Abstract:
Despite the opportunities brought about by agency banking for both the customers and commercial banks, by December 2016, 16 commercial banks and 3 microfinance banks had contracted 95,789 customers and 58 agents across the country with a concentration of 90% of the agents in 3 banks; Equity Bank with 13,767 agents, Kenya Commercial Bank with 9,687 and Cooperative Bank with 8,765 (CBK, 2016). Many of the banks that have embarked on agency banking roll-out have found that agents lack the capacity to handle large transactions of cash and that they are not spending enough on security measures leading to poor performance of agency banking. The purpose of the study was to determine the influence of risk management controls practices on sustainability of agency banking in commercial banks in Nakuru town. The study sought to determine the influence of liquidity management and auditing on sustainability of agency banking in commercial banks in Nakuru town. The study was guided by agency theory and lending Credibility Theory. The study adopted descriptive research design. The study’s target population was 46 employees working in the agency department from 6 banks in Nakuru town which operate agency banking. The study also targeted 94 agents in Equity Bank, 39 agents in Co-operative Bank, 23 agents in family Bank, 14 agents in Post Bank, 23 Agents in National Bank and 44 Agents in Kenya Commercial Bank. Each agent outlet produced one respondent who was either the owner or the manager. Since the population of employee working in the agency department was small the researcher used census technique to incorporate all the targeted employees. Nassiuma’s formula was used to calculate the sample size of the agents to get a sampled of 75 agents. Questionnaire was used to collect the primary data desirable for the study. Both descriptive and inferential statistics was used in the study. Descriptive statistics involved the use of percentages, frequencies, measures of central tendencies (mean) and measures of dispersion (standard deviation). Multiple regression analysis was used to establish the relationship between the dependent and the independent variables. The findings revealed that exists a strong, positive and significant relationship (r=0.597, P=0.018) between liquidity management and sustainability of agency banking. The study also indicated that there exist a strong, positive and significant relationship (r=0.604, P=0.032) between auditing and sustainability of agency banking. The researcher recommended that banks should ensure that the gadgets used to do transactions in agent banking are always supplied with network coverage to ensure all-time accessibility/use. This will enhance the performance of agent banking businesses.