Strategies for asset financing to enhance performance of commercial banks in Kenya

Abstract

Organizations often formulate company strategies, product and service strategies, and strategies that drive operational, support and managerial processes. The study was guided by the following research objectives: To determine the strategies used for assets financing by commercial banks in Kenya and to establish the relationship between strategies used in assets financing and firm performance of commercial banks in Kenya. The study adopted a descriptive survey because of its ability to build a profile about a phenomenon. Primary data was collected using a questionnaire. The questionnaire comprised of open and closed ended questions. The questionnaires collected from the field was inspected for completeness and consistence then entered into Statistical Package for Social Sciences for processing. The edited data was coded for ease of classification in order to facilitate tabulation. On if the Bank has used competitive interest rates in asset financing, the respondents agreed to a great extent. Whether the Bank has used diversified asset class in asset financing, the respondents agreed to a moderate extent. On if the Bank has applied market segmentation strategy in asset financing, the respondents agreed to a little extent. Concerning whether the competent staff in asset financing department has improved asset performance in the Bank the respondents agreed to a moderate extent. On if schemes established with customers have improved asset performance in the Bank the respondents agreed to a moderate extent. The study concludes that the bank has employed quality service delivery in asset financing, the respondents agreed to a great extent and that banks adopt strategies directed at improving, the effectiveness of basic operations within the company, such as production, marketing, materials management, research and development, and human resources.The study recommends that it is very necessary for banks to understand the underlying sources of competitive pressure in its industry in order to formulate appropriate strategies and respond to competitive forces.