IMPACT OF AUTOMATED TELLER MACHINE (ATM) TRANSACTION ON FINANCIAL PERFORMANCE OF COMMERCIAL BANKS IN RWANDA CASE STUDY OF BANK OF KIGALI (2015-2018) A Thesis submitted in partial fulfillment of the Requirements for the Degree of Master of Business Administration (Finance Option) SUBMITTED BY: MUKAMUNANA SOPHIE REG No: 215031527 SEPTEMBER 2019 DECLARATION I declare that this research is my own work. It is submitted in partial fulfillment of the requirements for the degree of Master of Business Administration at the University of Rwanda. It has not been submitted before for any degree or examination in any other university. No part of this of this research should be reproduced without the authors’ consent. Student Names: MUKAMUNANA SOPHIE Date ----------------------------------------Signature-------------------------------------------- Declaration by the supervisor (s) This research has been submitted with our approval as the research Supervisor Names: Date---------------------------------------- and Signature------------------------------------- ii APPROVAL SHEET This thesis entitled Impact Of Automated Teller Machine (Atm) Transaction On Financial Performance Of Commercial Banks In Rwanda: Case Study Of Bank Of Kigali (2015-2018) written and submitted by Mukamunana Sophie in partial fulfillment of the requirements for the degree of Master of Business Administration, Finance is hereby accepted and approved. _____________________ Supervisor: Dr. SHEMA JEAN BOSCO _________________________________ Date The thesis is accepted in partial fulfillment of the requirements for the degree of Master of Business Administration. _______________________ ______________________ Member of the Jury Member of the Jury _______________ ________________ Date Date _________________________ Coordinator of Postgraduate Studies _______________ Date iii ABSTRACT This study entitles the impact of Automated Teller Machine on Financial performance of commercial banks of Rwanda, case of Bank of Kigali. This study was being guided by the objectives which are to establish the effect of Automated Teller Machine transactions on financial performance of commercial Banks, find out the extent of commercial Banks performance influenced by Automated Teller Machine transactions, and establish the relationship between Automated Teller Machine transactions on financial performance of commercial Banks. The data collected from both primary and secondary sources was processed and analyzed so as to find out the hidden meaning that can be based on to draw conclusions. The logistic regression was used to analyze and interpret binary logistic was also used to analyze logistic regression. The process of data analysis was beginning after that data is collected, and then the data was entered into the SPSS software and therefore analyses. To interpret the responses of the respondents, the values of interpretation was used. The level of performance of commercial banks by observed response of respondents which are 84% of total number of respondents who agreed with Yes and 16% of total number of respondents who disagreed with NO. Exponentiation of the B coefficient which is an odds ratio indicates odds ratio is given by odds: 8/42 which gives 0.190 and is less than 0.5, Score test that is used to predict whether or not an independent variable would be significant in the model. This indicates that V1, V2, V3, V4, V5, V6 each of the predictors would be statistically significant. This helped a researcher to reject the null hypothesis H0 which says that there is no a significant relationship between Automated Teller Machine transaction and performance of Bank of Kigali, and confirm H1 which says that there is a significant relationship between Automated Teller Machine transactions on financial performance of Bank of Kigali. iv TABLE OF CONTENTS CHAPTER ONE ....................................................................................................................... 1 INTRODUCTION .................................................................................................................... 1 1.2 Statement of the Problem ........................................................................................... 5 1.3 Objectives of the study .............................................................................................. 5 1.4 Research questions ..................................................................................................... 6 1.5 Justification of the study ................................................................................................. 6 1.6 Limitations of the study .................................................................................................. 6 CH APTER TWO ..................................................................................................................... 7 LITERATURE REVIEW ......................................................................................................... 7 2.0 Introduction ..................................................................................................................... 7 2.1 Theoretical Literature Review ........................................................................................ 7 2.1.2 Evolution of Automated Teller Machine ..................................................................... 8 2.1.3 Operation of Automated Teller Machine ..................................................................... 8 2.1.4 Effectiveness of Automated Teller Machine ............................................................... 9 2.1.5 Impact of Automated Teller Machine on Financial Performance ............................... 9 2.2 Conceptual frame work ................................................................................................. 11 2.3 Empirical Literature review .......................................................................................... 13 CHAPTER THREE ................................................................................................................ 15 RESEARCH METHODOLOGY ........................................................................................... 15 3.0 Introduction ................................................................................................................... 15 3.1 Research Design ........................................................................................................... 15 3.2 Study Population ........................................................................................................... 16 3.3 Sample Size ................................................................................................................... 16 v 3. 3.1 Sampling Procedure .............................................................................................. 16 3.3.2 Source of Data ........................................................................................................ 17 3.3.3 Data Collection Method ......................................................................................... 17 3.4 Operational definition of variables ............................................................................... 18 3.4.1 Financial Performance of commercial banks ......................................................... 18 3.4.2 Automated teller Machine transactions .................................................................. 18 3.5 Data Analysis ................................................................................................................ 18 3.5.1 Data presentation ....................................................................................................... 18 3.5.2 Data Processing and Analysis .................................................................................... 19 3.6 Ethical considerations ................................................................................................... 19 CHAPTER FOUR .................................................................................................................. 20 DATA PRESENTATION, ANALYSIS AND INTERPRETATION .................................... 20 4.0 Introduction ................................................................................................................... 20 4.1 Demographic characteristics of respondents ................................................................ 20 4.1.1 Distribution of respondents .................................................................................... 20 4.2 Logistic regression analysis and findings ..................................................................... 23 4.2.1 Classification table ................................................................................................. 23 4.1.2 How Profitable is an ATM Machine BK? .............................................................. 26 4.1.3 How BK makes money with an ATM machine ..................................................... 27 CHAPTER FIVE .................................................................................................................... 28 SUMMARY OF FINDINGS, CONCLUSION AND RECOMMENDATIONS ................... 28 5.0 Introduction ................................................................................................................... 28 5.1 Summary of the findings ............................................................................................... 28 5.4 Summary of respondents on Automated Teller Machine transactions on financial performance