INFLUENCE OF BANCASSURANCE ON FINANCIAL PERFORMANCE OF COMMERCIAL BANKS LISTED ON NAIROBI SECURITIES EXCHANGE IN KENYA

Abstract

Commercial banks and other entities in the financial sector have adopted portfolio diversification as a means of
enhancing their overall financial performance. However, not all the products in their portfolios are very
profitable, as the risk inherent in each of the products comprising of the portfolio vary. The objective of having
a diversified portfolio is majorly to ensure that the expected portfolio return is maximized for a given level of
risk. The current study was necessitated by an existence of a knowledge gap on whether banking products
diversification really enhance the financial performance of listed commercial banks in Kenya. In particular, the
study sought to examine the influence of bancassurance on the financial performance of commercial banks
listed on the Nairobi Securities Exchange. The study used a descriptive research design with a census method
targeting the 11 listed commercial banks in Kenya. It relied on both primary and secondary data obtained from
respondents as well as the financial reports of the said banks to establish the relationship between the study
variables. The data on the financial performance of the listed banks was collected using structured
questionnaires and data collection sheets. It was then analyzed by the help of SPSS using statistics such as
frequencies, percentages, means and standard deviations and presented on tables. The study established that
bancassurance (r = 0.177) had a weak correlation with financial performance.