Browsing by Author "Mundia, Carol Wanjira"

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    Digital Financial Innovations and Financial Deepening of Commercial Banks in Nairobi City County Kenya
    (Kenyatta University, 2025-03) Mundia, Carol Wanjira
    Limited access to financial services remains a major challenge in emerging economies, particularly in Sub-Saharan Africa, where only 5% to 25% of households have a formal banking relationship. This financial exclusion constrains private sector growth and economic development. In Kenya, digital financial innovations have played a pivotal role in enhancing financial deepening, yet the extent of their impact remains inadequately explored. This study examined the effects of digital financial innovations on the financial deepening of commercial banks in Kenya. Specifically, the study assessed the impact of mobile phone banking, ATM banking, online banking, and agency banking on financial deepening. Additionally, it investigated whether bank size moderates the relationship between financial innovations and financial deepening. The study adopted a descriptive and explanatory cross-sectional research design and was conducted in Nairobi City County, where most commercial banks have their headquarters. The study was guided by the Innovation Diffusion Theory, Disruptive Innovation Theory, Agency Theory, and Market Power Theory. The target population comprised 39 licensed commercial banks in Kenya as of December 31, 2022. Secondary panel data were sourced from the Central Bank of Kenya’s annual banking reports, and multiple regression analysis was performed using SPSS version 20. The findings revealed that mobile phone banking, ATM banking, online banking, and agency banking had a statistically significant positive effect on financial deepening in Kenyan commercial banks. Furthermore, bank size moderated the relationship between financial innovations and financial deepening, indicating that larger banks contribute more effectively to financial inclusion. Based on these findings, the study concludes that mobile phone banking expands financial access in remote areas, ATMs enhance accessibility, online banking improves convenience, and agency banking strengthens financial outreach in underserved regions. Additionally, larger banks facilitate deeper financial integration by offering diverse financial products and services. The study recommends that commercial banks invest in user-friendly mobile banking interfaces, expand ATM networks, develop seamless mobile banking applications, and recruit more agency banking agents in rural areas. Furthermore, banks should leverage digital financial innovations to enhance their market presence. Future research should explore the long-term effects of financial innovations on financial sustainability and assess the role of regulatory frameworks in enhancing financial deepening. Ethical considerations, including data confidentiality and compliance with research guidelines, were observed throughout the study.