Effect Of Banking Regulations On Lending Among Commercial Banks In Kenya

Abstract

The main objective of the study was to assess the effect of banking regulations on lending among commercial banks in Kenya. The study was guided by the following objectives; to determine the effect of liquidity management regulations, capital adequacy regulations, management efficiency regulations and asset quality regulations on lending among commercial banks in Kenya. The study adopted a descriptive research design. The target population of this study comprised 43 commercial banks that operated in Kenya by December 2017. The collected data was analyzed using descriptive and inferential statistics. Based on regression results, liquidity management regulations (p=0.000<0.05), capital adequacy regulations (p=0.002<0.05) and management efficiency regulations (0.019<0.05) have a significant effect on lending among commercial banks in Kenya. The study concludes that asset quality has no positive significant influence on lending among commercial banks. Management efficiency regulations have negative significant influence on lending among commercial banks. Capital adequacy had positive significant influence on lending among commercial banks. Liquidity management regulation positive significantly influenced lending among commercial banks. The study recommends that commercial banks should improve client profiling for better management of non-performing loans for better risk taking. Commercial banks should cut down their operating expenses for increased profits in the organization. Commercial banks should increase liquidity management regulations for increased lending in commercial banks. The study suggests that future studies ought to be done in other lending institutions including SACCOs. Additionally, the focus of the future studies could be on listed commercial banks on NSE.