The Effect of Internet Banking on Kenya’s Economic Development

Abstract

The main objective of this study was to establish the effect of internet banking on economic development and establish the status of internet banking in commercial banks in Kenya. Specifically, it examined the investment in ICT, the number of clients using internet baking, the return on assets and the adoption of automated teller machines over the period 2009 – 2013. Economic development was measured by gross domestic product. The study adopted causal research design and descriptive design where inferential statistics were used in analyzing the data. The primary data was collected by questionaries’ from 15 banks. Secondary data was collected using documentary information from CBK and KNBS. The data was analyzed using linear regression model. The study found that, the fifteen commercial banks have all adopted internet banking and customers access some services online due to enhanced efficiency. The results showed that, there exists a positive relationship between economic development and the number of customers using internet banking, the number of ATMs and return on assets. However, there is a negative relationship between economic development and investment in ICT by the commercial banks.