FINANCIAL INCLUSION, COMPETITIVE LANDSCAPE AND ORGANIZATIONAL PERFORMANCE OF SELECTED COMMERCIAL BANKS IN UASIN GISHU COUNTY

Abstract

Organizational performance in Kenya continues to face challenges, as evidenced by a consistent decline in return on investment. For example, the Return on Assets (ROA) in the Kenyan banking sector dropped from 3.2% in 2022 to 2.8% in 2023, reflecting reduced profitability. The purpose of the study was to investigate the financial inclusion and organizational performance of selected commercial banks in Uasin Gishu County. The study was guided by four specific objectives; to investigate the influence of financial literacy, technology adoption, lending practices, and income levels on organizational performance of selected commercial bank, and a moderator to determine the influence of competitive landscape on the relationship between financial inclusion and organizational performance of selected commercial banks. This study was guided by the following theories; the systems theory of financial inclusion, organizational performance theory, and competitive/market landscape theory. The study adopted explanatory research design. The study targeted 748 employees. This study employed a stratified random sampling to select a sample of 261 respondents determined by Yamane formula. The study used questionnaires as the data collection tool. The study tested for reliability and validity and pilot study carried out in Nakuru County. Both descriptive and inferential statistics were utilized. Multiple regression analysis was used to determine the effect of financial inclusion on organizational performance whereas hierarchical multiple regression was adopted to test for the moderating effect. Results showed that a positive and significant effect of financial literacy (β = 0.289, p < 0.001), technology adoption (β = 0.161, p = 0.004), lending practices (β = 0.325, p < 0.001) and income levels (β = 0.122, p = 0.029) on bank performance. Hierarchical regression showed that competitive landscape significantly moderates the relationship between financial literacy and organization performance (β = 0.56, p < 0.05, R2Δ = 0.11), relationship between lending practices and the organizational performance of commercial banks (β = 0.53, p < 0.05, R2Δ = 0.08), and relationship between income levels and the organizational performance of commercial (β = 0.37, p < 0.05, R2Δ = 0.030). However, findings indicated that the competitive landscape does not significantly increase the explained variance of technology adoption on bank performance (β = 0.33, p > 0.05, R2Δ = 0.000). In conclusion, the study asserts that financial literacy, technology adoption, lending practices, and income levels are essential aspects of financial inclusion that significantly enhance organizational performance. Additionally, the competitive landscape plays a crucial role in shaping this relationship. Based on these findings, the study recommends that regulators implement standardized financial literacy programs to empower consumers. It is also essential to encourage the adoption of technological tools, ensuring the availability of user-friendly mobile and online banking platforms. Furthermore, banks should develop clear communication strategies that clearly outline lending processes and conditions. Conducting thorough market research to understand the diverse financial needs of various income segments is vital for creating suitable financial products, such as affordable loans and savings plans. Finally, banks should regularly perform competitive analysis to remain informed about market trends and competitor strategies, which can help them effectively, navigate the evolving financial landscape.