EFFECT OF AGENCY BANKING ON FINANCIAL PERFORMANCE OF COMMERCIAL BANKS IN RWANDA. A STUDY OF FOUR COMMERCIAL BANKS IN RWANDA
Journal Title: European Journal of Business and Social Sciences - Year 2016, Vol 5, Issue 1
Abstract
Until recently access to banks was not an easy thing for a common man in Rwanda as banking sector was majorly targeting working class and the middle class people with more disposable income. Since 2012, there have been significant improvements in the banking sector with the introduction of agency banking, an innovative delivery channel that seeks to bring access to financial services much closer to entrepreneurs in Rwanda (BNR 2015). This study sought to investigate the effect of agency banking on financial performance of commercial banks in Rwanda. The study adopted a descriptive research design. The target study sample comprised of the 4 commercial banks operating agency banking in Rwanda as at 31st December 2015 (BNR, 2015). Census approach was used to select 15 senior managers from each bank thus forming a sample size of 60 respondents who were used in this study The study used both primary and secondary data. Primary data was collected using structured questionnaires that were administered to the respondents. Data collected was analyzed through SPSS version 21. The study found that the move by the central bank to regulate agency banking had a positive influence on the financial performance of commercial banks in Rwanda. The study also found that low transaction cost through agency banking had a positive impact on the financial performance of commercial banks in Rwanda. The study revealed that financial services accessibility by customers through baking agencies had a positive impact on financial performance of commercial banks in Rwanda. The study found that increased market share had a positive effect on the financial performance of commercial banks with many banking institutions indicating that increased market share allowed a company to achieve greater scale in its operations which generally improved its profitability. Multiple regression models was used to analyze the data on financial performance. The ANOVA results for regression coefficient indicate that the significance of the F is 0.00 which is less than 0.05. This implies that there is a positive significant relationship the effect of agency banking and performance of commercial banks in Rwanda and that the model is a good fit for the data.
Authors and Affiliations
Peter Mwangi King’ang’ai| Jomo Kenyatta University of Agriculture and Technology, Kigali, Rwanda. Email: bmmaghanga@gmail.com, Prof Thomas Kigabo| Jomo Kenyatta University of Agriculture and Technology, Kigali, Rwanda. Email : kthomas@bnr.rw, Dr. Ephantus Kihonge| Jomo Kenyatta University of Agriculture and Technology, Juja Kenya Email: ekihonge@jkuat.ac.ke, Ms. Jacklinne Kibachia| Jomo Kenyatta University of Agriculture and Technology, Kigali, Rwanda. Email: jakkie.kibachia@gmail.com
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