MST-Department of Accounting and Finance
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Browsing MST-Department of Accounting and Finance by Subject "Agency Banking"
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Item Adoption of Agency Banking and Operational Cost of the Commercial Banks in Kenya(Kenyatta University, 2021) Otigo, Bob; James MuturiThe adoption of financial innovation by commercial banks has been a strategic move aimed at expanding the market share of most commercial banks. The adoption of agency banking service by most commercial banks has assisted banks to render effective services to its consumers and businesses. Despite most of the studies on agency banking adoption indicating that the aim is to reduce the cost of operations, there remains a gap on studies seeking to establish whether agency banking has had a statistically significant effect on operating costs of the bank such as cost of labor, rental charges, cost of depreciation charge on plant and equipment, cost of utilities and marketing costs hence the motivation for this research. This study sought to evaluate the relationship between adoption of agency banking and operational costs by commercial banks in Kenya. Specifically, the study sought to address the following objectives; to assess the relationship between availability of financial services and operational costs by commercial banks in Kenya, to analyze the relationship between financial inclusion and operational costs by commercial banks in Kenya, to determine the relationship between accessibility to financial services and operational costs by commercial banks in Kenya. The study was anchored on three theories that is; Agency theory, Bank -lead theory and diffusion of innovation theory. The study adopted the cross sectional design in analyzing data from various commercial banks over a period of time. The target population of the study constituted all the 11 commercial banks that have adopted agency banking by 2014 since its authorization in the year 2010. All the 11 banks were considered for the study indicating that a census was appropriate. A research window of four years before and after the adoption and 4 years after the adoption was considered. The data collection was done using a secondary data capture tool where various costs were extracted from the financial statements of the 11 banks between 2006 and 2014. The results were analyzed using descriptive statistics of mean and standard deviations and inferential statics of correlation, simple and multiple regression and t- test to test the significance of the change. The research considered all ethical considerations and norms regarding researches in Kenya and Kenyatta University. The results have indicated that operating costs reduced for those banks that had adopted agency banking since the mean difference before adoption was much more than the difference after the adoption. This was attributed to the fact that financial services were more available to the customers there was increased financial inclusion and also increase in access to financial services by the customers. The results showed that the mean difference measured by the t statistic in the three independent variables (availability, financial inclusion and accessibility) significantly contributed to the reduction in the operational costs among commercial banks that had adopted agency banking in Kenya. The results further indicated that the mean difference of availability, financial inclusion, accessibility and operating costs of commercial banks that had adopted agency banking by 2014 was statistically significance. The study concluded that agency banking adoption has had a very significant effect on the reduction of operational costs. The study recommends that commercial banks need to expand their services offered by agencies in order to reduce the cost incurred at the branch and make their financial services available and accessible to more unbanked customers. The results are expected to benefit the management of the commercial banks, and other stakeholders in the sector as it provided an insight to the agency banking in relation to operational costs.Item Agency Banking and Deposit Mobilization on Commercial Banks in Kenya, Nairobi City County Branches(Kenyatta University, 2020-10) Rono, Romanus KipngetichBanking industry has been competitive in the past years. Kenyan Banks are exploring all strategies to remain competitive in lending and in ensuring that their clients are satisfied. They have diversified their products from lending to offering custodial and insurance services. Lending continuity mainly depends on the reserves or rather bank’s available deposits. As an initiative therefore, Kenyan commercial banks have employed various strategies to mobilize cheap and stable deposits, as is the game changer. In line with this, most banks have invested in technology and alternative banking channels. There has been an impressive uptake of agent banking model after Central Bank Implemented it in the year 2010. Some banks have leveraged on it and casted it wider to net more customers across the country particularly in the rural areas to fish out for the idle deposits and in the process promoting financial inclusion in the country. Tier 1 banks have benefited much on this alternative channels while Tier 2 banks are still struggling with their agency business. These banks are aggressively implementing various strategies to mobilize their deposits and one of the strategies is agency banking. Several studies have expounded on commercial banks’ deposit mobilization and lending. However, no study available has documented the role of agency banking in the banks’ deposit mobilization initiatives. This study therefore sought to determine the role of agent banking in deposit mobilization for the Commercial Banks in Kenya. The commercial banks under the study are Equity, KCB, Co-operative and Family Bank. All of these banks have branches and agents spread within Nairobi. The specific objectives of the study was to find out the effect of deposit transactions, account opening, institution payments and bill/utility payment and size of the agents on the banks’ deposit mobilization. The study was anchored on agency theory, financial intermediation banking theory and fractional reserve banking theory. Descriptive research was employed with the study targeting the branches within Nairobi County for the banks under the study. The target population of the study was 152 respondents including 4 branch managers, 8 agency banking officers and 140 bank agents. A sample size of 60 respondents was drawn from the population for study where primary data was mainly used. Primary data was collected through semi-structured questionnaire. The data collected was analysed by use of descriptive and inferential statistics thereafter presented by charts and frequency tables. The study findings revealed that there is a significant relationship between agent deposit transactions and deposit mobilization (p=0.000); there was a significant relationship between agent account opening and deposit mobilization (p=0.000); there was a significant relationship between bill/utility payments and deposit mobilization (p=0.000) and that there was a significant relationship between number of agents and deposit mobilization (p=0.000). The study concluded that an increase in the number of agents increases the deposit mobilization of commercial banks in Kenya and that a decrease in volume of deposits negatively affects the deposit mobilization of commercial banks. The study concluded that deposit mobilization by bank agents in Kenya need to be looked into more so as to mobilize more transactions made on agent banking thus Agency banking should be used as a tool by commercial banks to mobilize deposits in places where customers are far away from the bank. From the foregoing conclusion, there is need for Commercial banks in Kenya to leverage on expansion of agent network in order to improve their deposit mobilization drive.