Relationship between interest rate spread and financial performance of the commercial banks in Kenya
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Date
2012Author
Mang’eli, Michael Y.
Type
ThesisLanguage
enMetadata
Show full item recordAbstract
The research aims at contributing to the growing number of studies on banking
performance by attempting to introduce the interest rate spread as one of the factor
behind financial performance in the banks .
Interest rate spread is defined by market microstructure characteristics of the banking
sector and the policy environment. Risk-averse banks operate with a smaller spread than
risk-neutral banks since risk aversion raises the bank’s optimal interest rate and reduces
the amount of credit supplied. Widening interest rate spread in Kenya has been widening
following interest rate liberalization characterized by high implicit costs with tight
monetary policy achieved through increased reserve and cash ratios and declining nonperforming
loans. This study sought to establish the relationship between interest rate
spread and financial performance of the commercial banks in Kenya.
This study adopted a descriptive research design on a sample of quoted commercial
banks in Kenya. The study used secondary data, collected from Bank Supervision Report.
The study used quantitative techniques in data analysis to the relationship between the
interest rate spread and performance of commercial banks. The data is presented using
tables
Citation
MBA Thesis 2012Sponsorhip
University of NairobiPublisher
School of business