scholarly journals DETERMINANTS OF INTEREST RATE SPREAD AMONG COMMERCIAL BANKS IN KENYA

2017 ◽  
Vol 2 (5) ◽  
pp. 75
Author(s):  
Leah Njoroge ◽  
Dr.Chogii Dr.Chogii
Keyword(s):  
Interest Rate ◽  
Central Bank ◽  
Credit Risk ◽  
Significant Relationship ◽  
Commercial Banks ◽  
Regression Coefficient ◽  
Secondary Data ◽  
P Value ◽  
Unique Contribution ◽  
Interest Rate Spread

Purpose: This study sought to find the determinant of interest rate spread among commercial banks in Kenya.Methodology: The study used a descriptive research design. The target population of this study included all the commercial banks in Kenya since the small number of population called for a census survey of all the banks. The study used secondary data which includes the governments’ publications, journals, banking survey reports, annual reports of the Commercial banks in Kenya and periodicals. Quantitative data was collected. Secondary data used to calculate interest rate spread was collected from the annual statements of the sampled commercial banks. The study used both descriptive and inferential statistics. The descriptive statistics included trend analysis, mean and standard deviation. The study used a pooled OLS regression model to analyze the relationship between the independent and dependent variables.Results: The regression results indicate that there is a positive and significant relationship between market structure and interest spread. This finding was supported by a regression coefficient of 0.200 (p value = 0.000). The reported p value was less than the critical p value of 0.05. The results also indicated that there is a positive and significant relationship between credit risk and interest spread. This finding was supported by a regression coefficient of 0.096 (p value = 0.008). The reported p value was less than the critical p value of 0.05. This implies that an increase in credit risk by one unit would result to an increase in the interest spread by 0.096 units. Further, the results indicate that there is a positive but insignificant relationship between access to information and interest spread. The regression results also indicated that there is a negative and significant relationship between regulation and interest spread. This finding was supported by a regression coefficient of -1.309 (p value = 0.000). The reported p value was less than the critical p value of 0.05.Unique contribution to theory, practice and policy: The study recommended that commercial banks should be encouraged to use the information from the credit reference bureaus so as to maintain a lower interest spread among Commercial banks in Kenya. The study also recommended that the central  bank should licence more CRBs which would assist the commercial banks in lowering the credit risk. the study recommended that the central bank should review the monetary policy and lower the T- bill (91 days). This would help to lower the interest spread among Commercial banks in Kenya.

scholarly journals THE DETERMINANTS OF INTEREST RATE SPREAD AMONG COMMERCIAL BANKS IN KENYA

2017 ◽  
Vol 2 (5) ◽  
pp. 29
Author(s):  
Leah Njoroge ◽  
Mercy Warui ◽  
Catherine Mbogo ◽  
Margaret Chiera ◽  
Dr. Chogii
Keyword(s):  
Interest Rate ◽  
Interest Rates ◽  
Market Structure ◽  
Significant Relationship ◽  
Commercial Banks ◽  
Banking Sector ◽  
Unique Contribution ◽  
High Interest Rate ◽  
Interest Rate Spread ◽  
The Interest Rate

Purpose: To establish the determinants of interest rate spread among commercial banks in Kenya. Methodology: The study utilized a descriptive survey research design. Findings: The results indicated that the commercial banking sector has witnessed a gradual rise in the Interest rate spread. Results also showed that the mean of market structure has been fluctuating with year (2010) being the lowest with mean of 4 and year (2012) being the highest with mean 12. Results also showed that there was no regulation from the year (2005) to the year (2009) but it was later adopted whereas regulations shoot steadily to mean of 1.0 in the year (2009) and remained in the same level the rest of the years. The regression results indicate that there is a positive and significant relationship between market structure, credit risk and interest spread. The regression results also indicated that there is a positive but insignificant relationship between access to information and interest spread. Further, the results indicated that there is a negative and significant relationship between regulation and interest spread. Unique contribution to theory, practice and policy: The study is important to the management of Commercial banks as it will provide an insight on the factors influencing interest rate spread among commercial banks in Kenya. The results of this study will provide information to policy makers and other stakeholders in the financial sector (especially the banks) to come up with strategies that help in dealing with the high interest rate spread experience in the banking sector and thus improve on the financial performance of the organisations. It may be used as a tool for persuading commercial banks to reduce their interest rates spread and hence increase their volume of business, which of course would compensate the loss in the interest rate spread. The study will also be invaluable to the government and CBK. This is because the monetary policy framework of Central Bank of Kenya and its implementation will be guided by a need to ensure, among others: realistic interest rate spreads that encourage financial deepening and a safe, sound, efficient and competitive banking system through discreet risk management. These findings therefore might influence the effectiveness of economic policies. The research results will also be important to scholars and researchers as it will add to the existing pool of knowledge.

scholarly journals The Sensitivity of Central Bank Interest Rate on Commercial Banks’ Stock Market Returns in Kenya

2021 ◽  
Vol 7 (5) ◽  
pp. p72
Author(s):  
Micah Odhiambo Nyamita ◽  
Martine Ogola Dima
Keyword(s):  
Interest Rate ◽  
Central Bank ◽  
Interest Rates ◽  
Stock Returns ◽  
Commercial Banks ◽  
Secondary Data ◽  
Market Returns ◽  
Cross Sectional ◽  
Stock Market Returns ◽  
Panel Data Regression

Commercial banks occupy a significant position in the transmission of monetary policy through the financial market. Furthermore, commercial banks have assets and liabilities which are interest rate sensitive, and their stock returns are believed to be particularly responsive to changes in the central bank base lending rates. Therefore, this study investigated the sensitivity of central bank interest rate changes on stock returns of listed commercial banks in Kenya for nine year period, from 2006 to 2014. The study used a hybrid of cross sectional and longitudinal quantitative surveys method, applying GMM panel data regression model on the secondary data from the 11 listed commercial banks in Kenya. The study found out that there is a significant strong positive sensitivity of average annual changes in central bank interest rates (CBR) on the stock returns of the listed commercial banks in Kenya, from 2006 to 2014, measured using CAPM. Hence, listed commercial banks’ managers in Kenya should monitor, keenly, the changes in the central bank interest rates and make investor related decisions accordingly.

scholarly journals Financial Inclusion, GDP and Credit Risk of Commercial Banks in Kenya

2018 ◽  
Vol 10 (3) ◽  
pp. 181 ◽  
Author(s):  
Salome Musau ◽  
Stephen Muathe ◽  
Lucy Mwangi
Keyword(s):  
Central Bank ◽  
Credit Risk ◽  
Commercial Banks ◽  
Secondary Data ◽  
Target Population ◽  
Financial Inclusion ◽  
Three Dimensions ◽  
Annual Reports ◽  
Annual Data ◽  
Trade Offs

This paper provides an empirical analysis of the synergies and trade-offs between financial inclusion and credit risk of commercial banks in Kenya. The paper analyzed the effect of financial inclusion on credit risk and the moderation effect of GDP on commercial banks in Kenya. Financial inclusion was measured using three dimensions of bank availability, bank accessibility and bank usage, while credit risk was represented by the non performing loans ratio. The study was anchored on financial intermediation theory supported by finance growth theory and asymmetry information theory. The target population was all the 43 commercial banks in Kenya. The study used secondary data collected from Central Bank of Kenya annual reports; commercial banks of Kenya published audited financial statements and annual data from Central Bureau of statistics of Kenya for the period between 2007-2015. Data was analyzed using descriptive statistics and panel multiple regression analysis. The results obtained found that bank availability, bank accessibility and bank usage had significant effect on credit risk of commercial banks in Kenya. GDP growth rate was found to partially moderate the relationship between financial inclusion and credit risk. From the findings the study concluded that financial inclusion has a significant effect on credit risk of commercial banks in Kenya. The study also recommended that commercial banks in Kenya to negotiate with Central Bank and the Ministry of Finance to put policies which support favorable macroeconomic variables especially GDP which influences the level of financial inclusion and bank credit risk.

scholarly journals Impact of Interest Rate Spread on Profitability in Nepalese Commercial Banks

2020 ◽  
Vol 10 (1) ◽  
pp. 73-81
Author(s):  
Chitra Bahadur Karki
Keyword(s):  
Interest Rate ◽  
Commercial Banks ◽  
Positive Impact ◽  
Secondary Data ◽  
Annual Reports ◽  
Fiscal Year ◽  
Optimum Level ◽  
Investment Bank ◽  
Interest Rate Spread ◽  
The Impact

The paper aims to examine the relationship between interest rate spread (IRS) and profitability and the impact of IRS on profitability of commercial banks in Nepal. Secondary data have been collected from the annual reports of Nepal investment bank ltd. from fiscal year 2066/67 to 2075/76. A regression technique has been used considering statistical package Minitab 16 version to analyze the data. The study reveals the positive impact of IRS upon the profitability of Nepal investment bank ltd. This study provides sufficient evidences to Nepalese commercial banks about the impact of their IRS on their profitability. The result of this study motivates to Nepalese commercial banks to understand the importance of IRS to raise profitability. Based on the findings, the study is useful to Nepalese commercial banks for making balance between deposit rate and lending rate and maintaining optimum level of interest rate spread to attract both depositors and debtors. This study is also useful to new researchers as a reference for conducting study on similar topic.

scholarly journals Assessing effects of Interest Rates Spread on Non-Performing Loans: A Case of Commercial Banks in Trans-Nzoia County, Kenya

2021 ◽  
pp. 22-36
Author(s):  
Lewis Agwata ◽  
Peter Somotwo ◽  
Martin Onsiro Ronald
Keyword(s):  
Risk Management ◽  
Interest Rate ◽  
Credit Risk ◽  
Commercial Banks ◽  
Bank Regulation ◽  
Credit Risk Management ◽  
Interest Rate Spread ◽  
In Trans ◽  
The Interest Rate ◽  
Training Programmes

In the spike of increasing occurrences of non-performing loans among commercial banks in Trans-Nzoia County, Kenya, interest rate spread should be given serious consideration through more empirical research.  This study therefore sought establish the relationship between the interest rate spread and occurrence of non-performing loans among commercial banks in Trans-Nzoia County. It specifically; looked into the credit risk management impacts non-performing loans, bank regulation impacts non-performing loans, and the capital sufficiency impacts non-performing loans. Adopting descriptive research design, the study used the 78 employees of commercial banks in Trans-Nzoia County as its targeted. The entire population participated in the study as respondents. Data, which was gathered using a questionnaire, was using quantitative approach to yield descriptive and inferential statistics. Multiple regression analysis was used to draw inferences from the findings. All factors were found to be statistically significant (p,0.05). Thus, credit risk management, bank regulation impacts, and the capital sufficiency have a positive significant effect on non-performing loans among commercial banks in Trans-Nzoia. The study recommended for; credit staff training programmes, applying strict interest rate rules and strict lending advances policies. In the spike of increasing occurrences of non-performing loans among commercial banks in Trans-Nzoia County, Kenya, interest rate spread should be given serious consideration through more empirical research.  This study therefore sought establish the relationship between the interest rate spread and occurrence of non-performing loans among commercial banks in Trans-Nzoia County. It specifically; looked into the credit risk management impacts non-performing loans, bank regulation impacts non-performing loans, and the capital sufficiency impacts non-performing loans. Adopting descriptive research design, the study used the 78 employees of commercial banks in Trans-Nzoia County as its targeted. The entire population participated in the study as respondents. Data, which was gathered using a questionnaire, was using quantitative approach to yield descriptive and inferential statistics. Multiple regression analysis was used to draw inferences from the findings. All factors were found to be statistically significant (p,0.05). Thus, credit risk management, bank regulation impacts, and the capital sufficiency have a positive significant effect on non-performing loans among commercial banks in Trans-Nzoia. The study recommended for; credit staff training programmes, applying strict interest rate rules and strict lending advances policies.

scholarly journals EXAMINING THE EFFECTS OF FINANCIAL FACTORS ON PROFITABILITY OF GENERAL INSURANCE COMPANIES IN KENYA

2020 ◽  
Vol 5 (1) ◽  
pp. 1
Author(s):  
Joseph Nthuli Ngunguni ◽  
Dr Sedina Misango ◽  
Dr. Martin Onsiro
Keyword(s):  
Regression Coefficient ◽  
Secondary Data ◽  
Annual Reports ◽  
Insurance Companies ◽  
P Value ◽  
Unique Contribution ◽  
Loss Ratio ◽  
Leverage Ratio ◽  
Financial Factors ◽  
General Insurance

Purpose: The objective of this study was to examine the financial factors which affect the profitability of general insurance companies in Kenya. The profitability in this study is represented by ROA, as dependent variable for the period 2013 to 2017. Independent variables in this study were liquidity, leverage, loss ratio and expenses ratio. Methodology: The type of research design used in this study was both descriptive as well as referential analysis. The study applied a census procedure to study all the 28 general insurance companies and targeted the entire population of 28 companies. Secondary data was collected from individual annual published financial statements of 28 general insurance companies for 5 years; 2013 to 2017, AKI reports and IRA published annual reports. A collection data sheet was used to collect the relevant data from all the 28 general insurance companies. After the data was collected and sorted, it was analyzed using referential analysis (multiple regression analysis). This was assisted by SPSS (Version 20) software. Findings: The study revealed that the regression coefficient of loss ratio was -0.068, t-statistics -0.415 and p-value of 0.682 while that of leverage ratio was -0.048, t-statistics -0.546 and p-value of 0.590. Liquidity ratio had a regression coefficient of 4.238, t-statistics 3.257 and p-value of 0.003 while expenses ratio had a regression coefficient of -0.281, t-statistics -3.840 and p-value of 0.001. Unique contribution to theory, practice and policy: The study recommends that the management of general insurance companies in Kenya need to address liquidity and expenses by minimizing expenses and maximizing liquidity in order to be on the safe side as far as profitability is concerned. The study also recommends that regulators and other stakeholders, within the industry, should at regular interval intensify efforts to ascertain the claims handling procedures currently in use by insurance companies in Kenya.

An Analysis of the Link between Water Infrastructure Financing and Water Provision South Africa

2018 ◽  
Vol 10 (3(J)) ◽  
pp. 74-83
Author(s):  
Lerato C. Bapela ◽  
Collins C. Ngwakwe ◽  
Mokoko P. Sebola
Keyword(s):  
South Africa ◽  
Quantitative Research ◽  
Secondary Data ◽  
P Value ◽  
Unique Contribution ◽  
Water Infrastructure ◽  
Control Variables ◽  
Policy Makers ◽  
Infrastructure Finance ◽  
Water Provision

This paper evaluated the relationship between water infrastructure financing and water provision in South Africa. The research followed a quantitative research design; secondary data for water infrastructure financing and water provision in South Africa was obtained from the Trans - Caledon Tunneling Agency (TCTA) and the World Bank for the period 1994 - 2014 . The regression results indicated two separate findings which offers unique contribution to the current literature; results from water asset finance as a single independent variable on water provision showed a significant relationship. However, an addition of two control variables , corruption and violence, neutralised the effectiveness of water asset finance on water provision to the extent that water asset finance became less significant with a P value of 0.05. The paper makes a nuance contribution from the findings, which specifically is that finance alone may not deliver target water provision if corruption and violence is left unbridled. The paper thus recommends the need for public policy makers to control the rate of corruption and violence to enable effective application of water infrastructure finance in water provision. The paper also recommends the need for further research on other government departments to integrate corruption and violence as control variables. 

scholarly journals The Effect of Risks on Banking Safety: Applied Study on Jordanian Traditional Banks (2005-2016)

2017 ◽  
Vol 9 (9) ◽  
pp. 102
Author(s):  
Mohammad Abdel Mohsen Al-Afeef ◽  
Atallah Hassan Al-Ta'ani
Keyword(s):  
Interest Rate ◽  
Credit Risk ◽  
Commercial Banks ◽  
Banking Sector ◽  
Liquidity Risk ◽  
Interest Rate Risk ◽  
Bank Credit ◽  
Applied Study ◽  
Rate Risk ◽  
The Impact

Banking sector is one of the most important sectors that support the sustainable economic development in Jordan, therefore this study aimed to test the impact of risks; (Liquidity risk, bank credit risk and interest rate risk) on the safety in the banking sector in the Jordanian commercial banks during the period 2005-2016.The results of the study showed that there is a statistically significant impact for each of liquidity risk and interest rate risk on the safety in the banking sector, and there isn't statistically significant impact for credit risk on the safety in the banking sector during the period of this study, and also find that the explanatory of model was 60.5%, which means that 39.5% due to other factors.

scholarly journals Determinants of Credit Risk: Evidence From Commercial Banks in Malaysia

2021 ◽  
Vol 16 (1) ◽  
pp. 134-143
Author(s):  
Noor Hafizha Muhamad Yusuf ◽  
Mohamad Shukery Mohamad Shamsudin ◽  
Wan Mohd Yaseer Mohd Abdoh ◽  
Noor Sharida Badri Shah ◽  
Rozihanim Shekh Zain
Keyword(s):  
Credit Risk ◽  
Significant Relationship ◽  
Commercial Banks ◽  
Fe Model ◽  
Panel Regression ◽  
Return On Equity ◽  
Factors Affecting ◽  
Independent Variables ◽  
Interest Income ◽  
The Relationship

The purpose of this study is to determine the relationship between microeconomic factors with credit risk among selected commercial banks in Malaysia. For this purpose, a sample of seven out of 27 commercial banks in Malaysia was selected and the microeconomic factors affecting credit risk with six measurements of return on asset (ROA), bank size, leverage, the ratio of capital, interest income and return on equity (ROE) were examined by applying Panel Regression Fixed Effect (FE) Model for a period 20 years from 1998 to 2017. The scope of the study covers seven selected commercial banks in Malaysia namely: Affin Bank Berhad, Alliance Bank Malaysia Berhad, CIMB Bank Berhad, Hong Leong Bank Berhad, Malayan Banking Berhad, Public Bank Berhad and RHB Bank Berhad. This study is using credit risk proxy by non-performing loan for dependent variable while independent variables that have been selected were returned on asset (ROA), bank size, leverage, the ratio of capital, interest income and return on equity (ROE). The findings of the study managed to reject the null hypothesis for return on asset, bank size, leverage, interest income and return on equity which indicates the five microeconomic variables give a significant relationship with credit risk. There are positive relationships between leverage, interest income and return on equity with credit risk while return on asset, bank size and ratio of capital are negatively related to credit risk. However, the study fails to find any significant relationship between the ratio of capital and credit risk for commercial banks in Malaysia.

scholarly journals Determinan Suku Bunga dan Likuiditas Bank Terhadap Pertumbuhan Kredit di Indonesia

Jurnal Ecogen ◽  
2020 ◽  
Vol 3 (2) ◽  
pp. 200
Author(s):  
Yeniwati Yeniwati
Keyword(s):  
Interest Rate ◽  
Interest Rates ◽  
Commercial Banks ◽  
Secondary Data ◽  
Least Square ◽  
Bank Credit ◽  
Credit Growth ◽  
Ordinary Least Square ◽  
Banking Community ◽  
The Interest Rate

This study aims to determine the effect of the interest rate (BI rate) on bank credit growth in Indonesia, liquidity on bank credit growth in Indonesia and determine the effect of interest rates and liquidity on bank credit growth in Indonesia. The method used in this study is Ordinary Least Square (OLS) using secondary data from 2009 Quarter I to 2018 Quarter IV. The results of the analysis showed that there was an influence between interest rates on bank credit growth in Indonesia, there was an influence between liquidity on bank credit growth in Indonesia. Together there is an influence between interest rates and bank liquidity on the growth of bank credit in Indonesia. The policy implication of this research is that Bank Indonesia must maintain the benchmark interest rate set in order to trigger an increase in bank credit growth. In addition, Bank Indonesia must monitor the liquidity of commercial banks in Indonesia so that the trust of the banking community is even greaterKeywords : interest rate, Liquidity, Credit

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