The effect of financial inclusion strategies on financial performance of commercial banks in Kenya

Abstract

An economy cannot thrive on a fraction of its citizens while excluding the others. In many developing countries economic development is skewed towards a few rich people and regions while the larger population and regions are left out. Financial inclusion is key to realization of economic goal not only in Kenya but also globally. The study seeks to bridge the gap by undertaking a study on the same. The following research questions guided the study; what are the financial inclusions strategies in the banking sector in Kenya? How do financial inclusions affect the financial performance of commercial banks in Kenya? The causal study design was employed in this research. There are 43 Commercial Banks in Kenya which formed the target population for this study. Secondary data from financial statements of Commercial banks will be collected using data collection forms. The study collected secondary data for the last five years starting year 2008 to 2012. Data analysis was done using SPSS Version 20 whereby inferential statistics was applied whereby a multiple regression model was employed. The study found that financial inclusion strategies had great effects on the financial performance of commercial banks in Kenya, as it was revelaed that there was a greater varation on financial performance of commercial banks in Kenya due to changes in mobile phone banking, agency banking, micro banking, internet banking and Islamic banking, which is an indication that changes in financial performance of commercial banks in Kenya could be accounted for by mobile phone banking, agency banking, micro banking, internet banking and Islamic banking. The study found that there was a positive relationship between mobile phone banking, agency banking, micro banking, internet banking, Islamic banking and financial performance of commercial banks in Kenya.