The Effect of Lending Interest Rate Volatility on Financial Performance of Banks Sector in Kenya
Abstract
The financial institutions are essential for the growth and sustainability of the economy. A connection amid the financial performance and interest rates of a firm exists for it is one on the major economic factor that influences the economic growth. The rate of interest influences the capital cost to the investor and the returns of various bank savers. The aim of this research was to discover the effect of interest rate volatility on the Kenya commercial banks performance in financial area. The research employed a descriptive survey and the population of this study was averages of all commercial banks in Kenya 42 in total, hence a census was carried out because of its relatively low population size. The study used quarterly secondary data which was gathered between 2007 and 2016 period. To analyze the collected data the regression model was adopted. The findings revealed that the relationship between rates of interest volatility and commercial banks financial performance was negative and insignificant whereas the relation between credit risk and commercial banks in Kenya financial performance was positive and insignificant. The results also established that the relationship amid financial performance and inflation of the commercial banks was negative and vital while the relationship amid real GDP and financial performance of was positive and significant. The research settled that Kenyan commercial banks financial performance is not significant influence by interest rates volatility and credit risk. The study also concluded that inflation and economic growth significantly affects the Kenyan commercial banks performance. The research recommended that the CBK should come up with policy mechanisms to counter the effects of inflation and to foster economic growth.
Publisher
University of Nairobi
Subject
The Effect of Lending Interest Rate Volatility on Financial Performance of Banks Sector in KenyaRights
Attribution-NonCommercial-NoDerivs 3.0 United StatesUsage Rights
http://creativecommons.org/licenses/by-nc-nd/3.0/us/Collections
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