Original Research
Financial innovation, firm performance and the speeds of adjustment: New evidence from Kenya’s banking sector
Journal of Economic and Financial Sciences | Vol 11, No 1 | a158 |
DOI: https://doi.org/10.4102/jef.v11i1.158
| © 2018 Moses M. Muthinja, Chimwemwe Chipeta
| This work is licensed under CC Attribution 4.0
Submitted: 24 January 2018 | Published: 28 June 2018
Submitted: 24 January 2018 | Published: 28 June 2018
About the author(s)
Moses M. Muthinja, Department of Finance, Risk Management and Banking, University of South Africa, South Africa; Department of Business, St. Paul’s University, KenyaChimwemwe Chipeta, School of Economic and Business Sciences, University of the Witwatersrand, South Africa
Abstract
This article examines the speed of adjustment of firm performance to financial innovations usage and the speed of adjustment of financial innovation to financial innovation drivers for banks in Kenya. We used the Koyck distributed lag model, which is estimated using dynamic panel estimation with System Generalised Method of Moments. We find that it takes on average 1.179 years for bank financial performance to adjust to the four financial innovations studied. Secondly, it takes less than a year (0.368 years) to accomplish 50% of the total change in firm performance following a unit-sustained change in the financial innovations. Moreover, mobile banking has the shortest mean lag (2.849), while Automated Teller Machines (ATMs) have the longest mean lag (4.926). Notably, it takes approximately three years for mobile banking to adjust to financial innovation drivers at firm level and on average five years for ATMs to adjust to the financial innovation drivers.
Keywords
financial innovation; financial performance; speed of adjustment
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Crossref Citations
1. Financial Innovation and Financial Inclusion Nexus in South Asian Countries: Evidence from Symmetric and Asymmetric Panel Investigation
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