An Analysis Of The Impact Of Agency Banking On Growth Of Small And Medium-Scale Enterprises In Tharaka Nithi County

ABSTRACT

During school opening days, we have witnessed long queues in the halls of our

Commercial Banks arising from the last minute rush by the parents/guardians to pay

school fees for their beloved children. In addition, the opening and closing hours of these

commercial banks has continued to cause unknown havoc to small and medium scale

enterprises who cannot access their services outside their normal but limiting operating

hours. This has necessitated the proliferation of Agency Banking to complement the

existing commercial banks. This study thus, mainly; assessed how low transaction cost by

agency banks affect the growth of Small and Medium Scale Enterprises in Tharaka Nithi

County; determined how customer relationship management by agency banks affect the

growth of Small and Medium Scale Enterprises in Tharaka Nithi County; established how

convenient financial services accessibility by agency banks affect the growth of Small

and Medium Scale Enterprises in Tharaka Nithi County; and assessed how security of

agency banks affect the growth of Small and Medium Scale Enterprises in Tharaka Nithi

County. The study employed descriptive survey design with a sample size of 400

respondents. The primary data was collected using questionnaires. Data collected was

edited, coded and analyzed using SPSS. In addition, the study conducted inferential

statistics such as multiple regressions to measure the strength of the relationship between

the dependent and independent variables. ANOVA was used to test the significance of

the model and regression diagnostics were computed. The study deduced that customer

relationship management affect the growth of SMEs business in Tharaka Nithi County to

a great extent. The study also established that convenient financial services accessibility

affect the growth of SMEs business in Tharaka Nithi County to a great extent. The study

concluded that agency banking aid SMEs in saving money easily, agency banks are fast

and have no queues like in banks, they also help SMEs avoid impulse buying, they are

easily accessible and facilitate banking of money at night and weekends. The study

recommended that banks should lower the transaction costs of agency banking. The bank

should remove the deposit charges and instead come up with more elaborate way of

recovering the commissions.