The Effects of foreign direct investment, external debt stock, and merchandise trade on bank stability in Kenya

Abstract

Bank stability is a cornerstone of economic growth and individual financial wellbeing, essential for maintaining consumer confidence, ensuring the efficient allocation of resources, and safeguarding against systemic risks (Kaufman, 2018). The urgency of addressing bank stability has been heightened by both historical precedents and recent events, as evidenced by Ozili (2018) who outlines the intricate determinants of banking stability in the African context. The collapse of banks not only erodes trust but can unravel the economic fabric of society—a fact that is no stranger to Kenya's own landscape (Muriithi & Louw, 2017). Key Words: Foreign direct investment (FDI), external debt, merchandise trade, bank stability, financial stability, Kenyan economy, macroeconomic indicators, economic growth, and risk management.