E-PAYMENT SYSTEM AND FINANCIAL PERFORMANCE OF COMMERCIAL BANKS IN NAIROBI COUNTY, KENYA
Abstract
The business environmental dynamics in the market have made it imperative for organizations to adopt new and efficient technologies to compete and probably gain superior financial performance. The proposed study endeavours to test the relationship between electronic payment system and financial performance of commercial banks in Kenya. Specifically, it analysed the relationships between electronic cards issued and bank agents and financial performance. The research adopted the Agency theory by Fama (1980), Bank-Focused Theory, and the theory of financial intermediation model. Employing a cross-sectional study design, the study targeted the Information Technology, Operations, and Finance Management Staff of the 24 domestic (fully Kenyan owned) commercial banks in Kenya. Purposive sampling was utilized at the Head offices of these banks, with at least 5 respondents from each of the three targeted departments, totalling approximately 120 sample respondents. Descriptive statistics, including frequencies, means, and standard deviation, were used for data analysis. Quantitative data were presented in tables and graphs, while inferential statistics included tests for multiple regression assumptions, model fit, ANOVA, and coefficients. Multiple regression analysis was employed to analyze data collected from a sample of domestic commercial banks. The findings revealed a significant relationship between electronic payment systems and financial performance. Specifically, electronic cards usage and bank agents were found to positively influence financial performance, while the impact of automated teller machines (ATMs) was statistically significant. These findings underscore the importance of embracing electronic payment systems as strategic tools for improving financial performance in the banking sector.
Key Words: Electronic Payment System, Electronic Cards Usage and Bank Agents
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