COVID 19 PANDEMIC AND PERFORMANCE OF COMMERCIAL BANKS IN KENYA
COVID 19 PANDEMIC AND PERFORMANCE OF COMMERCIAL BANKS IN KENYA
Betty Kiptoo - Master of Business Administration, Catholic University of Eastern Africa, Kenya.
Dr. Susan Wasike - Catholic University of Eastern Africa, Kenya.
Priscilla Mote - Catholic University of Eastern Africa, Kenya.
ABSTRACT
The emergence of COVID-19 virus in December 2019 has led to unprecedented economic shocks that have been experienced across the globe. The virus has spread to virtually all the countries across the globe. Many governments responded by imposing lockdowns, curfews, social distancing among other measures to curb the spread of the virus. The impact of the pandemic was so severe that it led to business closure, disruption of supply chain dynamics, mass layoffs, suppressed demand for goods and services, slump in production and loss of income. The main objective of this study was to establish the effect of COVID-19 pandemic on performance of commercial banks in Kenya. The specific objectives were: to establish the effect of global trade supply chain disruptions, assess the effect of financial fragility/instability on the performance of commercial banks in Kenya, determine the effect of shrinking/reduction in demand on the performance of commercial banks in Kenya, and examine the effect of operational interruptions on the performance of commercial banks in Kenya. The study was grounded on three landmark theories, namely: contingency theory, dynamic capabilities theory and resource-based view theory. The study adopted descriptive cross-sectional research design. The population was a census of 39 registered commercial banks as at 31/12/2020. The unit of analysis was the management of the 3 departments consisting of senior management team, middle-level managers as well as managers at functional level. Data was categorized into two groups: secondary data and primary data. Primary data was obtained using self-administered questionnaires. Secondary data was obtained from the published financial statements by various banks as posted in their respective websites as well as the specific departments that deal with specific issues of interest. Data was analyzed by use of descriptive and inferential statistics. Various statistical procedures such as frequencies, measures of central tendencies (mean, medium and mode) and measures of dispersion (standard deviation, range and variance) were computed with the aid of the Statistical Package for Social Science (SPSS). The study used multiple regression. The results were presented using graphs, tables and charts for ease of understanding which allowed for interpretation of findings generated and recommendations from the findings to be made. The study found that bank employees were affected by the high transportation cost, there has been high turn-around time, in the bank, there have been disruptions in logistics, and the bank was affected by the increased cost of supplies. The research also found that the bank increased the accessibility to funds and did not generated a lot of profits. The study found that it was uncertain whether the customer flow in our bank reduced and the bank had a good number of investments. The research found that the banks did not deal with the operating time by putting employees to work in shifts. The study concluded that operational interruptions had the greatest effect on the performance of commercial banks in Kenya, followed by shrinking/reduction demand for investment, then global trade supply chain disruptions while financial fragility/instability had the least effect to the performance of commercial banks in Kenya. The research recommends that commercial banks should adopt financial innovations in enhancing their financial stability. Some of the financial innovations recommended that commercial banks should adopt included modern methods of financial reconciliations, modern risk assessment method. The commercial banks should also diversify their earning to enhance their financial stability.
