CREDIT RISK MANAGEMENT AND FINANCIAL PERFORMANCE OF COMMERCIAL BANKS IN KENYA

ESSERY NGATI IMBUYE, JULIUS MIROGA, PhD
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Abstract

This study assessed the effect of credit risk management on financial performance of commercial banks in Kenya. The study adopted a descriptive survey design. The study targeted a population of 200 employees within 43 commercial banks legally operating in Kenya as per the 2018 to 2022 annual reports by the CBK. However, the study specifically focused on 5 commercial banks with a specific target population of 108 employees in all the banks. The five specific banks were selected owing to their vast fame and long existence in the financial market and huge customer base. Questionnaires were the main data collection instruments and were used to source for the data. Internal consistency checks of data were performed using Cronbach’s alpha to check for the reliability of data. The reliability of the data was arrived at by using cronbach’s alpha. Financial performance on commercial banks was assessed in terms of return on assets. Data analysis was done using both quantitative and qualitative methods. The data collected was edited, coded and then analyzed using descriptive statistics and inferential analysis. The inferential analysis performed included correlation and regression analysis. The study results showed that credit risk management has an inverse and significant impact on the performance of these commercial banks. The study concluded that banks had managed their liquidity and that bank earnings were positively influenced by higher interest rates. However, their performance was negatively influenced by high credit risk management arising from nonperforming loans and foreign currency exchange. This study recommended that commercial banks should have a proper methodology for the measurement, identification, and control of credit risk management. It is important that all banking ventures have a comprehensive risk mitigation process embedded within their operations and that this is subjected to appropriate board and upper management oversight. Commercial banks should also know the credit risk appetite of its key stakeholders such as directors and gauge appropriate responses to them. This study also recommended that all banks should explore more methods to enhance credit risk management capacities. Key words: Credit Risk Management, Financial Risk Management, Financial Performance CITATION : Imbuye, E. N., & Miroga, J. (2023). Credit risk management and financial performance of commercial banks in Kenya. The Strategic Journal of Business & Change Management, 10 (3), 597 – 607. http://dx.doi.org/10.61426/sjbcm.v10i3.2728
肯尼亚商业银行信用风险管理与财务绩效
本研究评估信贷风险管理对肯尼亚商业银行财务绩效的影响。本研究采用描述性调查设计。根据CBK 2018年至2022年的年度报告,该研究的目标是在肯尼亚合法经营的43家商业银行的200名员工。然而,该研究专门针对5家商业银行,所有银行的特定目标人群为108名员工。这五家银行之所以被选中,是因为它们在金融市场上有着巨大的声誉和悠久的历史,拥有庞大的客户基础。问卷调查是主要的数据收集工具,并用于数据来源。采用Cronbach’s alpha对数据进行内部一致性检验,以检验数据的可靠性。数据的可靠性是通过使用cronbach 's alpha来确定的。商业银行的财务业绩是根据资产回报率来评估的。数据分析采用定量和定性两种方法。对收集到的数据进行编辑、编码,然后使用描述性统计和推理分析进行分析。进行的推断分析包括相关分析和回归分析。研究结果表明,信用风险管理对这些商业银行的绩效具有显著的负相关影响。研究得出的结论是,银行对流动性进行了管理,银行收益受到了利率上升的积极影响。然而,他们的业绩受到不良贷款和外汇兑换产生的高信用风险管理的负面影响。本研究建议商业银行应有一套适当的信贷风险管理测量、识别和控制方法。重要的是,所有银行合资企业都必须在其业务中纳入全面的风险缓解程序,并受到董事会和高层管理人员的适当监督。商业银行还应了解其主要利益相关者(如董事)的信贷风险偏好,并衡量适当的应对措施。本研究亦建议各银行应探索更多方法提升信贷风险管理能力。关键词:信用风险管理;财务风险管理;财务绩效Miroga, J.(2023)。肯尼亚商业银行信用风险管理与财务绩效。商业战略杂志;管理学报,2010(3),597 - 597。http://dx.doi.org/10.61426/sjbcm.v10i3.2728
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