Financial Innovations and Profitability of Commercial Banks in Uganda
Keywords:
Financial innovations, profitability, commercial Banks in Uganda
Abstract
The purpose of this study was to examine the relationships between financial innovation and profitability of commercial Banks in Uganda. The study was prompted by the low profitability evidenced by some banks being closed down because of low profitability. The study adopted a cross-section and descriptive research design using Roscoe 1975 to get a sample size of 24 commercial banks. Self-administered questionnaires were used to collect the responses. Based on the goals of the study, the data was examined for validity and reliability, examined using SPSS, and the results were reported. The results showed that the profitability of commercial banks in Uganda had a positive and significant association with both process and product innovation, suggesting that improving one will benefit the other. However, product innovation was found to be a stronger predictor of profitability in commercial Banks in Uganda. With these findings, the study contributes to providing empirical evidence that financial innovation in commercial banks is highly influenced by commercial banks introducing and improving their products/services since it results in profitability. There is also a need to put much emphasis on Financial Innovations by continuously introducing and improving on the existing products/services. The Commercial Banks in Uganda should promote and appreciate Financial Innovations as they are vital not only in enhancing cost minimization, thus improving profitability
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References
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Karjaluoto, H., Glavee-Geo, R., Ramdhony, D., Shaikh, A. A., & Hurpaul, A. (2021). Consumption values and mobile banking services: Understanding the urban-rural dichotomy in a developing economy. International Journal of Bank Marketing.
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Knudsen, E. S., Lien, L. B., Timmermans, B., Belik, I., & Pandey, S. (2021). Stability in turbulent times? The effect of digitalization on the sustainability of competitive advantage. Journal of Business Research, 128, 360-369.
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Kotler, P. (2011). Reinventing marketing to manage the environmental imperative. Journal of Marketing, 75(4), 132-135.
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Madugba, J., Egbide, B. C., Jossy, D. W., Agburuga, U. T., & Chibunna, O. O. (2021). Effect of electronic banking on the financial performance of deposit money banks in Nigeria. Banks and Bank Systems, 16(3), 71-83.
Marszk, A., & Lechman, E. (2021). Reshaping financial systems: The role of ICT in the diffusion of financial innovations–Recent evidence from European countries. Technological Forecasting and Social Change, 167, 120683.
Merton, R. C., & Bodie, Z. (2006). Design of financial systems: towards a synthesis of function and structure. In The world of risk management (pp. 1-27).
Migwi, J. M. (2013). Credit Monitoring and recovery strategies adopted by Commercial Banks in Kenya (Doctoral dissertation, University of Nairobi).
Mwangi, K. D. (2014). The effect of electronic banking on the financial performance of commercial banks in Kenya. Unpublished MBA Project.
Mwangi, R. W. (2011). An evaluation of the role of agency banking in the performance of commercial banks in Kenya. MBA Thesis, Kenyatta University, 45-48.
Naeem, M. (2020). Developing the antecedents of social influence for Internet banking adoption through social networking platforms: evidence from conventional and Islamic banks. Asia Pacific Journal of Marketing and Logistics, 33(1), 185-204.
Nduta, R. W., & Wanjira, J. (2019). E-banking strategy and performance of commercial banks in Kenya. International Journal of Current Aspects, 3(5), 147-165.
Nejad, M. G. (2022). Research on financial innovations: An interdisciplinary review. International Journal of Bank Marketing, 40(3), 578-612.
Ngugi, K., & Karina, B. (2013). Effect of innovation strategy on performance of commercial banks in Kenya. International Journal of Social Sciences and Entrepreneurship, 1(3), 158-170.
Ngumi, P. M. (2014). Effect of bank innovations on financial performance of commercial banks in Kenya (Doctoral dissertation).
Nielsen, J. F., Bukh, P. N. D., & Mols, N. P. (2000). Barriers to customer?oriented management accounting in financial services. International Journal of Service Industry Management, 11(3), 269-286.
Nofie, I. (2011). The diffusion of electronic banking in Indonesia. Manchester Business School.
Nyaboga, D., Basweti, M., Miyienda, M., & Onsongo, M. (2012). An Analysis of the Impact of Agent Banking Entrepreneurs in Kisii Township, Nyanza Province, Kenya. International Journal of Business and Management Tomorrow, 2(9), 1-11.
Nyathira, N. C. (2012). Financial innovation and its effect on the financial performance of commercial banks in Kenya. UON MBA is unpublished.
Obadire, A. M., Moyo, V., & Munzhelele, N. F. (2022). Basel III capital regulations and bank efficiency: Evidence from selected African Countries. International Journal of Financial Studies, 10(3), 57.
Oecd, E. (2005). Oslo Manual. Guidelines for collecting and interpreting innovation data.
Patel, P. C., Guedes, M. J., Pagano, M. S., & Olson, G. T. (2020). Industry profitability matters The value of sustainable growth rate and distance from bankruptcy as enablers of venture survival. Journal of Business Research, 114, 80-92.
Pfeiffer, S. (2021). The Greater Transformation: Digitalization and the Transformative Power of Distributive Forces in Digital Capitalism. International Critical Thought, 11(4), 535-552.
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Published
2024-07-03
How to Cite
Atukunda, G., Musiita, B., Atwiine, J., Atwine, A., & Olyanga, A. M. (2024). Financial Innovations and Profitability of Commercial Banks in Uganda. Journal of Economics and Behavioral Studies, 16(2(J), 32-44. https://doi.org/10.22610/jebs.v16i2(J).3835
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Research Paper
Copyright (c) 2024 Gershom Atukunda, Benjamin Musiita, Johnson Atwiine, Aquilionus Atwine, Anthony Moni Olyanga
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