Credit Survey Information and Commercial Banks’ Lending to Non-Financial Corporate Sectors in Kenya
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Date
2020
Authors
S.M., Maina
A.O., Jagongo
G.K., Atheru
Journal Title
Journal ISSN
Volume Title
Publisher
IOSR
Abstract
This study sought to assess the link between credit survey information and commercial banks’ lending to nonfinancial corporate sectors in Kenya.The study used secondary data extracted fromreports prepared by the
Central Bank of Kenya and Kenya National Bureau of Statistics such as Quarterly Economic Reviews, Credit
Survey Reports, Bank Stability Reports and Bank Supervision Reports for the period December 2012 –
September 2018. The data obtained was analyzed using the panel regression model for random effects as
supported by Hausman test results. The study found out that there exist a statistically significant positive
relationship between credit demand and commercial banks’ lending to the non-financial corporate sectors. In
respect to credit standards, the study found no evidence of a statistically significant relationship between credit
standards and commercial banks’ lending to the non-financial corporate sectors in Kenya. The non-performing
loans for the second immediate past quarter were found to have a statistically significant negative relationship
with commercial banks’ lending. Based on the study’s empirical results,the study recommends that the
government of Kenya should enact measures aimed at boosting economic growth and revival of the economy so
as to enhance business cash flows and demand of products from the non-financial corporate sectors in Kenya.
Additionally, the government should focus on measures such as improving the employment rate, reducing the
tax burden, increasing public investment and expanding the market for locally produced products.
Description
Article
Keywords
commercial banks’ lending, credit demand, credit standards, non-performing loans, non-financial corporate sectors, random-effects model
Citation
Maina, S. M., Jagongo, A., & Atheru, G. Credit Survey Information and Commercial Banks’ Lending to Non-Financial Corporate Sectors in Kenya.