Effect of Electronic Banking on Financial Performance of Deposit Taking Micro-finance Institutions in Kenya

Abstract

The main objective of this study was to find out the effect of electronic banking on financial performance of deposit taking microfinance institutions. Specifically, this study examined the adoption of automated teller machines, mobile banking, and the use of personal computers and how they affect the financial performance of deposit taking microfinance institutions in Kenya. Financial performance was measured using Return on Assets.

The study adopted a descriptive design where inferential statistics were used in analysing the data. The study population consisted nine registered deposit taking microfinance institutions in Kenya as at June 2013. The primary data was collected through the administration of questionnaires to the staff of these deposit taking microfinance institutions. Secondary data was collected using documentary information from the institutions annual accounts. Both descriptive (frequencies, percentages, mean and standard deviation) and inferential statistics including mean and frequencies was used and data was analysed using linear regression model.

The study found that all the deposit taking microfinance institutions had adopted e- banking technologies and that there exists a negative relationship between electronic banking and financial performance of deposit taking microfinance institutions in Kenya.