| dc.description.abstract | This exploratory study sought to investigate the factors that influence the liquidity level
of commercial banks in Kenya. Primary data was collected with the aid of a semi-structured
questionnaire. Data was analyzed using descriptive statistics and factor
analysis. Cross tabulation was also used to determine the relationship between the
variables and the demographic data.
The study identified the main factors that influence the liquidity level of commercial
banks in Kenya and ranked them as follows;
Factor one was outlined as the role played by the bank and its regulator. This factor
comprised variables such as central banks role, interest rates and bank obligation. Factor
two, performance and economic cycles, comprised of variables such as bank performance
and economic cycles. Factor three, monetary and employment policies, comprised of
monetary policy and price of labor. Factor four, government expenditure, consisted of
banks contingency planning and government expenditure. While balance of payment
status came last as factor five. Other factors include; target market, government role, inflation, integrity of the
employees, maturity of loans and deposits, customer service, regularity of cash deposits,
competition, branch location, and the level of idle assets in that order
From the study it can be concluded that there are other factors, other than CBK
regulation, which influence the liquidity level of commercial banks in Kenya. However,
liquidity regulation by the central bank of Kenya still ranks as number one factor in
influencing the liquidity level of commercial banks. | en |
