Abstract: The main objective of the study was to determine the influence of credit risk on performance of commercial Banks in Kenya. The measures of credit risk for this research were capital adequacy, non-performing loans ratio, loans to total deposit ratio. Despite the banking sector stability and resilience in 2015, two non-systemic banks, were placed in receivership by the Central Bank of Kenya this was attributed to liquidity risk and failure to owner debt, lack of adequate provision for non-performing loans. Secondary data were used in the study. A population of 44 commercial banks in Kenya was used of which 2 were under receivership and one under statutory management. Panel data for 30 commercial banks that had data for 10 year period from 2006 to 2015 were obtained from the central bank of Kenya and banks website. Descriptive statistics, correlation analysis, and random and fixed effects regression were used using E-views software. The findings were credit risk had a negative relationship with performance hence managers should aim at reducing this risk to increase performance for commercial banks in Kenya.
Keywords: Credit Risk, Non-Performing Loans, Capital Adequacy.
Title: Influence of Credit Risk on Performance of Commercial Banks in Kenya
Author: Maniagi Musiega, Dr. Tobias Olweny, Dr.Clive Mukanzi, Dr. Mbithi Mutua
International Journal of Management and Commerce Innovations
ISSN 2348-7585 (Online)
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