Analysis of the Economic Impact of the Banking Sector in Kenya: A Case Study of Kenya Commercial Bank Ltd

This study analyzes the economic impact of the banking sector in Kenya, with a specific focus on Kenya Commercial Bank Ltd. (KCB). The research is grounded in the Financial Intermediation Theory, Endogenous Growth Theory, and Financial Inclusion Theory to examine how banking activities influence economic growth, employment creation, and financial inclusion across selected counties. Using a mixed-methods research design, data were collected from 300 respondents drawn from seven major financial institutions—KCB, Central Bank of Kenya, Cooperative Bank of Kenya, Standard Chartered Bank Kenya, ABSA Bank Kenya, Commercial Bank of Africa, and I&M Bank—across Nairobi, Mombasa, Kisumu, and Eldoret. Quantitative data were analyzed using descriptive statistics and regression techniques, while qualitative insights were derived through thematic analysis of interviews with senior banking personnel.

The findings reveal that KCB plays a significant role in Kenya’s economic development. Approximately 66.7% of respondents rated KCB’s contribution to economic growth as high or very high, indicating strong confidence in its role in capital formation and investment financing. Regression analysis demonstrates a statistically significant positive relationship between KCB’s lending volume and employment creation (β = 0.45, p < 0.001), confirming the bank’s influence on job growth among client enterprises. The study further finds that financial inclusion has improved considerably through digital banking, agency networks, and mobile platforms, particularly in Nairobi and Mombasa. However, regional disparities persist, with Kisumu and Eldoret exhibiting comparatively lower levels of inclusion due to reduced branch penetration and limited digital adoption. Additionally, while regulatory frameworks established by the Central Bank of Kenya enhance financial sector stability, they may simultaneously constrain lending expansion, especially for smaller banks.

Overall, the study concludes that KCB contributes substantially to economic growth, employment creation, and financial inclusion in Kenya. The triangulated results affirm the centrality of banking institutions in driving socio-economic transformation in emerging economies. The study recommends increased SME financing, expansion of digital financial services to underserved regions, and regulatory flexibility to enhance credit intermediation. These insights provide valuable implications for banking practitioners, policymakers, and development stakeholders seeking to strengthen Kenya’s financial ecosystem.