BIG DATA ANALYTICS FINANCIAL CAPABILITIES AND COST EFFICIENCY OF COMMERCIAL BANKS IN KENYA
Masira Shadrack Mariga - Postgraduate Student, Department of Accounting and Finance, School of Business Economics and Tourism, Kenyatta University, Kenya
Anthony K. Thuo (CPA) - Lecturer, Department of Accounting and Finance, School of Business Economics and Tourism, Kenyatta University, Kenya
Dr. Francis Gitagia (Ph.D, CPA) - Lecturer, Department of Accounting and Finance, School of Business Economics and Tourism, Kenyatta University, Kenya
ABSTRACT
This study examined the effect of Big Data Analytics Financial Data Management Capability and Big Data Analytics Financial Technological Capability on the cost efficiency of commercial banks in Kenya. The research was anchored on RBV Theory, Dynamic Capabilities Theory and Transaction Cost Theory. A cross-sectional research design was adopted covering all 38 licensed commercial banks in Kenya. Data were analyzed through descriptive statistics, Pearson correlation analysis, multiple linear regression and mediation analysis using Stata Version 18. The findings established that Big Data Analytics Financial Data Management Capability (β = −5.1189, p = 0.010), Big Data Analytics Financial Technological Capability (β = −4.4983, p = 0.022) had negative and statistically significant effects on the cost-to-income ratio, indicating enhanced cost efficiency. The study concludes that Big Data Analytics financial capabilities enhance the cost efficiency of commercial banks both directly. The study recommends sustained investment in Big Data Analytics Financial Data Management Capability, greater investment priority for Financial Technological Capability, which was comparatively the least-developed capability. Central Bank of Kenya should incorporate Big Data Analytics financial capability and cost-efficiency considerations into supervisory guidance on banks’ digital transformation and technology investments.