Abstract: The General objective of this research was to assess the effect of bank specific factors on the liquidity risk of commercial banks in Kenya. The specific objective of this project was to establish the effect of capital adequacy, bank size, non-performing loans and profitability on liquidity risk of commercial banks in Kenya. The study adopted secondary data analysis research design. The observations used were date from January the year 2011 to December 2015 and included 60 monthly observations. The population was composed of all the 42 licensed commercial banks in Kenya. The data was obtained from Kenya National Bureau of statistics, the central bank and audited financial statements of individual banks. Multiple regression was employed as the analytical tool. The study was driven by the absence of laborious studies that address the dynamics of the liquidity risk in commercial banks in Kenya. The research was also motivated by the mixed results that various previous researchers got for the same types of the variables. The results revealed that there was a strong and statistically significant influence of the various bank specific factors on the liquidity risk of commercial banks in Kenya. Only Non-performing loans were found to have a positive effect on the liquidity risk. Other factors that is, Capital Adequacy, Profitability and Bank size were found to have an negative relationship with the liquidity risk.
Keywords: Capital Adequacy, Profitability, Bank Size, Non-performing loans and Liquidity risk.
Title: Effect of Banks Specific Factors on the Liquidity Risk of Commercial Banks in Kenya
Author: Kosgey Cecilia Cheruto, Dr. Willy M. Muturi
International Journal of Management and Commerce Innovations
ISSN 2348-7585 (Online)
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