EFFECT OF DIGITAL LENDING PROCEDURES ON FINANCIAL PERFOMANCE OF COMMERCIAL BANKS IN KISII COUNTY: MODERATING ROLE OF GOVERNMENT POLICIES
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Abstract
The aim of the study was to assess the effects of digital lending procedures on financial performance of commercial banks in kisii county, moderating role of government policies. The specific objectives incuded; to determine the effect of application procedure on financial performance and to establish role of government on the relationship between digital lending procedures and financial performance. The study anchored on innovation diffusion theory and bank focused theory. The study used descriptive survey design. The study targeted population of 127 respondents bank employees. The sample size of 16 commercial banks in kisii town with a sample size of 107 employees working in the banks. Questionnaire were used for primary data collection. Secondary data collection used financial reports published by central bank of Kenya from 2016 to 2020 for 5 years. The study carried pilot study in Nyamira county with 11 questionnaires distributed to commercial banks. The vality of the instruments will be verified by supervisors and experts. The reliability of the instruments was maintained by cronbach alpha coefficients of 0.7 and above. The study used stratified random sampling technique to choose the sample size. Descriptive statistics included means, minimum, maximum, and standard deviations. The correlation analysis was also conducted to relationships and regression analysis to test the effect of relationship. Hierarchical analysis was done to analyze moderating role. The results were presented by tables and figures. The study showed that loan application procedures had week and positive significant correlations with financial performance. Thus, the improvement of loan procedures resulted to a decline of financial performance. The study recommended that commercial banks should automate loan application and approvale procedures for better monitoring. This could help management to manage loan procedures on financial peroformance and identify the best way to enhance financial performance.
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