Assessing the impact of COVID-19 on bank specific factors and credit risk management of Kenyan banks
Date
2024
Authors
Maina, V. W.
Journal Title
Journal ISSN
Volume Title
Publisher
Strathmore University
Abstract
The global financial crisis of 2007 – 2009 was considered the most serious global economic crisis until the COVID-19 pandemic hit in 2020. The COVID-19 pandemic added to the difficult operating environment which occasioned high default rates, hence an increase in credit risk. The main objective of the study was to determine the impact of COVID-19 on bank specific factors that influence credit risk management of commercial banks in Kenya. The bank specific factors studied are liquidity, bank size and age of the bank. There is little empirical evidence on how banks responded with regards to credit risk management during COVID-19 pandemic and studies have also failed to highlight whether the relationship between bank specific factors and credit risk management was the same before and after COVID-19 pandemic. This study was anchored on asymmetric information and credit risk theories. The research philosophy implemented in the study was the pragmatism philosophy and the research design implemented was mixed method research design which combines both qualitative and quantitative research methods. Questionnaires were used to collect primary data and administered through google forms while secondary data was sourced from the annual reports for the period 2019 to 2021. The study’s target population was all the 39 commercial banks in Kenya. The study period was 2019 to 2021 since the study focuses on before and after COVID-19. The data analysis used descriptive statistics, diagnostic tests, correlation, and multiple regression analysis. The study established that bank size, age of the bank and ownership structure do not significantly influence credit risk management before and after COVID-19 except for liquidity ratio where a significant change was noted after COVID-19. The findings of this study can be used by banks’ management and scholars to help them understand the relationship between bank specific factors and credit risk management. The study recommends that commercial banks in Kenya should take stringent measures in implementing credit assessment processes and comply with all established lending requirements to improve financial performance. The bank management should closely monitor the restructured loans and implement debt collection.
Description
Full - text thesis
Keywords
Citation
Maina, V. W. (2024). Assessing the impact of COVID-19 on bank specific factors and credit risk management of Kenyan banks [Strathmore University]. http://hdl.handle.net/11071/15573