Credit risk, efficiency and performance of commercial banks in Kenya
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Date
2014-10-10
Authors
Lakasia, Japheth Manguya
Journal Title
Journal ISSN
Volume Title
Publisher
Kenyatta University
Abstract
Banking in Kenya is very dynamic and robust. Performance of this sector measured by
profitability is very important and should be monitored closely because it contributes immensely
to economic growth in Kenya. Vision 2030 of Kenya envisages an increase of savings to 10% of
GDP. The government of Kenya is relying on commercial banks to mobilize the savings that will
. lead to extension of loans to the public to fuel development. Credit creation is the main income
generating activity of banks; however banking comes with a couple of risks including credit risk
captured by the level of nonperformingloans among other factors. Recently the level of
nonperforming loans in the Kenyan banking industry has been on the upward trend. There is a felt .
need to ad~ress this trend because an increase in nonperformingloans (indicator of credit risk)•
may hamper commercial banks from achieving their objectives. Therefore this study seeks to .
establish the effects of efficiency and credit risk on performance of commercial banks. This
..researchis significant in the sense that it will help banks to place themselves strategically towards
achievement of their goals. The study will employ Data Envelopment Analysis to determine••
.. techriical efficiency of commercial banks while panel data regression model will used to establish
credit risk on performance of commercial banks.
Description
Master of Economics-Department of applied economics, 58p. Dec.2014