Effects of Income Diversification and Financial Performance of Kenyan Commercial Banks.
Journal Title: Journal of Economics, Finance and Management Studies - Year 2021, Vol 4, Issue 08
Abstract
Aim/purpose – This paper aims at examining the impact of income diversification on financial performance. The motivating factor is an occasion by raising pursuance of interest activities and fluctuations of profitability among banks due to the declining interest income and stiff competition. Design/methodology/approach – This study uses a sample of 31 Kenyan banks and data for the period 2008-2019. Data is analyzed through fixed-effect regression analysis. Findings – The study finds that income diversification improves bank profitability. The findings are attributable to an increase in non-interest income and possible risk diversification. Moreover, the study controls for several banking sector-specific factors that affect financial performance. The results show bank size, age, loan portfolio quality, lending strategy, and market share have a significant effect. Research implications – Based on the results, the study recommends that bank managers should consider engaging in non-traditional activities that generate non-interest income to compensate for deteriorating interest income and to boost performance. In addition, the study recommends that bank regulators should relax rules that limit the extent to which banks can engage in non-interest earning activities
Authors and Affiliations
Timothy Kipkogei Kiptum, Dr. Naomy Koske, Dr. Patrick Limo
Keywords
Related Articles
- EP ID EP705548
- DOI 10.47191/jefms/v4-i8-33
- Views 63
- Downloads 0
Analysis of the Effect of Information Technology Development, Absorbility Capacity on MSMe Business Performance
Information technology absorption capacity is a factor that can affect business performance. The development of information technology can positively impact businesses to improve business performance. Absorption capacity...
The Effect of Teamwork and Organizational Commitment on Employee Performance
This research aims to analyze the effect of teamwork on employee performance, analyze the effect of organizational commitment on employee performance, and analyze the effect of teamwork and organizational commitment simu...
Status Quo of Entrepreneurship in the Mekong River Delta
In the context of an integrated economy with many opportunities and challenges, especially the Coronavirus disease (Covid-19) is causing many difficulties for all nations of the world, entrepreneurship is seen as an eff...
Determinants of Behavioral Intentions to Use E-Wallet Services in the City of Padang
This study aims to analyze the effect of perceived usefulness and perceived ease of use on behavioral intention to use with an attitude toward using as an intervening variable on the use of e-wallet services in Padang Ci...
The Influence of Human Resource Capability and Performance Allowances on Employee Work Performance at the Directorate of Regional Budget Planning, Directorate General of Regional Financial Development, Ministry of Home Affairs Indonesia
This study aimed to determine and examine the effect of the ability of human resources and performance allowances individually and collectively on the work performance of employees at the Directorate of Regional Budget P...