Expansion Strategies and Performance of Commercial Banks in Kenya

Abstract

Much of the research done so far has focused on growth and its antecedents in commercial banks. Firms are employing different strategies to accomplish growth and gain competitive advantage in the market. Among the key strategies that firms employ in attaining and sustaining competitive advantage is expansion. Commercial banks in Kenya have expanded regionally as the industry has undergone internal and external expansion. The ongoing regional integration efforts and the increasing competition in the banking sector have seen a number of Kenyan banks establish their footprint in the East African Community partner states and South Sudan. This research therefore sought to establish the effect of expansion strategy on the performance of commercial banks in Kenya. The main purpose of the study was to determine if there was a link between expansion and performance. The research target was the entire population of commercial banks in Kenya data was collected from the managerial staff. Both primary and secondary data were used. Primary data was collected by means of a questionnaire. The data was coded, tabulated and analyzed using Statistical Package for Social Science (SPSS) software and Excel. Descriptive statistics such as frequency distribution and percentages were used to analyze the data. Research questions were analyzed using descriptive statistics. The study established that commercial banks in Kenya are impacted positively by expansion strategies. Therefore, to gain sustainable growth and achieve economies of scale, banks are embracing expansion strategy as key competitive strategy. From the study it is clear that expansion strategy is one of the strategies applied by banks in Kenya and has a positive effect on performance. Researchers’ and banks have to establish further what other strategies when combined have positive impact on performance.