An Analysis of the effect of business diversification on the financial performance of Commercial Banks in Kenya

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dc.contributor.authorKitisya, Daniel Tamale
dc.date.accessioned2017-11-16T12:42:11Z
dc.date.available2017-11-16T12:42:11Z
dc.date.issued2017
dc.descriptionThesis submitted in partial fulfillment for the requirements for the Degree of Master of Commerce (MCOM) at Strathmore Universityen_US
dc.description.abstractThis study sought to investigate the effect of business diversification on the financial performance of commercial banks in Kenya. The study was based on the fact that the banking sector in Kenya is highly regulated with significant business restrictions and attendant disclosures which have created incentives for the banks to diversify. However, the effect of business diversification on financial performance remains inconclusive with diverse studies finding minimal or no relationship while others finding positive significant effect. The study used a mixed research design where descriptive and quantitative research designs were used. The population for this study was all the forty two commercial banks in Kenya. Sources of data were both secondary and primary where quantitative techniques were used to undertake data analysis. To determine the relationship that existed between the variables, both multiple regression analysis and chi-square tests were adopted. The study found that business diversification significantly positively affected how the commercial banks in Kenya performed. The exact effect was however established to be largely dependent on bank-size. Business diversification significantly improved financial performance for small banks. Under medium sized banks category, only location diversification affected financial performance in a significant manner. For large banks all the four forms of business diversification did not have a significant effect on their financial performance. Respondents perceived business diversification to positively affect financial performance of commercial banks in Kenya to a moderate extent. The study was limited by examining financial performance by use of the CAMELS model in a developing country and being conducted in a single industry. Further, CAMELS was measured using a constructed index by data being obtained from the commercial banks’ annual audited reports. The study highlighted the need to develop business diversification strategies specifically tailored for each of the tiers of commercial banks with a focus on all forms of diversification for small banks, location diversification for the medium-sized banks and enhancement of existing forms of diversification among large commercial banks.en_US
dc.identifier.urihttp://hdl.handle.net/11071/5593
dc.language.isoenen_US
dc.publisherStrathmore Universityen_US
dc.subjectBusiness Diversificationen_US
dc.subjectCommercial Banks -- Kenyaen_US
dc.subjectBanking Sector-- Kenyaen_US
dc.subjectFinancial Performanceen_US
dc.titleAn Analysis of the effect of business diversification on the financial performance of Commercial Banks in Kenyaen_US
dc.typeThesisen_US
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MCOM Theses and Dissertations (2017)