study comprised of the 43
commercial banks operating in Kenya. The study targeted the head office of each of the
commercial banks and the respondents were the marketing managers. A pilot study was conducted
using customer experience executives of four commercial banks. The study conducted a census of
the 43 head marketing managers of the financial Institutions in Kenya. The study used structured
questionnaires to collect data. The study used face, content and construct validity and reliability
was measured using the Cronbach’s Alpha coefficient. Analyzing of data was done through
descriptive and inferential statistics using the SPSS software. The findings were presented using
charts, tables, and graphs. The study concludes that organizational resources had significant
influence on performance with and without government policies. Organizational structure had a
great impact on commercial banks performance. Competition had significant influence on
performance of commercial banks with or without the moderating influence of government
policies. The government policy had significant moderating influence in the relationship between
environmental factors and performance of commercial banks. The research recommends that the
top management team of all commercial banks operating in Kenya should improve on their
organizational resources by ensuring adequate number of employees is in place in various
departments and functions. The management of all firms in the financial sector in Kenya should
improve on their structures by engaging subordinate staff in decision making on daily operations
of the firm. The management team of all commercial banks should come up with better strategies
of remaining competitive in the industry in view of other industry participants with similar product
offering like other banks, microfinance institutions and SACCOs. The Central Bank of Kenya
should increase its supervisory and monitoring role among commercial banks to positively
influence their performance. There is need for strong market intelligence to collect information on
products and services of competitors for constant improvement and thus performance among
commercial banks.
Description
An Article Published in International Journal of Current Aspects
Keywords
Environmental Factors, Organizational Resources, Organizational Structure, Competition, Government Policies, Performance of Commercial Banks in Kenya
Citation
Thumbi, G., & Ragui, M. (2019). Environmental Factors and Performance of Commercial Banks in Kenya. International Journal of Current Aspects, 3(VI), 149-175. https://doi.org/10.35942/ijcab.v3iVI.83