Bancassurance and Profitability of Selected Commercial Banks in Kenya
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The banking sector in Kenya plays an important role in the growth of the economy, and thus this sector needs to be stable, over the years this sector has faced challenges which have impacted on profitability of most institutions. Hence, the sector adopted the concept of Bancassurance as a form of diversification to improve its fortunes. However, despite the introduction of this sophisticated concept, there is very little empirical evidence on whether the concept has a significant effect on Profitability of the banks which have largely adopted the concept. And this was the thrust of this empirical investigation. The objective of the study was to determine the effect of bancassurance on profitability of selected commercial banks in Kenya, between the years 2012 to 2016. Profitability was operationalized into Net income, Return on Asset and Return on Equity. The study adopted descriptive survey method. Purposive sampling was used to pick respondents for the study; the target population of six best commercial banks in Kenya was adopted. These were banks offering bancassurance services. Data was analysed by descriptive statistics and multiple regression analysis. Data presentation was in the form of tables and graphs. The study found a positive and statistically significant effect of interest income from banc assurance, customer retention and acquisition and the risk diversification on financial performance of selected commercial banks in Kenya. The number of insurance products on offer did not have a statistically significant effect on profitability of the banks under study. Hence, the study concludes that Bancassurance is a significant component of the banks revenue stream which should be given more prominence as the banks strive to remain profitable.