| dc.description.abstract | The study sought to investigate the effect of financial innovations on the non – interest income of
commercial banks in Kenya. The study sought to examine how agency banking, mobile banking
and online banking as a key financial innovation by commercial banks influenced non – interest
income of commercial banks in Kenya. In carrying out the study, descriptive research design was
adopted since the main objective was to obtain ideas and insights on the causal – effect
relationship between financial innovations and the bank non – interest income. By making use of
statistical analysis tools, I performed panel econometric analysis mainly pooled regressions since
the study was made up of panel data. The target population of the study was 39 commercial
banks that have adopted agency banking in Kenya by year 2020. The study adopted a census in
its undertaking. The study period was 2011 – 2020. The study utilized secondary data. The data
on the bank non – interest income was collected from the audited financial statements of
commercial banks and the Central Bank of Kenya. For the data analysis, STATA software was
used. The analysis entailed computation of measures of central tendency as well as the measures
of dispersion. In addition to the descriptive statistics, correlation analysis among other model
variables were computed to examine the relationship among the variables. To determine the
effect of agency banking innovation on the bank non – interest income, the agency banking
variables were regressed on the bank non – interest income while controlling for exogenous
factors such as bank market share. In this case, an empirical model was relied on. Therefore, a
linear empirical model was estimated using a multivariable Pooled Ordinary Least Squares
method. In addition to empirical analysis, several diagnostic tests were conducted namely:
correlation analysis, heteroscedasticity, multicollinearity, and autocorrelation tests. The model
selection test found that fixed effects was the most appropriate model for the study. Based on the
fixed effects model, it was evident that agency banking had a positive and significant effect on
bank non – interest income. The moderating effect of the bank market share on agency banking
had insignificant effect on the bank’s non – interest income. Regarding the mobile banking, the
results found that based on the fixed effects model, mobile banking had a positive and significant
effect on bank non – interest income. The moderating effect of the bank market share on mobile
banking had a positive and significant effect on the bank’s non – interest income. Regarding the
internet banking, the fixed effect model results indicated that internet banking had a positive
effect on the bank’s non – interest income. At 5 percent level of significance, the effect was
found to be significant. However, the moderating effect of the bank market share on internet
banking though positive, it was found to be insignificant. | en_US |
