| dc.description.abstract | Financial institutions including Co-operative Bank of Kenya Limited performed very dismally in
eighties both in Kenya and globally. During this period, a number of banks and microfinance
institutions did poorly and very few of them were listed in the securities market. A number of
factors have been said to have occasioned the poor performance during this period; such factors
include: lack of political goodwill, global economic crisis i.e. recession and poor management.
Currently the banks are doing well in terms of performance but individual bank performance is
not the same. Financing decisions they make may have brought either positive or negative effect.
Co-operative Bank of Kenya reached a decision to go public in 2008 with an aim of getting
enough deposits. The bank needed capital to finance its core system, expand its outlets, develop
products and increase its lending in a bid to get its competitive space in the industry, despite the
reported slowdown in IPO market during the same period. After the IPO, the bank experienced
steady growth in its profit before tax through to the year 2013. Previously, the bank's
performance was dismal; it did poorly in the year 2000 and 2001. It is however not clear whether
improved performance is due to the IPO or not. This study investigated the effect of IPQ
financing on the performance of Co-operative Bank of Kenya Limited in Nyanza region.
Cooperative bank of Kenya is used in the study because it is one of the top commercial ban ks in
Kenya: commercial banks sell almost similar products in a homogeneous market, the results
therefc.c are expected to be generalizable. Specific objectives were: to determine th~ effect of
branch expansion on profit before tax in Co-operative Bank of Kenya Limited, to establish the
effect of product development on profit before tax in Co-operative Bank of Kenya Limited and
to investigate the effect of Customer satisfaction on profit before tax in cooperative bank of
Kenya I =nited. It "/as conceptualized that branch net work, product development, CSR and
technology influences PBT and there also exist intervening factors such as government policies,
economic factors, legal factors and leadership factors. The study adopted descriptive research
design. The target population was 120 Co-operative Bank employees from six branches in
Nyanza region Stratified random sampling was used to sample 92 employees from the 120
employees;th .study used both primary and secondary data. Questionnaires with both structured
and unstructured questions were used to collect primary data while annual financial reports for
Co-operative Bank were used to provide secondary data. Regression results shown that the
branch expansion insignificantly affect profit before tax, p=-0.021, p=0.316>0.05, this means
that instead of increasing the number of branches, the bank can decide to capitalize in alternative
banking channels such as putting more ATM lobbies, agency banking and mobile banking. This
can increase revenue as compared to branches whose cost of setting up may be expensive.
Further, results have shown that product development significantly affects profit before tax,
P=O.llS, p=O.021<0.05, the commercial banks therefore should develop unique products that
may capture the market hence increase revenue. Finally, the amount used in corporate social
responsibility was found to be significantly affecting profit before tax, p=0.074, p=0.022<0.OS.
The cost of technology was also found to be significantly affecting profit before tax, ~=-0.297,
p=O.OOO<O.OSCommercial , banks therefore should invest more on powerful systems that are real
time and that serve customers fast. This level of efficiency will lead to good customer
experience, auraction of more customers hence more revenue. In conclusion, the study found out
that IPO financing influences profit before tax in Co-operative Bank of Kenya and therefore
recommend that commercial banks should procure funds through IPQ financing as it is realized
from the study that IPO financing significantly influences profit before tax of Co-operative Bank
of Kenya Limited. | en_US |
