MJAMR

Inflation And Organization Performance. A Case Study Of Equity Bank

Monday Vivian, Babirye Shamirah


Abstract

This study explored the relationship between inflation and organization performance using Equity Bank as a case study. Equity Bank is one of the largest commercial banks in Kenya, with over 10 million customers and over 150 branches across the country as of 2022 (Equity Bank, 2022). The researcher first reviewed recent inflation trends in Kenya. Official government statistics showed that annual inflation rate in Kenya averaged around 6% from 2010 to 2015 but then rose significantly to over 11% in 2016 and remained elevated at over 8% through 2019 (Kenya National Bureau of Statistics, 2022). Then, the study analyzed Equity Bank's annual financial reports from 2010 to 2019 to examine how key performance metrics like profitability, loan portfolio, and deposits fared during periods of high and low inflation. The financial metrics were adjusted for inflation to isolate the real impact. The researcher also conducted interviews with 5 senior managers at Equity Bank to understand how the bank adapted strategies and operations in response to inflation changes. The findings revealed that during periods of high inflation from 2016-2019, Equity Bank's profitability declined in real terms and the value of its loan portfolio and deposits grew at a slower pace after accounting for inflation. However, the bank mitigated some impacts through proactive measures like increasing interest rates charged on loans and paid on deposits to offset inflation. Government should also issue more securities such as bonds through financial markets when the rate of inflation is at lower level before it worsens.

Keywords

Inflation Organization and Performance
Metropolitan Journal of Academic Multidisciplinary Research

Cite This Article

Monday Vivian & Babirye Shamirah (2024). Inflation And Organization Performance. A Case Study Of Equity Bank. Metropolitan Journal of Academic Multidisciplinary Research, 3(7). https://journals.miu.ac.ug/pages/article.php?article_id=1403