| dc.description.abstract | The sustainability of commercial banks in Kenya is a major concern to various
stakeholders as market volatility conditions are continuously shifting, stiff competition,
and evolving customer demands all affecting banks business models. A critical issue
confronting these banks is the limited understanding of how financial lending
innovations such as digital lending, open banking, block chain-based lending and credit
card lending affect their financial sustainability. Despite the significant investment in
these innovations, the relationship between these lending practices and long-term
financial sustainability remains unclear, particularly in the context of how operational
efficiency mediates this relationship. The primary objective of this study was to examine
the effect of financial lending innovations on the financial sustainability of commercial
banks in Kenya and operational efficiency explored as a mediating factor. The study was
guided by the following specific objectives: to assess the impact of digital lending, open
banking, block chain-based lending, credit card lending on the financial sustainability of
commercial banks and to test the mediating effect of operational efficiency on this
relationship. A descriptive research design was employed to capture the current state of
lending innovations and their impact on financial sustainability. The study targeted
commercial banks in Kenya, categorized into Tier 1, Tier 2 and Tier 3 banks, with a total
population comprising 7 Tier 1 banks, 19 Tier 2 banks, and the remaining Tier 3 banks.
A stratified random sampling technique was used to select a representative sample,
ensuring that insights are captured across different bank categories. Data was collected
using a structured questionnaire, designed to gather information on respondents'
perceptions of lending innovations, financial sustainability and operational efficiency.
The reliability and validity of the instrument was tested through a pilot study, employing
Cronbach’s alpha to ensure internal consistency, Keiser- Meryer -Olkin (KMO) tested
construct validity, current variance index (CVI) used to assess content validity and
Brletts Test of Sphericity assessed null hypothesis. Data analysis involved testing the
assumptions of the Sobel Test, Classical Linear Regression Model (CLRM), including
linearity, normality, homoscedasticity, autocorrelation, and Multicollinearity. The main
analysis was conducted using regression models to determine the direct and mediating
effects. The results were presented using descriptive and inferential statistics, including
regression coefficients, significance levels and graphical presentations to illustrate key
findings. The findings of this study are expected to provide critical insights into the role
of lending innovations in enhancing the financial sustainability of commercial banks.
The results will inform stakeholders on the strategic value of operational efficiency as a
mediator, offering recommendations for enhancing sustainable banking practices in
Kenya. | en_US |
