THE EFFECT OF MOBILE BANKING ON FINANCIAL PERFORMANCE OF BANKING INSTITUTIONS

TABLE OF CONTENTS

DECLARATION

APPROVAL ii

DEDICATION iii

ACKNOWLEDGEMENT iv

LIST OF TABLES ix

LIST OF FIGURES x

LIST OF ABBREVIATIONS xi

ABSTRACT xii

CHAPTER ONE: INTRODUCTION 1

1.0 Introduction I

1.1 Background of the study

1.2 Statement of the problem 4

1.3 Purpose of the study 4

1.4 Objectives of the study 5

1.4.1 General objective 5

1.4.2 Specific objectives 5

1.5 Research questions 5

1.6 Scope of the Study 5

1.6.1 Geographical scope 5

1.6.2 Time scope 6

1.6.3 Contextual scope 6

1.7 Significance of the Study 6

1.8 Conceptual framework 7

1.9 Definition of key terms  8

CHAPTER TWO: LITERATURE REVIEW 10

2.0 Introduction 10

2.1 The concept of mobile banking 10

2.2 The Mobile Banking services adopted by Banking Institutions 11

2.3 The effect of mobile banking on financial performance 12

2.4 The Relationship between mobile banking and financial performance in banking institutions 14

2.5 The Bank performance indicators I 7

2.5.1 Return on Equity (ROE) I 8

2.5.2 Return on Asset 18

2.5.3 Net Interest Margin 19

2.5.4 CAMEL rating system 19

2.5.4.1 Capital Adequacy 19

2.5.4.2 Asset quality 20

2.5.4.3 Management Quality 20

2.5.4.4 Earning ability 20

2.5.4.5 Liquidity 20

2.6 Conclusion and Research gap 21

CHAPTER THREE: RESEARCH METHODOLOGY 22

3.0 Introduction 22

3.1 Research Design 22

3.2 Target Population 22

3.3 Sample Size 22

3.4 Sampling Technique 23

3.5 Data Collection instruments 23

3.5.1 Questionnaire 23

3.6 Data collection procedure 24

3.7 Validity and Reliability of Instruments 24

3.7.1 Validity 24

3.7.2 Reliability 24

3.8 Data Analysis and presentation 25

3.9 Ethical considerations 25

3.10 Limitations to the study 25

CHAPTER FOUR: PRESENTATION, ANALYSIS AND INTERPRETATION OF

FINDINGS 27

4.1 Introduction 27

4.2 Demographic information of the respondents 27

4.2.1 Gender of the Respondents 27

Figure 4.1: Gender Distribution of the respondents 27

4.2.2 Age of the respondents 28

4.2.3 Respondents’ Marital status 29

4.2.4 Department of service 30

4.2.5 The Level of Education Attained by the Respondents 30

4.2.6 Number of years worked 31

4.2.7 Extent customers have adopted mobile banking services 32

4.3 The mobile banking services adopted by Equity Bank (U) Limited Jinja branch 33

4.4 The effect of mobile banking on financial performance of Equity Bank (U) Limited Jinja branch 34

4.5 The Relationship between mobile banking and financial performance of Equity Bank 36

4.5.1 Relationship between mobile banking and Returns on Equity 36

4.5.2 Relationship between mobile banking and Returns on Assets 37

CHAPTER FIVE: SUMMARY OF FINDINGS, CONCLUSION AND

RECOMMENDATIONS 39

5.1 Introduction 39

5.2 Summary and discussion of findings 39

5.2.1 Mobile banking services adopted by Equity Bank Jinja branch 39

5.2.2 The Effect of mobile banking on Financial Performance of Equity Bank Jinja Branch 40

5.2.3 The relationship between mobile banking and financial performance of Equity Bank 41

5.3 Conclusion 41

5.4 Recommendations 42

5.5 Areas for Further Research 42

REFERENCES 44

APPENDICES 48

APPENDIX II: Questionnaire 48

APPENDIX II: Krejcie and Morgan, 1970 Sample table 52

Krejcie and Morgan, 1970 Sample table 52

ABSTRACT 

This study focused on establishing the effect of mobile banking on financial performance of banking institutions in reference to Equity Bank (U) Limited, Jinja branch. This study specifically seeks to establish the mobile banking systems adopted by Equity Bank, to examine the extent to which mobile banking influence the financial performance of Equity Bank and to analyze the relationship between mobile banking and financial performance of Equity Bank, Jinja branch. This study used a descriptive research design. The target population for this study comprised of 40 employees in the finance, loans, Administration and Operations department. A sample size of 36 respondents was selected by purposive sampling based on Krejcie and Morgan’s sample table. Questionnaires were the main data collection instrument used. The collected data were processed manually. The processing stage involved editing, classification, coding, transcription and tabulation. These results were presented in frequency tables, bar graphs and charts. The findings indicated that the bank the following mobile banking services; Funds transfer from bank account to Mobile Money Accounts, payment of bills using mobile phone, Cash deposits and withdrawals, Bank statement request, checking cheque deposit status, ordering cheque book and balance enquiry as evidenced by the majority of the respondents. The finding also revealed that mobile banking services provide crucial banking services to bank clients thus increasing the bank’s sales revenue, the bank has been able to increase on its profitability because of adaptation of mobile banking services, mobile banking service help the bank management to reduce unnecessary cost associated with paper work. The study also revealed that mobile banking has a positively relationship with the bank’s Returns on Equity and Returns on Assets. The study concluded that mobile banking services have a significant effect on financial performance of Equity Bank Jinja branch. The study recommends that the policy makers take mobile banking awareness creation into consideration when drafting policies on the operations of banks in Uganda. The study also recommends that policy makers keep a keen eye on the developments of mobile banking as it is a new platform for competition among commercial banks as the world moves into a digital age to ensure it does not lose its regulatory role.