INFLUENCE OF ELECTRONIC BANKING ON FINANCIAL PERFORMANCE OF DEPOSIT TAKING MICROFINANCE INSTITUTIONS IN KENYA
Abstract
The purpose of this study was to assess the influence of electronic banking on financial performance of deposit taking microfinance institutions in Kenya. The objectives of the study were to: establish influence of operational efficiency, market outreach, customer service management, new products and accessibility on financial performance of deposit taking microfinance institutions in Kenya. Descriptive research design was applied in this study. The study population consisted of 12 DTMs that had been licensed to operate in Kenya. The study found out that to a great extent operational efficiency, customer relationship management, market outreach, new products and services impacts, accessibility to banking services have positively influenced financial performance of DTMs. The study also found out that operational efficiency, market outreach, customer relationship management, new products and services and accessibility to banking services were significantly related to financial performance of DTMs. The study concluded that there is evidence for the direct effect of e-banking on financial performance of DTM as suggested by the literature. Accessibility to banking services, new products and services and market outreach emerged as a stronger predictor of financial performance of DTM. The study further concluded that the established regression model was significantly good for foresting and could be used for prediction of financial performance of DTM in Kenya. The study recommended that whereas there is a strong relationship between electronic banking and financial performance of deposit taking microfinance institutions in Kenya, the relationship may not be one of cause and effect hence there is therefore room for isolating all these factors in order to generate better predictive model. The study further recommended similar studies need to be done in other sectors in the financial industry in the country and the results be compared so as to establish whether the models are consistent among the various groups.
Keywords: Operational Efficiency, Market Outreach, Customer Service, New Products and Services, Accessibility, Financial Performance
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DOI: http://dx.doi.org/10.61426/sjbcm.v5i3.826
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