Determinants of Non-interest Income in Kenya Commercial Banks

Abstract

Non-interest income has become an gradually imperative source of revenue for commercial banks, driven by the need to diversify income streams beyond traditional interest-based activities. This study was motivated by the growing significance of noninterest income in enhancing the financial performance of banks, especially in the context of technological advancements and changing customer preferences. The primary objective of the research was to determine the determinants of non-interest income among commercial banks in Kenya. The study was anchored on the Resource- Based View Theory, supported by Transaction Cost Economics Theory and Financial Intermediation Theory. A descriptive research design was adopted, utilizing secondary data from 39 commercial banks in Kenya for the five-year duration between 2019 and 2023. The study focused on key variables such as firm size (total assets), deposit levels, technology integration (volume of fintech transactions), loan portfolio (ratio of loan fees to total loans), and foreign exchange transactions (foreign exchange fees). Panel regression, correlation analysis, and descriptive statistics were used to analyze the data...