CORPORATEGOVERNANCEANDFINANCIALPERFORMANCEOF COMMERCIALBANKS INMACHAKOSCOUNTY,KENYA

Abstract

The banking industry in Kenya and the world by extension is characterized by ever changing and turbulent competitive business environment in terms of products and services offered to their customers all geared towards the commercial bank's performance. To overcome the above strains and remain profitable commercial banks need to adopt corporate governance practices that would aid them enhance their performance. This will make identification and pursuit of the right corporate governance practices as a source of superior performance to become a predominant priority in all organizations nevertheless the application of the right corporate governance practices is still a concern in most of the commercial banks. Hence, the purpose of the research was to examine how the services provided by commercial banks in the country affects the customers' satisfaction, regulatory framework compliance, employee motivation and retention, and overall transparency and accountability. Between January 2023 and August 2023, researchers in Machakos County gathered data. The anchor theory of the research was stakeholder theory and agency theory, and stewardship theory were supporting theories. Data was gathered using surveys utilizing a descriptive research methodology. Commercial banks in Machakos County were the focus of this research. Because of its central location within the metro area and its excellent infrastructure, Machakos County was chosen due to the region's tremendous economic potential. Machakos county has a total of 26 commercial banks spread across its 9 sub counties and were all involved in the study. The data collection tool was piloted in Makueni County. Collected data was coded and entered into the SPSS version 22 program; the tool that aided in data analysis. Descriptive statistics was used to summaries the data including percentages and frequencies. Tables and other graphical presentations deemed appropriate were used to present the data collected for ease of understanding and analysis. Pearson correlation was used to test the relationship between the dependent and independent variables. Both the correlation and regression results were used to establish whether any form of influence between transparency and accountability, employee motivation and retention, regulatory framework compliance, customer satisfaction and performance of commercial banks in Kenya. The study found out that there exists a positive relationship between the specific aspects of corporate governance under study and the financial performance of commercial banks. these findings have also been related to the findings of another previous research. From the findings of the study, the research recommends that to ensure there is sufficient Compliance to Regulatory Framework the management of the commercial banks, the legislature and the central bank which is the supervising authority needs to put in place policies to ensure the bank is compliant to the provisions. This research recommends that further research be carried out in other locations as well as the supervisory authority to establish its commitment in ensuring that the corporate governance is fully complied with. Further the research recommends that, further research be carried out in other financial institutions such as insurance companies, micro finance institutions and savings and credit cooperative societies.