| dc.description.abstract | Agency banking in Kenya is part of the approach by the Central Bank of Kenya to
promote innovation through mobile financial services and to address the delivery of
channels costs (Central Bank of Kenya, 2010). Agency banking begun as early as 1999 in
other countries like Brazil, Columbia, Pakistan, South Africa and Indonesia, it was
introduced in Kenya in May 2010 when the Central Bank of Kenya published prudential
guidelines for its operations. Since its inception a number of banks have embraced this
model. Out of the 44 banks operating in the country 9 banks have rolled out agency
banking services. The objective of the study was to analyze the effects of agency banking
on the non-funded income for commercial banks in Kenya. The study employed a
descriptive research design. This research made use of secondary data from selected
period from 2011 to 2013 (3years).The population of the study was 9 Commercial Banks
offering agency banking in Kenya. The study was quantitative in nature and the refined
data was analyzed using inferential statistics. The statistics were generated with aid of
computer software, statistical package for social sciences (SPSS, version 21).The
findings were presented using tables. To analyze the relationship between agency
banking and non-funded income for commercial banks in Kenya, a multiple regression
model was used to establish whether a relationship exist between agency banking and
non-funded income. The study used Non Funded income as dependent variable and value
of fees and commissions income from agency banking, value of dividends and other
income, value of fees and commissions from electronic, internet and mobile banking,
debit cards and credit cards, value of foreign exchange income as independent variables
both measured in Kshs. The study indicates that fees and commissions income from
agency banking had a coefficient of 3.21 (p value less than 0.05); dividends and other
income lead had a coefficient of 0.301 (p value less than 0.05); fees and commissions
from electronic, internet and mobile banking debit and credit had a coefficient of 0.528 (p
value less than 0.05), Foreign exchange income had a coefficient of 0.166 (p value less
than 0.05).The regression analysis indicated that the independent variables can explain
and predict non funded income of commercial banks in Kenya by 87%. The study also
indicated that all the independent variables were significant in the model, as well the
independent variables were found to be having significant positive relationship with nonfunded
income. The study concludes that agency banking has a positive impact on the
non-funded income for commercial banks in Kenya. The study recommends the rest of
the banks to adopt agency due to its positive impact on the non- funded income. Further,
recommends that there is need to support agency banking by all players: the banks,
government, and licensing bodies, especially local authorities; so as to reduce the high
compliance costs in bureaucracy in registration. This will enhance financial inclusion | en_US |
