International Journal of Finance and Banking Research

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Assessment of Use of Diversification Strategy in Enhancing Competitive Performance at Equity Bank, Kenya

Received: 08 April 2016    Accepted: 18 April 2016    Published: 28 April 2016
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Abstract

Banks and other financial institutions operate in a dynamic environment where opportunities and challenges arise in equal measure. A critical factor that presents challenges and opportunities for the banks and other financial institutions is competition. To beat competitors in the dynamic market and stay abreast with the ever changing market demands, it is imperative for banks to rethink, rework and adjust their diversification strategies appropriately in order to remain relevant in the market. A diversification strategy helps organizations to spread portfolio risks by combining a variety of investments. In fact, organizations that seeks to survive various business cycles or to stay ahead of competition look for ways to diversify and in return, grow, survive and perform well in the long term. This study sought to assess the use of diversification strategy in enhancing competitive performance at Equity Bank Kenya. The study was based on; Technology Acceptance Model, Diversification Strategy Model and the Systems Theory. To achieve the objective of the study, the researcher sought to establish how banccasurance, electronic money transfer and agency banking affects competitive performance of the bank. The researcher used a survey and a descriptive study design. The population of the study included branch managers, corporate managers and divisional managers in charge of Banccassurance, electronic money transfers and Agency banking at Equity Bank while the study sample was selected from the said population by a simple random sampling technique. Data was collected using structured questionnaires that were administered through drop and pick technique. The collected data was analyzed using SPSS version 20. A linear regression analysis was conducted to guide inferences based on diversification strategies in relation to competitive performance of Equity Bank Kenya. The results were presented using the tables appropriately. The results of the study implied that the first null hypothesis was not rejected the second null hypothesis was not rejected, the third null hypothesis was not rejected. The study findings further indicated that the competitive performance of equity bank was not significantly influenced by 0.342 bancassurance, -0.317 electronic money transfers, -0.080 agency banking. However, the study findings indicated that the diversification strategies jointly influenced the competitive performance of Equity Bank (t = -3.922; p < 0.05). It was therefore recommended that bank should innovate its bancassurance products and electronic money transfer systems, motivate employees better and use appropriate technologies that the clientele find to be useful and easy to use.

DOI 10.11648/j.ijfbr.20160202.12
Published in International Journal of Finance and Banking Research (Volume 2, Issue 2, April 2016)
Page(s) 40-48
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This is an Open Access article, distributed under the terms of the Creative Commons Attribution 4.0 International License (http://creativecommons.org/licenses/by/4.0/), which permits unrestricted use, distribution and reproduction in any medium or format, provided the original work is properly cited.

Copyright

Copyright © The Author(s), 2024. Published by Science Publishing Group

Keywords

Diversification strategy, competitive performance, bancassurance, agency banking, electronic money transfer

References
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[2] Arora, A. & Jain, M., (2013). An Analysis on Contribution of Bancassurance on Financial Performance of Bank of India, Journal of Economics and Sustainable Development,Vol. 4(6) pp. 67-79.
[3] Chen, D., & Stroup, W., (1993) General System Theory: Toward a Conceptual Framework for Science and Technology Education for All, Journal of Science Education andTechnology, 2(7).
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[5] Davis, F. (1989). Perceived Usefulness, Perceived Ease of Use, and User Acceptance of Information Technology. MIS Quarterly, vol. 13(3), pp. 319-340.
[6] Deonanan, A., (2011). Gordon Institute of Business Science. Diversification as a corporate strategy: an assessment of financial performance of industrial companies in South Africa.
[7] Equity Bank Limited, (2015). Equity Bank Kenya. Retrieved on 1st August 14, 2015 from: http://www.equitybank.co.ke/about/our-history.
[8] Fauzi, H., Svensson, G., & Rahman, A. A., (2010) Triple Bottom Line as Sustainable Corporate Performance: A Proposition for the Future. Sustainability, 2, 1345-1360.
[9] Issahaku, H., (2012), Challenges of Electronic Payment Systems in Ghana: The Case of e-ZWICH, American Journal of Business and Management, 1(3), 87-95.
[10] Mele, C., Pels, J., & Polese, F., (2010) A Brief Review of Systems Theories and Their Managerial Applications. Service Science 2(1-2).
[11] Mukherji, A., (1998) The relationship between prior performance and diversification: a study of three industries. Management Decision, 36(3), 180–188.
[12] Musau, S. M. (2010). An Analysis of the Utilization of Agency Banking on Performance of Selected Banks in Nairobi County, Kenya. Kenyatta University. Unpublished Research Project.
[13] Ogare, H. O. (2013). The Effect of Electronic Banking on The Financial Performance of Commercial Banks in Kenya. University of Nairobi. P. 5-7.
[14] Oyewobi, L. O., Windapo, A. O., Cattell, K. S., (2013) Impact of business diversification on South African construction companies' corporate performance. Journal of Financial Management of Property and Construction, 18(2), 110–127.
[15] Peng, J. L., Jeng, V., Wang, J. L., Cheng, Y. C., (2015).The Impact of Bancassurance on Efficiency and Profitability of Banks:Evidence from the Banking Industry in Taiwan. Department of Risk Management and Insurance at the National Chengchi University, Taiwan.
[16] PWC, (2015) Price Waterhouse Coopers.
[17] Simon, S. M., Victor T. F., (1994), Customers Risk Perceptions of Electronic Payment Systems, International Journal of Bank Marketing, 12 (8), 26–38.
[18] Sorina, O. (2012). Banccasurance Development in Europe. International journal of Advances in Management and Economics, 6(01), 64-69.
[19] Steven, A. (2002). Information System: The Information of E-Busines, New Jersey: Natalie Anderson. pp. 11-36.
[20] Teimet, P. R., Ochieng, D. O., & Aywa, S., (2011) Income Source Diversification and Financial Performance of Commercial Banks in Kenya. International Journal of Business and Public Management, 1(1), 26-35.
[21] Teoh, W. M., Chong, S. C., Lin, B., & Chua, J. W., (2013), Factors affecting consumers’ perception of electronic payment: an empirical analysis, Internet Research, 23(4), 465- 485.
[22] Waweru, N. M., & Kalani, V. M., (2009), Commercial Banking Crises in Kenya: Causes and Remedy, Global Journal of Finance and Banking Issues, 3(3). Weiers, R. M., (2011) Introductory Business Statistics. South-Western: Cengage Learning.
[23] Waweru, T. N., (2013). The effect of bancassurance on the financial performance of commercial banks in Kenya. Unpublished MBA project, University of Nairobi.
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Author Information
  • Department of Commerce and Economic Studies, Jomo Kenyatta University of Agriculture and Technology, Juja, Kenya

  • Department of Commerce and Economic Studies, Jomo Kenyatta University of Agriculture and Technology, Juja, Kenya

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  • APA Style

    Mary Njeri Mwara, Barrack Okello. (2016). Assessment of Use of Diversification Strategy in Enhancing Competitive Performance at Equity Bank, Kenya. International Journal of Finance and Banking Research, 2(2), 40-48. https://doi.org/10.11648/j.ijfbr.20160202.12

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    Mary Njeri Mwara; Barrack Okello. Assessment of Use of Diversification Strategy in Enhancing Competitive Performance at Equity Bank, Kenya. Int. J. Finance Bank. Res. 2016, 2(2), 40-48. doi: 10.11648/j.ijfbr.20160202.12

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    AMA Style

    Mary Njeri Mwara, Barrack Okello. Assessment of Use of Diversification Strategy in Enhancing Competitive Performance at Equity Bank, Kenya. Int J Finance Bank Res. 2016;2(2):40-48. doi: 10.11648/j.ijfbr.20160202.12

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  • @article{10.11648/j.ijfbr.20160202.12,
      author = {Mary Njeri Mwara and Barrack Okello},
      title = {Assessment of Use of Diversification Strategy in Enhancing Competitive Performance at Equity Bank, Kenya},
      journal = {International Journal of Finance and Banking Research},
      volume = {2},
      number = {2},
      pages = {40-48},
      doi = {10.11648/j.ijfbr.20160202.12},
      url = {https://doi.org/10.11648/j.ijfbr.20160202.12},
      eprint = {https://download.sciencepg.com/pdf/10.11648.j.ijfbr.20160202.12},
      abstract = {Banks and other financial institutions operate in a dynamic environment where opportunities and challenges arise in equal measure. A critical factor that presents challenges and opportunities for the banks and other financial institutions is competition. To beat competitors in the dynamic market and stay abreast with the ever changing market demands, it is imperative for banks to rethink, rework and adjust their diversification strategies appropriately in order to remain relevant in the market. A diversification strategy helps organizations to spread portfolio risks by combining a variety of investments. In fact, organizations that seeks to survive various business cycles or to stay ahead of competition look for ways to diversify and in return, grow, survive and perform well in the long term. This study sought to assess the use of diversification strategy in enhancing competitive performance at Equity Bank Kenya. The study was based on; Technology Acceptance Model, Diversification Strategy Model and the Systems Theory. To achieve the objective of the study, the researcher sought to establish how banccasurance, electronic money transfer and agency banking affects competitive performance of the bank. The researcher used a survey and a descriptive study design. The population of the study included branch managers, corporate managers and divisional managers in charge of Banccassurance, electronic money transfers and Agency banking at Equity Bank while the study sample was selected from the said population by a simple random sampling technique. Data was collected using structured questionnaires that were administered through drop and pick technique. The collected data was analyzed using SPSS version 20. A linear regression analysis was conducted to guide inferences based on diversification strategies in relation to competitive performance of Equity Bank Kenya. The results were presented using the tables appropriately. The results of the study implied that the first null hypothesis was not rejected the second null hypothesis was not rejected, the third null hypothesis was not rejected. The study findings further indicated that the competitive performance of equity bank was not significantly influenced by 0.342 bancassurance, -0.317 electronic money transfers, -0.080 agency banking. However, the study findings indicated that the diversification strategies jointly influenced the competitive performance of Equity Bank (t = -3.922; p < 0.05). It was therefore recommended that bank should innovate its bancassurance products and electronic money transfer systems, motivate employees better and use appropriate technologies that the clientele find to be useful and easy to use.},
     year = {2016}
    }
    

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  • TY  - JOUR
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    AU  - Mary Njeri Mwara
    AU  - Barrack Okello
    Y1  - 2016/04/28
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    DO  - 10.11648/j.ijfbr.20160202.12
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    JF  - International Journal of Finance and Banking Research
    JO  - International Journal of Finance and Banking Research
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    PB  - Science Publishing Group
    SN  - 2472-2278
    UR  - https://doi.org/10.11648/j.ijfbr.20160202.12
    AB  - Banks and other financial institutions operate in a dynamic environment where opportunities and challenges arise in equal measure. A critical factor that presents challenges and opportunities for the banks and other financial institutions is competition. To beat competitors in the dynamic market and stay abreast with the ever changing market demands, it is imperative for banks to rethink, rework and adjust their diversification strategies appropriately in order to remain relevant in the market. A diversification strategy helps organizations to spread portfolio risks by combining a variety of investments. In fact, organizations that seeks to survive various business cycles or to stay ahead of competition look for ways to diversify and in return, grow, survive and perform well in the long term. This study sought to assess the use of diversification strategy in enhancing competitive performance at Equity Bank Kenya. The study was based on; Technology Acceptance Model, Diversification Strategy Model and the Systems Theory. To achieve the objective of the study, the researcher sought to establish how banccasurance, electronic money transfer and agency banking affects competitive performance of the bank. The researcher used a survey and a descriptive study design. The population of the study included branch managers, corporate managers and divisional managers in charge of Banccassurance, electronic money transfers and Agency banking at Equity Bank while the study sample was selected from the said population by a simple random sampling technique. Data was collected using structured questionnaires that were administered through drop and pick technique. The collected data was analyzed using SPSS version 20. A linear regression analysis was conducted to guide inferences based on diversification strategies in relation to competitive performance of Equity Bank Kenya. The results were presented using the tables appropriately. The results of the study implied that the first null hypothesis was not rejected the second null hypothesis was not rejected, the third null hypothesis was not rejected. The study findings further indicated that the competitive performance of equity bank was not significantly influenced by 0.342 bancassurance, -0.317 electronic money transfers, -0.080 agency banking. However, the study findings indicated that the diversification strategies jointly influenced the competitive performance of Equity Bank (t = -3.922; p < 0.05). It was therefore recommended that bank should innovate its bancassurance products and electronic money transfer systems, motivate employees better and use appropriate technologies that the clientele find to be useful and easy to use.
    VL  - 2
    IS  - 2
    ER  - 

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