Abstract: Commercial banks are regarded as very important players in the financial sector and the economy of a country at large. The study utilized causal research design and utilized panel data for Eleven (11) years from 2007 to 2017 using panel regression analysis. The target population constituted of all the eleven (11) listed commercial banks in Kenya and therefore this implied that a census was adopted. Data was sourced from the audited financial statements of commercial banks from the respective commercial bank’s official websites and CBK statistical bulletins from the CBK’s official website. Data obtained was regressed using the random effect model and the results of the analysis tabulated the results of the study established that that Central Bank Rate and inflation are insignificant to performance while money supply was significant. The study also indicated that capital adequacy had an insignificant moderating effect on the relationship between Central Bank Rate and money supply but significant moderating effect on the relationship between Inflation. Moreover, the study concluded that in absence of prudential regulation, Central Bank Rate and Inflation have insignificant effect on financial performance while Money Supply significantly affects performance. In presence of prudential regulations that dictates the capital buffer, Central Bank Rate, Money Supply have an insignificant moderating effect on the relationship with performance of listed banks while inflation has a significant effect. The results indicated that the CBK should ensure Money Supply is regulated as it affects performance of commercial banks. In the case of capital adequacy banks should engage other profitable ventures as opposed to putting so much capital buffer. This is because in periods of inflation such buffers become depleted and as such lowers the financial performance of commercial banks.
Keywords: Central Bank Rate, Money Supply, Inflation, Capital adequacy, Financial Performance.
Title: MONETARY POLICY IMPLICATIONS ON FINANCIAL PERFORMANCE OF COMMERCIAL BANKS LISTED IN THE NAIROBI SECURITIES EXCHANGE, KENYA
Author: Kamau George Muhoho, Stephen Ndung’u, Robert Abayo
International Journal of Management and Commerce Innovations
ISSN 2348-7585 (Online)
Research Publish Journals
