Adoption of Financial Innovations by Tier One Commercial Banks and Financial Deepening in Kenya
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Date
2021-06-19
Authors
Winga, E.
Ndede, F.
Journal Title
Journal ISSN
Volume Title
Publisher
Strategic Journals
Abstract
It is envisaged that by 2030 Kenya will realize the three pillars of success that is social, economic and political
development. These pillars are not likely to be achieved if the country adopts same way of doing things, thus
innovations in all sector is vital. Innovation accelerates growth in all the three pillars and more so economy.
Although bank innovations are of convincing importance when checked in terms of financial performance,
the effect created by the innovation on financial deepening is still not clear. The general objective of the study
was to establish the effect of the adoption of financial innovations by tier one commercial banks and financial
deepening in Kenya. Specifically, the study sought to establish mobile, agency, automated teller machine and
internet banking on financial deepening in Kenya. The study was based on diffusion theory of innovation and
theory of financial deepening. The study adopted correlation research design. In the current study the target
population composed of 6 banks in tier one. Census approach was used to select 6 tier one commercial banks
from 2010 to 2018. Data was analysed using descriptive statistics, correlation analysis and multiple
regression analysis with the aid of STATA 12. The regression coefficients were tested for significance using tstatistics at 5% confidence level. Diagnostic tests that conducted include auto correlation, multicollinearity,
heteroscedasticity, fixed and random effects and normality. The study findings found that commercial banks
in tier one had an average financial deepening of 16.61. Regression analysis revealed that mobile banking,
agency banking, automatic teller banking and internet banking have positive and significant effect on
financial deepening of tier one commercial banks in Kenya. There is need to take advantage of agency
banking services especially in regions which have low mobile phone penetration and adopt agency banking
services owing to proximity to banking agents. Data security should be provided to enhance authorization
procedure when using automatic teller machines banking services.
Description
A Research Article in the Strategic Journal of Business & Change Management
Keywords
Financial Innovations, Commercial Banks, Financial Deepening, Kenya
Citation
Winga, E., & Ndede, F. (2021). Adoption of financial innovations by tier one commercial banks and financial deepening in Kenya. The Strategic Journal of Business & Change Management, 8 (2), 566 – 576.