Effect of Cash Storage on the Financial Performance of Commercial Banks in Kenya

Purpose: The study sought to establish the effect of cash storage and on financial performance of commercial banks of Kenya. Methodology: The research was carried out through a descriptive survey research design. Descriptive design was used because it focused on complex analysis to bring out the correlation of variables. The study population was all the 43 commercial banks registered and licensed to operate in Kenya. These commercial banks formed the unit of analysis. A census was conducted on all the banks. The sampling frame of the survey of the banks was one head of operations and head of finance from each of the 43 commercial banks located in Nairobi County. The target respondents was hence 86. The study used both primary and secondary data for analysis. Inferential analysis techniques including correlation, regression and t-tests were used to achieve the study objectives. SPSS version 21 was used for analysis. Findings: The study findings indicated that the correlation between, cash storage and financial performance is positive. Further results indicated cash storage had a positive significant effect on cash storage and ROA is positive and significant. Unique Contribution to Theory, Practice and Policy: The study was anchored on cash management theory to evaluate the effect of cash storage on the financial performance of Commercial Banks in Kenya. The study recommends that commercial banks and other financial institutions involved in handling of cash should put in place proper reconciliation practices for instance increasing the frequency of reconciling books. The study also recommends that advanced practices of cash storage for instance investing in fire proof safes for storing cash and also in closed circuit television security cameras for surveillance of cash storage areas and also invest in alarm system in cash storage areas and also restricted access to cash storage areas by lock, key, passwords and other security measures so as to reduce fraud arising as a result of poor cash storage practices.