Judith Thogori Nyambura, Jagongo Ambrose, Fredrick Ndede
Abstract: Over the last eight years, agency banking has progressively gained importance in Kenya. Agency banking has enabled banks to save on costs associated with opening bank branches and has offered convenience to bank customers who before the introduction of agency banking involuntarily had to travel long distances and incur hefty amounts on transportation in order to access a bank branch. Studies on agency banking within the country and world over have concentrated on the how agency banking has affected the performance of banks while other studies have concentrated on the customers of the agency and how agency banking has impacted on their livelihoods with little attention being focused on the effect of agency banking on the financial performance of banking agents. Driven by this knowledge gap, this study sought to determine the effect of agency banking transactions on the financial performance of the primary businesses of Small scale enterprises in Kiambu Town, Kenya. Objectives of his research examined the effect of agency financial transactions; common costs of agency and primary business and agency liquidity on the financial performance of primary business of small scale enterprises in Kiambu Town, Kenya. The study indicated that entrepreneurs not only boost their income from the commissions received from the banks but they also gain additional business from the customers who often purchase goods and services from their primary business. The businesses engaging in agency business also save on operational costs since the same resources are used to derive additional income. The study recommended an awareness campaign on all the financial services offered by agents as most customers seem only to engage on few of the permissible activities of agency banking.
Keywords: Agency banking, small scale enterprises, agency liquidity, common costs, financial performance