Security in Agency Banking on Growth of Commercial Banks in Bungoma County, Kenya

Abstract

The extent to which agency banking can be used as a tool for growth of commercial banks remains largely unstudied. The purpose of this study was therefore to establish the effect of security in agency banking on growth of commercial banks in Bungoma County. The research adopted Theory of Financial Intermediation, Agency Banking Theory and conceptual framework. A descriptive survey design was used. The population of the study comprised of eight commercial banks operating agency banking in Bungoma County. The study embraced census method since the population was sufficiently small. Data was collected using questionnaires. Reliability and validity of the research instruments was determined through test and retest techniques on the piloted sample, which yielded an alpha of 0.7808. The study used both the descriptive and inferential statistical tools to analyse collected data. Analysed data analysis was presented in form of frequency tables. Results revealed statistically significant and positive effects of security in agency on the growth of commercial banks. The study concluded that increase in security would lead to more growth of commercial banks; a unit increase in bank support would lead to the growth of commercial banks and increase in liquidity would lead to increase in the growth of commercial banks. The following were the recommendations: Security should be enhanced in commercial banks and in agency banking by ensuring enough security measures being put in place to safeguard the customers’ and agents funds. Banks should invest more in reliable security systems that are not easily compromised. The study intended to help commercial bank policy makers in identifying the key challenges involved in agent banking operations and come up with strategies that would lead to improve the growth of the commercial banks in Kenya.