Liquidity Capacity and Financial Performance of Commercial Banks in Kenya

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dc.contributor.authorKiage, Job Abuga
dc.contributor.authorWamugo, Lucy
dc.contributor.authorMakori, Daniel
dc.date.accessioned2023-07-05T13:22:15Z
dc.date.available2023-07-05T13:22:15Z
dc.date.issued2023-06-12
dc.descriptionArticleen_US
dc.description.abstractPurpose: The objective of the study was to assess the impact of liquidity capacity on the financial performance of commercial banks in Kenya. Methodology: This study employed the explanatory research design. The 42 Kenyan commercial banks were the study's target population. The essential financial data for analysis was extracted and compiled using a data collection routine from the yearly reports. Panel data was mined from 42 commercial banks for six years between 2012 and 2018. The data were assessed by employing descriptive statistics as well as inferential statistics. Descriptive statistics employed involved the standard deviation, median, and average. Inferential statistics used involved panel regression. The data analysis was aided by STATA software. Findings: The findings from the regression analysis indicate that Net Stable Funding and Liquidity Coverage exert a significant positive impact on the financial performance of commercial banks in Kenya. Conversely, provisioning for NonPerforming Loans, Liquidity Gap, and Provisioning for Nonperforming Loans demonstrate a notable negative effect on the financial performance of commercial banks in the country. Moreover, the study reveals that bank competition plays a significant moderating role in the relationship between liquidity capacity and the financial performance of commercial banks in Kenya. Unique Contribution to Theory, Practice and Policy: The study was anchored on Anticipated Income Theory and Liquidity Preference Theory. The study recommended that the regulatory body for commercial banks, the CBK, facilitates open channels of communication between policy makers and senior management of commercial banks in Kenya. This discussion is critical to ensuring that the monetary policies developed are practical and beneficial to the expansion of the commercial banking industry. Lastly, the study suggests that all commercial banks in Kenya integrate considerations of liquidity costs, benefits, and risks into their performance measurement, pricing, and approval processes for significant business activities.en_US
dc.identifier.citationAbuga, K., Wamugo, L. ., & Makori, D. (2023). Liquidity Capacity and Financial Performance of Commercial Banks in Kenya.International Journal of Finance and Accounting,8(1), 76–96. https://doi.org/10.47604/ijfa.2003en_US
dc.identifier.urihttps://www.iprjb.org/journals/index.php/IJFA/article/view/2003/2173
dc.identifier.urihttp://ir-library.ku.ac.ke/handle/123456789/26089
dc.language.isoenen_US
dc.publisherIPRJBen_US
dc.subjectCommercial Banksen_US
dc.subjectFinancial Performanceen_US
dc.subjectLiquidity Capacityen_US
dc.titleLiquidity Capacity and Financial Performance of Commercial Banks in Kenyaen_US
dc.typeArticleen_US
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