dc.description.abstract | Commercial banks are always keen to record better financial performance at the end of every
fiscal year. This has always been the case because financial performance is always regarded to be
an important subject within the field of finance given the specific functions which commercial
banks perform in the economy. As commercial banks compete for customers, the factors that
play a crucial role in influencing how banks perform financially continue to attract the attention
of the concerned stakeholders. The need to ensure commercial banks are able to post better or
improved financial performance compels these stakeholders to study the determinants of
financial performance that matter to banks and by extension concentrate on areas that need to be
improved for the sake of bettering performance. Due to this concern, this study had to be
designed in a way that would support the evaluation of the effect which firm characteristics have
on banks’ financial performance within the Kenyan financial market. Since the objectives of the
study matter, a descriptive and diagnostic research design was adopted. Out of the 39
commercial banks that had obtained the official license to serve customers in the Kenyan market
by the CBK as of the 30th of September 2021, only 36 commercial banks were taken as a sample
for the study. Attention was directed to the period that falls between January 2017 and December
2021, and this confirms that secondary data from the 36 commercial banks is associated with a
period of five years. Regression analysis, correlation analysis, and descriptive analysis were
employed in performing data analysis. The level of significance was identified in the first place
before it was tested at 5 percent. The study found that liquidity, bank size, and the age of the
bank are positively correlated with ROA. However, capital adequacy and asset quality were
found to have a negative influence on ROA. Independent variables (liquidity, the size of the
bank, capital adequacy, asset quality, and the age of the bank) would account for 36.9 percent of
the variance in ROA. Out of the five independent variables, liquidity and capital adequacy were
found to be statistically significant with ROA at the five percent significance level. The study
recommends that commercial banks are supposed to concentrate on the major internal firm
characteristics even when attention is being directed to key advancements that matter in the field
of bank technology, intense competition among rival industry players, and the consolidation of
banks. | en_US |