Abstract: In a growing number of countries, banks are finding new ways to make money delivering financial services to "unbanked" people. Rather than using bank branches and their own field officers, they offer banking and payment services through retail outlets, including grocery stores, pharmacies, seed and fertilizer retailers and gas stations among others. The study sought to establish the effect of agency banking on financial performance of commercial banks in Rwanda. This study was adopted descriptive research design. The population for this study were 60 staffs of Equity bank that have embraced agency banking .The study was used primary and secondary data Therefore were collected from previously collected data, general business publications, reports from and by financial institutions and CBR bank Supervision reports. Annual reports of the bank were analyzed for the period between2012- 2016, which is the study period of 5 years. The study were used both quantitative and qualitative techniques to analyze data from the questionnaire. The quantitative data collected were analyzed by using Statistical Package for Social Sciences (SPSS version22) and presented through percentages, means, standard deviations and frequencies. Multiple linear regression models was used in measuring each variable and this model. The study found that the number of agents has a minor significance in the positive direction in relation to profitability and the volume of deposits related significantly negative with profitability of commercial banking institutions in Rwanda. The study also found that the volume of withdrawals and volume of bill of payments had an insignificant negative relationship with the profitability in the studied institutions. The study concluded that an increase in the number of agents increases the profitability and a decrease in volume of deposits, withdrawal and bills payments negatively affects the profitability of commercial banking institutions. The study recommended that commercial banks in Rwanda should invest more resources towards increasing their number of agents to increase their profitability and develop deposit mobilization strategies through agency banking to ensure that their clients use agency-banking services.
Keywords: Agency Banking Services, Financial Performance of Commercial Banks.
Title: EFFECT OF AGENCY BANKING SERVICES ON FINANCIAL PERFORMANCE OF COMMERCIAL BANKS: A CASE OF EQUITY BANK
Author: Faustin Karangwa, Dr. Patrick Mulyungi
International Journal of Management and Commerce Innovations
ISSN 2348-7585 (Online)
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