A survey of performance measurement systems used in commercial banks operating in Kenya.

Abstract

This study aimed at identifying the performance measurement systems used by commercial bank operating in Kenya. The study sought to identify the performance measurement systems and the factors influencing the choice of a particular system. The systems are both modern and traditional. . The study instrument was the questionnaire; the questionnaire was distributed to 38 of the 43 commercial banks operating in Kenya out of which 36 were returned. Several approaches were then used to analyze the data after coding them; these included a regression function and descriptive analysis. From the results, identification of the various traditional and modern measurement systems that are used by commercial banks operating in Kenya was made. The findings from descriptive and discriminant statistical analysis established the various performance measurement systems used by commercial banks operating in Kenya and the factors influencing the choice of such systems. Findings suggest that, banks are still using the traditional performance measurement systems like profitability, liquidity and ratio analysis in their day- to day operations. Some banks have also complemented the traditional systems with the modern performance measurement systems such as the balanced scorecard which is frequently used in operations. The factors influencing the choice of such systems depended on the company culture, management belief, company size among others.