Strategic Response Strategies to Competition and Perfromance of Commercial Banks in Nyeri County, Kenya
Loading...
Date
2018-11
Authors
Muriira, Moses Muriithi
Journal Title
Journal ISSN
Volume Title
Publisher
Kenyatta University
Abstract
The competitive intensity of commercial banks in Kenya threatens the health of the
banking sector as exhibited by the struggle and ultimate collapse of several small banks.
The main objective of this study therefore, was to establish the effect of strategic
response strategies to competition on performance among commercial banks in Nyeri
County, Kenya. The specific objectives of the study were to assess the effect of financial
innovation on performance among commercial banks; to establish the effect of rebranding
strategy on performance among commercial banks; to determine the effect of
restructuring strategy on performance among commercial banks and to investigate the
effect of competition-based pricing on performance among commercial banks in Nyeri
County, Kenya. The study was guided by the Porter‟s five force model. The current study
used a descriptive cross sectional research design. Commercial banks in Nyeri County
were targeted. Operations managers and departmental heads were the respondents in the
study. The study carried out a census of the 79 operations managers and departmental
heads of Commercial banks in Nyeri County A self-administered semi-structured
questionnaire was used to collect data on response strategies to competition. Data on
financial performance of participating banks was sourced from the banks‟ financial
statements. Descriptive statistics such as frequencies, percentages, mean and standard
deviation were used to organize findings. Regression analysis was conducted to
determine the statistical significance of the attempted prediction between strategic
response strategies to competition and performance among commercial banks. SPSS
software was used in analysis. Tables and figures were used to present findings. The
study found that descriptive statistics (M=1.686, SD =0.7608) showed that financial
innovations were used to a great extent in the participating banks. Descriptive statistics
(M=4.0, SD =0.691) indicated that rebranding was exercised to a very small extent in the
participating banks. Descriptive statistics (M=2.46, SD=0.70) showed that restructuring
was exercised to a large extent in the participating banks. Descriptive statistics (M=3.19,
SD=0.59) indicated that competition based pricing strategy was used to a small extent in
the participating banks. Simple regression analysis showed financial innovation (p=0.00),
restructuring strategy (p=0.007) and competition-based pricing (p=0.000) to be
statistically significant. Multiple regression analysis showed that 61.1% of financial
performance of commercial banks can be explained by the response strategies. Financial
innovations (β=0.456) had the highest effect of the four strategies considered in this
study. The study therefore concluded that financial innovation, restructuring and pricing
strategies were important predictors for financial performance of commercial banks. The
study recommended that banks should invest in research into financial innovations. In
particular, banks should seek to create more financial intermediaries to supplement the
banks existing product line.
Description
A Research Project Submitted to the School of Business in Partial Fulfilment of
the Requirements for the Degree of Master of Business Administration (Strategic
Management Option) of Kenyatta University