Restructuring Strategies and Organizational Performance of Tier Iii Commercial Banks in Nairobi City County, Kenya
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Date
2023
Authors
Juma, Eric Franc
Journal Title
Journal ISSN
Volume Title
Publisher
kenyatta university
Abstract
Poor performance has remained a key challenge of most of the tier III commercial banks in Kenya. This challenge has been demonstrated by an increase in acquisitions of this tier III commercial banks by other stable counterparts in tier I category. This study sought to establish the effect of restructuring strategies on performance of tier III commercial banks in Nairobi, Kenya. More specifically, specific objectives entailed determination of the effect of loan restructuring strategies, asset restructuring strategies, operational restructuring strategies and employment downsizing strategies on performance. This study was guided by contingency theory, dynamic capability theory and institutional theory. Empirical literature is reviewed on the objectives of the study to inform the conceptual framework. Descriptive and correlational designs was adopted targeting 21 tier III commercial banks in Nairobi as the unit of analysis and 105 loan officers, finance managers, operations managers, human resource managers and the marketing managers from each of these institutions as the unit of observation. Census was used and thus all the 105 respondents were covered in the study. Information was gathered in its primary form through questionnaire. The study tested for content, construct and face validities with the aid of the supervisor and two appointed experts in the field of restructuring. Reliability was determined through Cronbach Alpha Coefficients on the basis of the piloted results and interpreted at 0.7 thresholds. The analysis was supported by means and standard deviations and regression analysis and tables and figure aided the presentation of the results. The study established that loan restructuring strategies (M=3.84, β=0.343 & p<0.05), asset restructuring strategies (M=3.75, β= .499 & p<0.05), operational restructuring strategies (M=3.83, β=0.252 & p<0.05) and employee downsizing strategies (M=3.77, β=0.211 & p<0.05) were all significant predictors of performance of tier III commercial banks in Nairobi, Kenya. It was concluded that restructuring strategies are significant predictors of performance of tier III commercial banks in Nairobi, Kenya. The study recommended that loan officers working on tier III commercial banks in Kenya should regularly carry out regular review of interests and loan loss provisions as this is expected to have significant contribution towards organizational performance. The finance managers working should leverage on asset cleaning and effective portfolio management strategies to minimize risk exposure and maximize returns. The policy makers at CBK should formulate and enact sound regulations and policies that can promote the adoption of latest technologies to support the day to day operations. The human resource managers working in the tier III commercial banks in Kenya should exercise fairness as they execute employee downsizing strategies.
Description
A Research Project Submitted to the School of Business, Economics and Tourism in Partial Fulfilment of the Requirement for the Award of a Degree of Master of Business Administration (Strategic Management) of Kenyatta University
Keywords
Commercial Banks, Nairobi City County, Kenya