Branchless Banking Services and Financial Stability of Commercial Banks in Kenya
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Date
2025-05
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Kenyatta University
Abstract
Globally commercial banks continue to be the key conduit of financial intermediation. They do this by mobilizing savings and funding government economic activities. Financial stability is a primary objective for banking institutions, enabling them to function efficiently as intermediaries within the financial system. Technological advancements, creative financial products, shifting consumer needs, and the utilization of different distribution channels are all having an impact on the banking sector. Thus, the aim of the research was to investigate how Kenyan commercial banks' financial stability is impacted by branchless banking services. This research sought to investigate how commercial banks' financial health is impacted by ATM, agency, mobile, and online banking services. The research made use of the theories of financial intermediation, agency, diffusion of innovation, and stakeholders. Using an explanatory research approach, the study concentrated on all 38 commercial banks as of December 31, 2023. From commercial banks, secondary data spanning the years 2016 to 2022 was gathered. Data collecting sheets were utilized to gather secondary data. The gathered data were coded, cleaned, tabulated, and shown in tables prior to analysis. Statistics, both descriptive and inferential, were utilized to draw conclusions. Descriptive statistics comprised the mean and standard deviation and inferential statistics included multiple regression analysis and Pearson's Product Moment Correlation. STATA 14 software was used for the analysis in this study. Tables were used to display the diagnostic test, descriptive statistics, and inferential statistics. The study identified a favorable association between agency, mobile, and online banking services and financial stability. Multiple linear regression analysis also revealed a positive and significant relationship between agency, mobile, and online banking services and financial stability. The research hence came to a conclusion that ATMs, agency, mobile, and online banking services have a positive and significant effect on financial stability of commercial banks. The study made recommendations that commercial banks should implement measures that will lead to increased use of branchless services such as ATM banking, agency banking, mobile banking and online banking so as to improve their financial stability. The research also recommended that policymakers should make policies that aim at increasing the use of branchless banking services.
Description
A Research Project Submitted to the School of Business, Economics and Tourism in Partial Fulfilment for the Award of Degree in Master of Business Administration (Finance), Kenyatta University, May 2025.
Supervisor
John Mungai