Internationalization of Banks: A case of indigenous Kenyan Banks

Abstract

The aim of this paper is to study internationalization of banks with emphasis on indigenous Kenyan banks. The paper seeks to determine the factors influencing internationalization of homegrown Kenyan banks and to establish the challenges facing these Kenyan financial institutions when they venture beyond national borders. This research design is based on a census survey of the Kenyan indigenous banks that have internationalized. The method of data collection is through self-administered semi structured questionnaires. Data is analysed using descriptive statistics to summarise the responses through graphical representation and distribution of scores. The number of respondents for the study was five. These firms in the study have been in existence for over ten years, while most have been in international business for over two years. The findings indicate that increased brand identity, increased revenue, increased profit and long-term growth are major factors influencing internationalization. Further, the findings reveal that stability of currency and the nature of legal systems are major challenges that indigenous Kenyan banks faced when internationalizing. On the other hand, these findings indicate that timing of entry is not a major challenge faced during internationalization. The study also indicates that certain factors are influencing indigenous Kenyan banks to go beyond borders and that these firms employ various means to overcome the challenges faced during internationalization. Therefore, the study reveals that the homegrown financial institutions that have gone beyond borders are influenced by a number of factors including the urge to increase their market share and profitability. On the other hand, in order to overcome the challenges facing internationalization of

indigenous Kenyan banks, these firms offer staff exchange programmes between the home company headquarters and the one that has internationalized among other measures.