Effects of Financial Globalization on Commercial Banks in Kenya Limited

Abstract

Financial globalization refers to the integration of a country’s local financial system with international financial markets and institutions. National Bank of Kenya Limited as a Government of Kenya owned financial institution has been affected greatly by the level of financial integration in Kenya. The objective of this study was to determine the effects of financial globalization on commercial banks in Kenya using the case of National Bank of Kenya Limited. This study used a case study research design because the unit of analysis was one organization. The study used primary data collected using an interview guide. The researcher interviewed senior management team because of their involvement in financial integration issues in the Bank. The study used content analysis to analyze the data collected from the respondents since it was qualitative in nature. The study established that National Bank of Kenya Limited was able to offer its customers international financial services through co-operations with a nexus of foreign partner banks. Financial integration made it easy for the Bank to transact in foreign currency and maintain adequate foreign currency denominated accounts for its transactions. The Bank was able to increase the efficiency ratios besides expanding its customer base as the customers felt more secure transacting with the Ban k especially in the manner in which it handled their international cross border transactions. On the influence of financial integration and the stability of the Bank, financial integration had greatly promoted the stability of the Bank. It brought about a stronger market base for financial stability in the Bank. On the effects of financial integration at NB K, the Bank was able to borrow better technologies both in operating and information management. Financial integration had on the level of customer savings. Financial integration had improved the Bank’s risk management. The study concludes that financial integration enabled the Bank to offer its customers international financial services through co-operations with a nexus of foreign partner banks. The study also concludes that financial integration made it easy for the Bank to transact in foreign currency and maintain adequate foreign currency denominated accounts for its transactions. The study further concludes that the Bank improved standardization in its operations as it was able to exchange best practices with international partners which have led to a reduction of costs and improved financial performance. The study further concludes that due to financial integration, the Bank diversified its investment portfolios through financial integration as the Bank did not just invest locally but overseas through well established financial integration. This study recommends that the Bank continues the integration and collaboration so as to benchmark its operations to international financial institutions for better future performance