Factors affecting credit risk in commercial banks in Kenya
Date
2022
Authors
Marwa, Wendy Grace
Journal Title
Journal ISSN
Volume Title
Publisher
Strathmore University
Abstract
Credit risk is one of the main problems that affect most of the commercial banks in Kenya. Failure to minimizing the risk leads to many banks becoming bankrupt and collapsing in the end. Therefore, it is vital to ascertain the factors that affect credit risk in commercial banks in Kenya and thus come up with ways to solve the problem. The main research objective was to determine the factors affecting credit risk in commercial banks in Kenya. The specific objectives were to determine the effect of capital adequacy, management efficiency, interest rate and GDP on credit risk in commercial banks in Kenya. The study used descriptive research design. The target population was the 11 commercial banks listed on the Nairobi Security or stock exchange. The study period was from 2016- 2020. The study used secondary data and the linear multiple regression model was used to analyze the data. The study concluded that only management efficiency had a significant effect on credit risk while the other variables had insignificant relationship on credit risk. On the other hand, capital adequacy had a negative relationship on credit risk while interest rate, management efficiency, interest rate and GDP had a positive effect on credit risk. Research findings were proposed to government to ensure that management body in banks is comprised of individuals with ethical standards to ensure that loan is granted to creditworthy individuals only who have less chances of default.
Description
A Research Project Submitted in partial fulfillment of the requirements for the Degree of Bachelor of Commerce at Strathmore University