EFFECT OF BANK INNOVATIONS ON FINANCIAL.docx

# In this study the following were the regression

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In this study the following were the regression equations that were used to test the significance of the study hypotheses: Objective one - To determine if bank innovations influence total income of commercial banks in Kenya. The following multiple linear regression equation was used to determine the effect of bank innovations on total income of commercial banks Total Income =β 01 11 X 1 21 X 2 31 X 3 41 X 4 51 X 5 61 X 6 71 X 7+ β 81 X 8+ ε Total income was measured in Kenya shilling earnings of commercial banks. The independent variables of; automated teller machines, debit and credit cards, point of sale terminals, mobile banking, internet banking and electronic funds transfer. They are represented by X 1, X 2, X 3, X 4, X 5, X 6, respectively while the moderating variables of mobile phone subscriptions and internet service subscription were represented by X 7 and X 8 respectively. β 0 is the constant or intercept while β 1, β 2, β 3, β 4, β 5, β 6, β 7 and β 8 are the 53

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corresponding coefficients for the respective independent variables and moderating variables. ε is the error term which represents residual or disturbance factors or values that are not captured within the regression model. The interpretation of X, β and ε is the same for the subsequent equations for testing the other study objectives. Interpretations are as stated above. Objective two - To establish whether bank innovations influence return on total assets of commercial banks in Kenya. The following is a multiple linear regression equation used to determine the effect of bank innovations on the return on assets of commercial banks Return on Assets =β 02 12 X 1 22 X 2 32 X 3 42 X 4 52 X 5 62 X 6 + β 72 X 7+ β 82 X 8 Return on assets was measured by dividing the profit before taxation of the banks by their total assets and then multiplied by 100% to get a percentage return on assets. Objective three - To establish the influence of bank innovations on profitability of commercial banks in Kenya. The following is a multiple linear regression equation used to determine the effect of bank innovations on profitability of commercial banks Profit Before Tax =β 03 13 X 1 23 X 2 33 X 3 43 X 4 53 X 5 63 X 6 + β 73 X 7+ β 83 X 8 Profit before tax was obtained from the profit and loss statements of the banks. 54
Objective four - To determine the influence that bank innovations have on customer deposits of Kenyan commercial banks. The following is a multiple linear regression equation to be used to determine the effect of bank innovations on the deposits taken by commercial banks Total Deposits =β 04 14 X 1 24 X 2 34 X 3 44 X 4 54 X 5 64 X 6 + β 74 X 7+ β 84 X 8 Total deposits were obtained from the balance sheet of the banks. Deposits are the customer funds held by commercial banks at a particular time and are expressed in Kenya shillings.

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