Abstract: A steady bank system is an important cornerstone which helps modern economies maintains stability and healthy development. In order to achieve this goal, Kenya's banking industry has experienced a long-term reformed process. A dysfunctional financial industry puts pressures on businesses and households thereby adversely affecting the real economy as capital may be prevented from flowing to worthy investments and may lead to credit crunches. In order to ensure that the financial industry remains sound to perform its financial intermediation role effectively, it is important that individual financial institutions in the industry implement relevant strategies that would ensure their financial stability. The purpose of this study was to establish the determinants of financial stability of commercial banks. The specific objective was to assess the influence of operating costs on the financial stability of the listed commercial banks in Kenya. The study was based on the theory of systemic risk and design of prudential bank regulation. A descriptive survey research design was adopted for the study. The study population comprised of 356 bank staff from of eleven listed commercial banks in Kenya. A representative sample of 78 respondents was drawn from the population. The data for the study was collected by use of questionnaires. Cronbach’s Alpha of coefficient test was used to determine the reliability while test-retest and data triangulation technique was used to determine the validity of the instruments. The SPSS was used to analyze questionnaires. The empirical analysis of the study was conducted using both descriptive statistics and Ordinary Least Square regression analysis. It was concluded that Operation Costs have a significant negative influence on financial stability of commercial banks. It was suggested that further studies should consider inflation and GDP which affect commercial banks earning.
Keywords: Operational Costs, Financial Stability, commercial banks.
Title: FINANCIAL STABILITY OF LISTED COMMERCIAL BANKS IN KENYA
Author: PHILEMON AZANGU NGAIRA, DR. JULIUS MIROGA
International Journal of Management and Commerce Innovations
ISSN 2348-7585 (Online)
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