INFLUENCE OF STRATEGIC ALLIANCE ON FINANCIAL PERFORMANCE OF COMMERCIAL BANKS IN KENYA

Abstract

The strategy of allying with other organizations has become increasingly prevalent in order to strengthen their market positions and improve on their financial performance. In Kenya, the banking industry is cut throat competition, financial institutions have had to adopt a myriad of strategies in order to gain competitive advantage and stay afloat in the market. Many commercial banks have adopted got into alliance with other institutions informs of joint ventures, outsourcing among others. Of concern to the study, was to determine whether these alliance are of any importance to the final financial performance of the commercial banks. Questionnaire was used for primary data while secondary data was gathered from bank statement of financial performance and statements of comprehensive income during the period 2013 and 2014. Data was analyzed using Statistical Packages for Social Sciences (SPSS) version 23. Regression and correlation analysis were used to determine the nature and the strength of the relationship between the independent and dependent variables. The findings of this study reveal there exist negative relationship between the banks operational cost and the leverage on performance while the banks market share, efficiency, banks asset base and bank branches had a positive relationship with income. Correlation analysis carried out between the study variables yielded a value of R is 0.726 an indication that a strong relationship existed between the variables.