Effect of Mobile Banking on Shareholder Wealth of Commercial Banks Listed on the Nairobi Securities Exchange (NSE)
DOI:
https://doi.org/10.47604/ijfa.3832Keywords:
Mobile Banking, Shareholder Wealth, Commercial Banks, Nairobi Securities ExchangeAbstract
Purpose: This study examined the effect of mobile banking on shareholder wealth among commercial banks listed on the Nairobi Securities Exchange (NSE). Mobile banking has emerged as a transformative financial innovation that enables customers to conduct financial transactions through mobile devices using USSD codes and mobile applications. The increasing adoption of mobile banking in Kenya has enhanced financial inclusion, improved customer convenience, and strengthened the competitive position of commercial banks. The study sought to determine whether mobile banking contributes to shareholder wealth creation.
Methodology: The study adopted a quantitative exploratory research design and utilized secondary data obtained from the audited financial reports of selected NSE-listed commercial banks for the period 2016 to 2022. A sample of seven banks was selected based on data availability. Mobile banking was measured using the natural logarithm of mobile banking transaction values, while shareholder wealth was proxied by Tobin’s Q. Data were analyzed using descriptive and inferential statistics, including correlation and linear regression analyses. Diagnostic tests for normality, multicollinearity, and autocorrelation were conducted to ensure the validity and reliability of the results. The study found that mobile banking has a positive and statistically significant effect on shareholder wealth among commercial banks listed on the NSE.
Findings: The findings indicate that increased mobile banking transactions contribute to shareholder value through enhanced revenue generation, expanded customer reach, reduced operational costs, and improved service efficiency. Mobile banking services such as fund transfers, bill payments, and digital lending were found to strengthen customer loyalty and improve overall financial performance, thereby increasing shareholder wealth. The study concludes that mobile banking is a key driver of shareholder wealth creation in the Kenyan banking sector.
Unique Contribution to Theory, Practice and Policy: The recommended that commercial banks continue investing in mobile banking technologies and digital financial services to enhance customer experience and operational efficiency. Banks should also address infrastructure challenges and cybersecurity risks to ensure sustainable growth, maintain customer trust, and enhance long-term shareholder value.
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