Short-Term Financing Decisions and Financial Performance of Commercial Banks in Kenya

Abstract

Management of short-term financing is integral to corporate manager’s daily decisions. Proper balance between long term and short term financing is critical to a business financial prosperity. The study seeks to examine the effect of short-term financing on the financial performance of commercial banks in Kenya. To achieve the objective panel data from (2012-2018) was extracted from financial statements of commercial banks in Kenya. The proxies for short-term financing were customer deposits, liquidity ratio and Leverage while financial performance was measured through Return on asset (ROA). Multiple regression analysis were used to determine how short-term financing affects financial performance. The findings of the study indicate that customer deposits and liquidity have a significant effect on profitability while leverage has an insignificant effect on profitability of commercial banks in Kenya.