School of Business
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Item Strategies Adopted by Commercial Banks in Kenya to Enhance Financial Performance(KCA University, 2018) Karuku, Elias K.The purpose of the study was to examine the strategies applied by commercial banks in Kenya to improve financial performance. This study was informed by interest rate capping which necessitates commercial banks to seek other revenue sources and engage in lean and efficient credit risk management. Specific objectives of the research study were to investigate the influence of administration cost-concentration, credit policies, non-interest income and asset quality on financial performance of commercial banks in Kenya. This research study was based on the effectiveness hypothesis, arbitrage pricing theory, financial leverage model and the symmetric information theory. The researcher used descriptive research methodology. The 42 operational commercial banks in Kenya formed the population of interest in this research study. Data for five years (2013 – 2017) was collected from the audited financial reports of these commercial banks. Secondary data that was utilized to achieve the study objectives was sourced from the Central Bank of Kenya bank supervision reports, the audited financial statements of the commercial banks and the websites of the commercial banks. This research study utilized panel data analysis where information for each of the 42 commercial banks on ROA, administration costs concentration, credit policies, non-interest income, asset quality and bank size was gathered for five years. Stata statistical software was utilized for analysis. Presentation of data from the panel regression analysis was through tables and figures. Study findings show that administration cost-concentration had a significant positive effect on financial performance of commercial banks in Kenya (β= 0.4153; p < 0.05). Credit policies had a negative but insignificant effect on financial performance of commercial banks in Kenya (β= -0.1872; p > 0.05). Non-interest income had a significant positive effect on financial performance of commercial banks in Kenya (β= 0.1292; p < 0.05). Asset quality had a significant negative effect on financial performance of commercial banks in Kenya (β= -0.9979; p < 0.05). From the study results, the study recommends the following. On administration costs concentration, commercial banks should seek to enhance their efficiency by leveraging on technology and reducing their operations costs. Commercial banks should tighten their credit policies to ensure that only clients with riskiness that is covered by the capped interest rates access loan products from the commercial banks. Commercial banks should seek to perform other intermediation roles to diversify their revenue sources so that they do not rely heavily on the ever-reducing interest income. Lastly, management in commercial banks should be effective in controlling and monitoring credit risk to achieve a higher credit rating.Item Firm Characteristics And Financial Intermediation Efficiency Of Commercial Banks Listed At The Nairobi Stock Exchange In Kenya(KCA University, 2022) Njuguna, Eunice W.Commercial banks play an integral role in the financial intermediation. Financial intermediation is defined as the process through which commercial banks connect savers and borrowers. The efficiency and stability of commercial banks are regarded integral in the stability and eventual growth of the economy. Firm characteristics of commercial banks refer to those attributes that are largely determined by the management and the other organizational stakeholders including the employees. These variables are integral in the determination of the financial stability of commercial banks. However, there are various instances that have depicted the Kenyan banking sector sometimes unstable as well as inefficient especially following recent collapse of the Imperial bank and Chase bank. This study focused on the firm characteristics and their influence on the financial intermediation efficiency of commercial banks listed at the Nairobi stock exchange. A descriptive research design was adopted. Data was collected from consolidated reports for years 2017 to 2021. Data analysis was done through descriptive statistics and inferential statistical analysis including correlation and regression analysis. STATA and E-Views were used to incorporate the data forming the pooled model. Output from the data analysis were presented through tables, figures, and graphs. There was positive and not significant effect of capital adequacy on financial intermediation efficiency of listed commercial banks in Kenya. Further, operating efficiency and asset quality has inverse and not significant effect on financial intermediation of listed commercial banks. Moreover, there was an inverse and significant effect of liquidity on financial intermediation efficiency of listed commercial banks in Kenya. Based on the findings it can be concluded that increase in capital adequacy increases financial intermediation efficiency of listed commercial banks in Kenya. An inverse contribution of asset quality on financial intermediation efficiency we can conclude that an increased level of non-performing loans decreases financial intermediation efficiency. Further, there is a negative co-movement between liquidity and financial intermediation of listed commercial banks in Kenya. Moreover, an increase in outcomes with increase in level of financial intermediation efficiency of respective listed commercial banks in Kenya. From the findings it was recommended that the management approach ought to have vale chain design by incorporating the value benefit from respective firm characteristics. Financial services provision should be anchored on measures aim at precipitating demand for financial services in the target market niche. Moreover, commercial banks should stimulate demand for deposit and credit through linking deficit and surplus saving customers. Furthermore, banks should adopt data mining approaches so as to eradicate spillage of resources and optimize intermediation efficiency.