BROKERAGE AGREEMENTS, TOP MANAGEMENT SUPPORT AND COMPETITIVE PERFORMANCE OF COMMERCIAL BANKS IN KENYA
Abstract
Statement of the Problem: Brokerage agreements remain a widely used vehicle through which commercial banks extend their service offering and defend market share, but the strength of this relationship may depend on the degree to which top management champions and resources such arrangements.
Purpose of the Study: This study examined the effect of brokerage agreements on the competitive performance of commercial banks in Kenya and determined the moderating effect of top management support on this relationship.
Methodology: Adopting a cross-sectional survey design, the study targeted a census of 78 heads of credit and operations departments drawn from the 39 commercial banks headquartered in Nairobi City. Data were collected through structured questionnaires and analyzed using descriptive statistics, Pearson correlation, and simple and moderated linear regression in SPSS.
Findings: The findings revealed that brokerage agreements were strongly embraced by commercial banks, with an overall composite mean of 4.25 (SD = 0.799), while top management support recorded a composite mean of 4.02 (SD = 0.851). Correlation analysis established significant positive relationships between brokerage agreements and competitive performance (r = 0.459, p < 0.01), top management support and competitive performance (r = 0.512, p < 0.01), and brokerage agreements and top management support (r = 0.398, p < 0.01). Regression analysis confirmed that brokerage agreements had a statistically significant positive influence on competitive performance (B = 0.467, p = 0.000), and that the interaction between brokerage agreements and top management support was statistically significant (B = 0.089, p = 0.001), indicating that top management support moderates the relationship between brokerage agreements and competitive performance.
Conclusion: The study concludes that brokerage agreements are positively linked to competitive performance, and that this relationship is strengthened when brokerage arrangements are actively championed and resourced by top management.
Recommendation: The study recommends that bank board’s institutionalize governance structures around brokerage partnerships and that top management take a more visible, resourced role in their oversight.
Keywords: Brokerage Agreements, Top Management, Support, Competitive Performance, Commercial Banks
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