EFFECT OF AGENCY BANKING ON FINANCIAL PERFOMANCE OFCOMMERCIAL BANKS LISTED ATTHE NAIROBI SECURITIES EXCHANGE, KENYA

Abstract

According to the 2016 National Financial Access Survey, 17.4% Kenya’s bankable population is still totally out of the financial services sphere. The main objective of the study was to examine the effect of agency banking on financial performance of listed banking institutions in Kenya. The study sought to identify the effect of financial services accessibility through agency banking to customers on financial performance of banking institutions listed in NSE.To determine the effect of market share through agency banking, to determine the effect between transaction cost through agency banking on financial performance.The study used survey of the 11 commercial banks which have listed in Nairobi Securities Exchange. Content analysis of data involved gathering data from NSE Handbook. The study adopted a survey research design, and inferential statistics. Excel and Statistical Package for Social Sciences (SPSS) software version 20 was used to analyze the data.Analysis of data involved both descriptive and inferential statistics. Descriptive statistics were in form of mean and standard deviation. Inferential analyses was in form of correlation, regression and analysis of variance Each variable in the model was measured using multiple linear regression models and the results were used to establish the relationship between the dependent and independent variables.. All regression coefficients were significant at 5 per cent level. This implies there is a positive significant relationship on the effect of agency banking and performance of listed banking institutions in Kenya and that the model is a good fit for the data. The study recommended that the listed commercial banks should recruits more agents so as to increase financial accessibility levels. The study also recommended that commercial banks should manage the agency gap carefully as it was noted to be an important determinant of financial performance.