EFFECT OF FINANCIAL LITERACY PROGRAMS FOR CLIENTS ON FINANCIAL PERFORMANCE OF COMMERCIAL BANKS IN MIGORI COUNTY, KENYA

Abstract

There are various advantages of Corporate Social Responsibility (CSR) expenditures for companies, particularly in enhancing the way they are perceived by consumers. However, understanding of how different types of CSR spending relate to the financial performance of banking institutions remains under-researched, especially in developing economies like Kenya. While some prior studies have majored into the influence of CSR on the broader business environment, there is a notable absence of comprehensive research focusing specifically on commercial banks in Kenya, and more precisely in Migori County. The primary aim of this study is to establish the effect of financial literacy programs for clients on financial performance of Commercial Banks in Migori County, Kenya. The study was theoretically grounded on Social Cost Theory, Agency Theory and Stakeholder Theory. The methodological approach was descriptive research design and the scope of the study encompasses the 10 commercial banks in Migori town, with their diverse employee base totalling 135 individuals across different departments. A sample comprising 49 respondents were selected using simple random sampling methods and representing a proportionate distribution across these banks. A census strategy was employed to involve branch managers, operations managers, credit managers, project managers, tellers and customer service desks in this research. Data gathering was facilitated through questionnaires distributed to 49 respondents, thereby enabling quantitative analysis. Subsequent to data collection, both descriptive statistical methods, such as frequency distributions, percentages, means, and standard deviations, as well as inferential statistical methods like Pearson correlation, was utilized for data analysis. The study found that offering financial Literacy to the community influence favourably and significantly the financial performance of these commercial financial institutions. The study concluded that these CSR activities and programs affects the relationship between the firms and its stakeholders such as the suppliers, clients, donor community among others and that CSR activities and programs also enhance corporate reputation and boosts sales. The management of the commercial banks should increase financial resources to the corporate social responsibility kitty in order to ensure publicity and better coordination of CSR activities. The study further recommends that the current Corporate Social Responsibility programs should be expanded to cover emerging issues in the society as well as involve more employees and cover geographical locations outside Migori County.

Keywords: Financial literacy programs, Financial performance, Commercial Banks.