Joint Influence of Customer Credit Checks, Credit Risk Assessment and Credit Policy Compliance on Loan Performance of Commercial Banks Listed at the Nairobi Securities Exchange, Kenya
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Date
2023-10
Authors
Riro, Joseph Momanyi
Mbuva, Geoffrey
Journal Title
Journal ISSN
Volume Title
Publisher
IAJEF
Abstract
Loan default difficulties have been seen
within the commercial banking sector. The
study published by the Central Bank of Kenya
(CBK) has provided empirical evidence
indicating deficiencies in the lending
performance of commercial banks throughout
the years. This research is guided by particular
goals, which aim to investigate the impact of
client credit risk checks, credit risk
assessment, and credit policy compliance on
the loan performance of commercial banks
listed at the Nairobi Securities Exchange in
Kenya. This research is underpinned by three
suppositions: adverse selection theory and the
credit risk theory. The research design used in
this study was descriptive in nature. The
research population included of the twelve
commercial banks registered on the Nairobi
Securities Exchange. The investigation
moreover examined the collecting of data via
the use of both primary and secondary data
classifications. Consequently, the research
used both a questionnaire and a data
collecting sheet in a sequential manner. The
research used a combination of descriptive
and inferential data analysis methods for the
purpose of analyzing the data. The findings of
the study were presented in the form of tables,
graphs, and figures. The research
demonstrated ethical considerations by
obtaining authorization letters from both the
Kenyatta University graduate school and the
National Commission for Science,
Technology, and Innovation (NACOSTI),
therefore ensuring the protection of the rights
of all involved parties. The findings of the
research indicate that the implementation of
customer credit checks has a beneficial impact
on the loan performance of commercial banks
listed at the Nairobi Securities Exchange
(NSE) in Kenya. The findings suggest that
there is a positive relationship between client
credit checks and loan performance among
commercial banks listed at the Nairobi
Securities Exchange (NSE) in Kenya, with a
coefficient of 0.534. The findings of the credit
risk assessment indicate a favorable influence
on the loan performance of commercial banks
listed at the Nairobi Securities Exchange
(NSE) in Kenya. Specifically, it suggests that
for every unit rise in credit risk assessment,
there is a corresponding increase of 0.621 in
the loan performance of these commercial
banks. Additionally, it has been observed that
adherence to credit policy has a favorable
influence on the loan performance of
commercial banks in Kenya that are listed at
the Nairobi Securities Exchange (NSE).
Specifically, for each unit rise in compliance
to credit policy, there is a corresponding
increase of 0.512 in the loan performance of
these commercial banks.
Description
Article
Keywords
Citation
Riro, J. M., & Mbuva, G. (2023). Joint influence of customer credit checks, credit risk assessment and credit policy compliance on loan performance of commercial banks listed at the Nairobi Securities Exchange, Kenya. International Academic Journal of Economics and Finance, 3(10), 335-348.