Effect of Organization Redesign Strategy on Performance of Commercial Banks in Nairobi County, Kenya
Mwangi, Bernice Muthoni
Jagongo, Ambrose O.
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The capping of interest rates by the Central Bank of Kenya in September 2016,led to massive downsizing by commercial banks in Kenya to reduce costs, survive and generate profits. However,by the end of the financial year 2017 when banksthat downsized were releasing their financial reports some banks had made a profit like Kenya Commercial Bank, Cooperative bank, while others including Family bank, Barclays amongothers had made losses. Therefore, it is not clear whether downsizing has a positive ora negative impact on banks’ profitability. The surveylooked at the impact of organization redesign strategy on commercial bank financial performance. A descriptive research design was used.The research targeted12 commercial banks in Kenya. Theresearchtargetedthree managers from each bank in the following categories: senior, middle and supervisorylevel. Therefore, the target respondents were36 managers. A census approach wasadopted since the population size is not large. Data wasgathered using structured questionnairesissued to bank managers. The data collected wasquantitative and wassorted to ensure completeness.Findingsrevealed that organization redesign strategy had a positive and significant effect on commercial bank financial performance in Nairobi County.The study recommends that banks shoulddiversify to increase their income levels. Banks also need to invest more in innovation, agency,and digital banking as the main drivers of bank diversification and distribution channels for banking products. Banks are also encouraged to unite to work together and survive in the market.