Browsing by Author "Malalu, Mable Sophie"

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    Financial Risks and Financial Performance of Commercial Banks Listed In Nairobi Securities Exchange, Kenya
    (Kenyatta University, 2025-04) Malalu, Mable Sophie
    Commercial banks serve an essential part in any economy by allocating resources from depositors to investors. In performance of this role the banking sector has experienced major transition because of the volatile environment it operates in leading to collapse of many banks. The performance of banks is influenced by several variables, including the diverse kinds of risks they are exposed to. Despite the implementation of comprehensive risk management systems by commercial banks, the banking sector nevertheless incurs financial losses. Commercial banks listed on the NSE are experiencing declining financial performance. The main objective of the study is to ascertain the effect of financial risk on the financial performance of commercial banks NPAs: Non-Performing Asset NSE: Nairobi securities Exchange NPLR: Non-performing loans Ratio NSFR: Net Stable Funding Ratio PMI: Project Management Institute NIST: National Institute of Science and Technology ROA: Return on Asset ROE: Return on Equity SACCOs: Saving and Credits Cooperative Societies xiv listed on the Nairobi Securities Exchange in Kenya and will be measured by return on equity. Further the study seeks to examine the effects of credit, operational and liquidity risks on the financial performance of commercial banks listed on the NSE, Kenya. This study is based on Merton's Default Risk Model, Agency Theory, Shiftability Liquidity Model, and Risk Management Theory. Explanatory research design was used for study. A census was done on the 11 listed commercial banks with focus being from the year 2018 to 2023. The data collecting sheet was employed to amass the secondary data. The variables were analysed using IBM SPSS Version 25. Tests for multicollinearity, heteroscedasticity, normality, correlation, regression as well as the Hausman test were established. Data was diplayed in tables. From the findings, the study concluded that credit risk has a significant negative influence on financial performance of listed commercial banks. Operational risk has a significant positive influence while liquidity risk has significant positive influence on financial performance of listed commercial banks. To mitigate credit risk,continuous monitoring and evaluation of credit portfolios is recommended. This ensures timely identification and mitigation of potential risks. Banks should engage in scenario planning to anticipate and prepare for potential operational disruptions. This involves simulating various scenarios to test the resilience of operational systems and implementing measures to address identified weaknesses. Listed banks should diversify their funding sources to reduce reliance on short-term funding and promote the development of longer-term funding instruments in the financial markets. All ethical considerations were observed during the study.
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    Financial Risks and Financial Performance of Commercial Banks Listed in Nairobi Securities Exchange, Kenya
    (International Academic Journal of Economics and Finance (IAJEF), 2024-11) Malalu, Mable Sophie; Njoka, Charity
    Despite the implementation of comprehensive risk management systems by commercial banks, the banking sector incurs financial losses. Commercial banks listed on the Nairobi Security Exchange are experiencing declining financial performance. Financial risk management is regarded as a metric for assessing the performance or failure of a financial organization. It has been neglected in recent a long time. The main objective of the study is to ascertain the effect of financial risk on the financial performance of commercial banks listed on the Nairobi Securities Exchange in Kenya and will be measured by return on equity. This study was based on Merton's Default Risk Model, Agency Theory, Shiftability Liquidity Model, and Risk Management Theory. Explanatory research design was used for study. The sample is 11 listed commercial banks being focused from the year 2018 to 2023. The data collecting sheet was employed to amass the secondary data. The ethical considerations were observed to. The variables were analysed using IBM SPSS Version 25. Tests for multicollinearity, heteroscedasticity, correlation, regression as well as the Hausman test were established. The findings on credit risk indicated that the mean Non-Performing Loans Ratio is 11.062% which show moderate negative correlation between credit risk and financial performance of listed bank at (r=0.324; p=0.0016). Operational risk results indicated a strong positive and significant association between operational risk and financial performance(r=0.758 and p=0.00168) while liquidity risk showed that the mean of loan to deposit ratio is 72.847% and a weak positive correlation relationship between liquidity risk and financial performance (that r=0.0652 and p=0.003).From the finding the study conclude that credit risk, operational risk and liquidity risk has significant influence on financial performance of listed commercial banks. The study recommends that banks should engage in continuous monitoring of credit portfolios, invest in capacity building for enhanced risk management capabilities. Banks should conduct regular comprehensive risk assessments, invest substantially in technology for robust IT systems, and engage in scenario planning to anticipate and address potential operational risks. In addition, the listed banks should diversify funding sources, employ advanced risk modelling for robust liquidity risk management
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    Financial Risks and Financial Performance of Commercial Banks Listed in Nairobi Securities Exchange, Kenya
    (International Academic Journal of Economics and Finance (IAJEF), 2024-11) Malalu, Mable Sophie; Njoka, Charity
    Despite the implementation of comprehensive risk management systems by commercial banks, the banking sector incurs financial losses. Commercial banks listed on the Nairobi Security Exchange are experiencing declining financial performance. Financial risk management is regarded as a metric for assessing the performance or failure of a financial organization. It has been neglected in recent a long time. The main objective of the study is to ascertain the effect of financial risk on the financial performance of commercial banks listed on the Nairobi Securities Exchange in Kenya and will be measured by return on equity. This study was based on Merton's Default Risk Model, Agency Theory, Shiftability Liquidity Model, and Risk Management Theory. Explanatory research design was used for study. The sample is 11 listed commercial banks being focused from the year 2018 to 2023. The data collecting sheet was employed to amass the secondary data. The ethical considerations were observed to. The variables were analysed using IBM SPSS Version 25. Tests for multicollinearity, heteroscedasticity, correlation, regression as well as the Hausman test were established. The findings on credit risk indicated that the mean Non-Performing Loans Ratio is 11.062% which show moderate negative correlation between credit risk and financial performance of listed bank at (r=0.324; p=0.0016). Operational risk results indicated a strong positive and significant association between operational risk and financial performance(r=0.758 and p=0.00168) while liquidity risk showed that the mean of loan to deposit ratio is 72.847% and a weak positive correlation relationship between liquidity risk and financial performance (that r=0.0652 and p=0.003).From the finding the study conclude that credit risk, operational risk and liquidity risk has significant influence on financial performance of listed commercial banks. The study recommends that banks should engage in continuous monitoring of credit portfolios, invest in capacity building for enhanced risk management capabilities. Banks should conduct regular comprehensive risk assessments, invest substantially in technology for robust IT systems, and engage in scenario planning to anticipate and address potential operational risks. In addition, the listed banks should diversify funding sources, employ advanced risk modelling for robust liquidity risk management