Asset Quality and Financial Performance of Commercial Banks in Kenya
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Date
2019
Authors
Wambugu, James Wairegi
Mungai, John Njangiru
Journal Title
Journal ISSN
Volume Title
Publisher
International Journal Corner
Abstract
There has been a tremendous increase in non-performing loan in the recent past as a result of poor loan quality and poor
management of demand deposits in the recent past resulting to closure of various banks in Kenya. These has resulted to
the decline in banks overall decline in return on equity. The study’s aim was to determine effects of asset quality on
financial performance of the commercial banks. The study target population was 43 commercial banks. The study
adopted a census sampling design where causal research design was used. The study made use of secondary data and
regression model was utilized. Statistical package SPSS was used for data analysis. Complete secondary data for the
period 2013 to 2017 from 34 commercial banks was analyzed and presented in tables. This represented 79 per cent of
the target population. The findings presented that there was a low variation in asset quality ratio amongst the
commercial banks. The results showed that the average ROE for period 2013 to 2017 had huge significant dispersion
amongst the selected commercial banks in Kenya. The study found that the average performance of the commercial
banks for the year 2013 to 2017 as indicated by ROE was on the decline. The study concluded asset quality significantly
explains the changes in the financial performance of commercial banks in Kenya.
Description
A research article published in The International Journal of Business & Management
Keywords
Asset Quality, Financial Performance, Return on Equity
Citation
The International Journal of Business & Management. Vol 7 Iss 11