Effect of the value network on the performance of commercial banks in Kenya

Abstract

Globalization and advances in information technology have created a complex, dynamic economic landscape with a shift from a focus on tangibles to intangibles thus creating the intangible -service and information -economy: A networked economy characterized by partnerships among firms. As a result,the Commercial Banking sector in Kenya has progressed from a regulatory and strategic perspective as banks have built Value Networks in order to counter increasing competition thus constantly innovating products and services; and increasing market segments towards growth. The main purpose of this study was to investigate the effect of the Value Network on the performance of Commercial Banks in Kenya. Independent variables examined included scale, growth in alliances, R&D expenditure and training. A sample of 15 Commercial Banks was drawn from the target population of 43 Commercial Bank headquarters located in Nairobi and studied over five years from2010 to 2014. Data was collected from audited financial statements. Data analysis included descriptive and inferential statistics. The former employed frequency distributions, measures of central tendency and exploratory data analysis using growth pattern graphs and overlain growth plots.The results indicated an upward trend in all variables across the period and the presence of random effects.Panel descriptive analysis was also conducted which revealed the between and within differences.