Influence of Agency Banking on Deposit Mobilization of Commercial Banks in Kenya

Abstract

Technology and services offered under technology platforms play a major role in the major activities of the commercial banks in Kenya. This study sought to determine the influence of agency banking on deposit mobilization of commercial banks in Kenya. The study is of value to different stakeholders of commercial Banks in Kenya. The theories that the study was anchored include agency theory, Credit Creation Theory of Banking, and Financial Intermediation theory. This study used an illustrative research model where secondary data was used on bank agent count, cash receipts, cash takings, bank agent expenditures and deposits which was available in the central bank's annual supervisory report and published financial statements of the on the target population of 18 commercial banks on which the study was carried out. The data collected was checked for consistency and then analysed to arrive at various conclusions. Descriptive statistics such as frequencies, percentages, and mean scores were used to analyse and describe the data. The standard deviation measure of dispersion was used to show the spread of the data where appropriate. Tables were used to present the data. The study revealed that quantity of money received, and money saved by agents had a favorable influence on Kenya's commercial banks' deposit mobilization, while there was a substantial negative correlation between quantity of money taken and deposit mobilization in Kenya’s commercial banks also a negative impact between money spent by agents and deposits mobilization in Kenyan commercial banks. The study recommends that Kenyan profitable banks mobilize increased deposits when there is increase in quantity of money received and when there is an up in the quantity money saved by bank agents. Additionally, Kenyan commercial banks mobilize less deposits when there is increase in quantity of money taken and when there is upward shift in the volume of money Expended by bank agents. Due to the end scrutiny, the study suggests that Kenyan commercial banks allocate more funds to hiring more agents to boost their earnings. Therefore, to guarantee that their clients utilize agency-banking services, the examination indicates that commercial banks accumulate deposit techniques using agency banking. The research findings indicate that an increase in quantity of money received and increase in the quantity of money saved positively influence accumulation of deposits in Kenyan money-making banks. Whence, for commercial banks in increasing their revenue from fees and charges associated with withdrawals, the study suggests that they encourage their clients to take money out through their agents.