Effect of Delegation of Responsibility on Corporate Financial Performance of Commercial Banks in Kenya

Abstract

Abstract This study sought to examine the effects of delegation of responsibilities on corporate financial performance of commercial banks in Kenya. The study was hypothesized that there is no significant statistical effect of delegation of responsibilities on corporate financial performance in commercial banks in Kenya. This study was informed by Resource-Based Theory, Human Capital Theory and Agency theory. In this study, explanatory research design was adopted. The study targeted 869 Employees from 42 commercial banks operating in Kenya according to the CBK supervisory report in 2014. Simple random sampling method was used to select 267employees. Structured questionnaire was used to collect data. Cronbach alpha was used to test Reliability, while factor analysis was used to test validity. Data was analyzed using both descriptive statistics and inferential statistics. The study findings showed that delegation of responsibilities (β2 = 0.244, p<0.05 job delegation and financial performance (β= -0.83; ρ < 0.05) and corporate financial performance. thus, the study infers that delegation of responsibility as human capital practice is major determinant of corporate financial performance in banks. Thus, it is important for supervisors to allow employees to make decisions without having to consult them regularly. future scholars can conduct a longitudinal study as well as appreciate both the quantitative and qualitative aspects of research. Keywords: Delegation of Responsibility, Corporate Financial Performance, Human Capital