Abstract: This examined the effect of bank’s lending behaviour on loan losses of listed commercial banks in Kenya. The study employed descriptive research survey design. The target population encompassed 11 listed commercial banks in Kenya. The study was a census of listed commercial banks in Kenya. The data was extracted from CBK Annual reports and Audited financial statements of individual commercial bank in Kenya. Descriptive analysis involved mean, standard deviation, minimum and maximum while for inferential analysis; correlation analysis was used to test the relationship between banks’ lending behaviour and loan losses of commercial banks in Kenya. Simple OLS model was used to establish the causal effect relationship between lending behaviour and loan losses of listed commercial banks in Kenya. The findings showed that total customer loans and quality of loans had a statistically significant effect on loan losses. However the effect of lending rate, loan growth and loan portfolio diversification on loan losses was not statistically significant. The study thus concluded that banks’ lending behaviour has a significant effect on loan losses as shown by p value less than significance level in the ANOVA. The study recommends to the management of listed commercial banks to take into consideration their total customers loans and quality of loans when setting loan loss provisions to cover any eventual loan losses.
Keywords: Lending behaviour, Loan losses and commercial banks.
Title: Effect of Bank’s Lending Behaviour on Loan Losses of Listed Commercial Banks in Kenya
Author: Michael Ochieng Obuya, Dr. Tobias Olweny
International Journal of Management and Commerce Innovations
ISSN 2348-7585 (Online)
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