Mortgage Financing and Financial Performance of Commercial Banks in Kenya
Loading...
Date
2023-10
Authors
Manyara, Faith Mantaine
Kosgei, Margaret
Journal Title
Journal ISSN
Volume Title
Publisher
IAJEF
Abstract
Banking sector institutions are considered to
play a very crucial part especially in modern
economy of any state. The significance of
banking institutions is mostly witnessed
especially when it comes to the economic
development of any state as they allow money
marketing in both developed and developing
economies. In other words, for banks to
continue to serve as intermediaries, they must
have financial stability. However, some
commercial banks in Kenya have been
performing poorly as they have continued to
report distressing financial results. This has
been demonstrated by the decrease in ROE for
some commercial banks over the years as well
as their low global ranking. Therefore, the
current study examined the nexus between
mortgage financing and financial
performance within the Banking sector in
Kenya. Specifically, it examined interest
charged. To achieve this a descriptive
research approach was employed. All 43
licensed banking institutions were evaluated
as the survey total population as per CBK.
The study population comprised of all the
financial institutions that offer mortgage
financing as one of their products. The
researcher used census survey to select all
financial institutions in Kenya that offer
mortgage financing. For the data analysis the
researcher used correlation and regression
model. Thereafter, editing, coding,
classification and tabulation were the
processing steps that were used to process
data for better and efficient analysis. STATA
was therefore used to aid the researcher in
analysing the data. Based on the findings, it
was established that interest charged had a
positive and significant effect on the financial
performance of commercial banks in Kenya.
It was concluded that the rate of interest
charged on mortgage issued did contribute
significantly towards the financial
performance of commercial banks in Kenya.
It was, therefore, recommended that
commercial banks in the country should
consider lowering their mortgage interest
rates in order to make mortgage loans
accessible to all classes of customers. In
addition, it was recommended that
commercial banks in the country should strive
to diversify their mortgage loans investment
so as to enlarge their loan asset base and
establish more capacity to provide much more
mortgage financing to a wide range of
interested customers.
Description
Article
Keywords
Interest Charged, Volume of Mortgage Lending, Mortgage Types, Mortgage Financing, Financial Performance
Citation
Manyara, F. M., & Kosgei, M. (2023). Mortgage financing and financial performance of commercial banks in Kenya. International Academic Journal of Economics and Finance, 3(10), 459-470.