Influence of Adoption of Agency Banking Strategy on the Financial Performance of Micro-Finance Institution in Nanyuki Town, Kenya
Abstract
The study aims at evaluating the influence of adoption of agency banking on the financial performance of Micro Finance Institutions in Nanyuki town, Kenya. The theory guiding the study is the Bank Focused theory. The research design adopted was descriptive research design. The target population was 142 management level employees from the three-deposit taking Micro-Finance institutions. The sample size comprised of 41 respondents. Data was collected using questionnaires while data analysis was conducted using Statistical Package of Social Sciences (SPSS) Version 22.0. Descriptive and inferential statistical techniques were used in data analysis. The findings established that market effectiveness was the top attribute of adoption of agency banking strategy for the managers. Regression analysis indicated that agency banking had a positive linearly significant influence on financial performance of MFIs. The study concluded that since investment in agents by MFIs has led to increased market share, Return on Equity and profitability, efforts should continue to increase and support these agents for enhanced financial performance of MFIs. The study recommended that continuous investment in agency banking through increased recruitment, training and empowering of agents is an important avenue for MFIs to enhance financial performance.
Keywords: Agency banking, financial performance, Micro Finance Institutions
References
Atieno, O. A. (2018). Mobile Banking and Organizational Performance in the Banking Industry. Journal of Scientific Research and Studies, 5(5), 121–135.
Haddad, C., & Hornuf, L. (2019). The emergence of the global fintech market: Economic and technological determinants. Small Business Economics, 53(1), 81-105.
Hezron, R. O., & Muturi, W. (2015). Effect of internal factors on performance of SACCOs in Kenya: A case of Kisii County. International Journal of Economics, commerce and management, 3(7), 767-785.
Ivatury, D. & Lyman, A. (2016). Definition of FinTech and description of the FinTech industry. In FinTech in Germany (pp. 5-10). Springer, Cham.
Kamau, J. N. (2012). The relationship between agency banking and financial performance of commercial banks in Kenya (Doctoral dissertation).
Kithuka, B. K. (2017). Factors influencing growth of agency banking in Kenya: the case of Equity bank, Kwale County, Kenya (Doctoral dissertation, University of Nairobi, Kenya).
Misati, R. N., Kamau, A., Kipyegon, L., & Wandaka, L. (2017). Is The Evolution Of Fintech/Digital Financial Services Complementary to Bank Performance In Kenya? European Journal of Business and Management, 2222-1905, 6(33), 1-19.
Monica, D. N. (2016). The Effect of Agency Banking on Financial Performance of Commercial Banks in Kenya (Doctoral dissertation, University Of Nairobi).
Mwangi, D. (2016). The role of agency banking on profitability of commercial banks in Kenya (Doctoral dissertation, University of Nairobi).
Nyaboga, M., Omari, E. & Muigai, G. W. (2015). The role of agency banking on performance of financial institutions in Kisii County, Kenya. International Journal of Academic Research in Business and Social Sciences, 3(8), 443-454.
Omreng, S., & Gjendem, I. (2017). FinTech in Norway: the effect of FinTech on the traditional Norwegian banking sector (Master's thesis).
Owino, D. (2018). Influence of agency banking on the market share of deposit taking micro-finance institutions in Kenya. International Journal of Academic Research in Accounting, Finance and Management Sciences, 9(3), 240-250.
Rotich, G. (2017). Effect of Mobile Banking on the Financial Performance of Banking Institutions in Kenya. The Strategic Journal of Business and Change Management, 2 (98), 1440-1457.
Rotich, S. (2017). The impact of agency banking on the volume of deposits in in the deposit taking micro-finance institutions. International Journal of Current Aspects in Finance, Banking and Accounting, 2(2), 1-20.
Sekaran, I. T. (2015). Research methods and methodology towards knowledge creation in accounting. Contaduría y administración, 60(1), 9-30.
Trofimov, I. D., Aris, N. M., & Ying, J. K. Y. (2018). Determinants of commercial banks' profitability in Malaysia (No. 85598). University Library of Munich, Germany.
Uche, A. (2019). How Regulations Can Define the Future of Fintech in Nigeria. Available at SSRN 3354278.
Vutsengwa, R. M. & Ngugi, K. (2013), An assessment of the challenges facing commercial banks in sustainability of agency banking in Kenya: A case of commercial banks. International Journal of Social Sciences and Entrepreneurship, 1(2), 613- 620.
Wainaina, G.J. (2017). Mobile Based Loan Management Practices and Financial Performance of Commercial Banks in Kenya. Journal of Electronic Commerce Research, 16(7), 3-7.
Wairimu, R. W. (2019). Effect of Financial Innovation on Firm Performance of Microfinance Banks in Kenya (Doctoral dissertation, University of Nairobi).
Waithanji, M. N. (2015). The impact of agent banking as a financial deepening initiative in Kenya (Doctoral dissertation, University of Nairobi, Kenya).
Weber, T. A. (2017). Understanding the information-based transformation of strategy and society. Journal of Management Information Systems, 34(2), 425-456.
