Bank Financial Performance and Customer Satisfaction in Kenya

Abstract

The study intended to establish the relationship between financial performance and customer satisfaction in Kenyan banks. Financial performance was measured by use of Return on Asset that is net profit after tab divided by total current asset obtained from audited statements of comprehensive income while Customer satisfaction was measured by numbers of customers. For uniformity purposes, net profits before taxes was chosen since some commercial banks had treated expenses on CSR as tax exempt while others had not. Commercial institutions that did not participate in customer satisfaction activities or that had not kept data pertaining to financial performance were excluded. Secondary data from the year 2010 to 2014 was used for analysis. Using descriptive research design, the study tested for linear relationship between financial performance and customer satisfaction. The study used regression analysis and the five years secondary data to analyze the relationship between financial performance and customer satisfaction. Financial performance was the independent variable while customer satisfaction was the dependent variables in the linear regression. The study revealed that not all commercial banks report their customer satisfaction involvement. Out of the 44 commercial banks studied, only five provided the necessary and complete data that was appropriate for the study. The study finding implies that change in customer satisfaction is negatively attributable to financial performance. of commercial banks in Kenya. The independent variables studied explain only (10.2%) on the relationship between of financial performance and customer satisfaction in commercial banks in Kenya as represented by R². This means that the other variables not studied in this research contributed (89.8%) and thus further research should be conducted to investigate these other factors affecting financial performance in commercial banks in Kenya.