An evaluation of financial performance of the Kenyan Banking sector for the period 1987 To 1999
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Date
2000-10Author
Kathanje, Musa N
Type
ThesisLanguage
enMetadata
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This study set out to achieve the following three objectives:
o To evaluate financial performance of the Kenyan Banking Sector during the period 1987 to
1999 using financial ratio analysis,
o To determine whether the financial performance in the Pre Liberalisation period (1987- 1992)
is significantly different from performance in the Post Liberalisation period (1993 - 1999),
o To formulate a Performance Predictive Model for the Banking Sector using the data for the
period under consideration.
Secondary data obtained from financial statements and various publications was used in the study
and data was analysed by use of Microsoft (Ms) Excel Statistical package.
On financial performance evaluation of the Banking Sector, the study observed an improved
performance over the period with better performance in the sector noted in the Post Liberalisation
period. The performance in the sector as measured by (Z) was low in the Pre liberalisation period but
improved thereafter. The result of the study led to the conclusion that liberalisation in the Kenyan
Banking Sector positively influenced performance and was better for the economy. A discriminant
analysis revealed that three financial ratios; Liquidity, Gearing and Earnings have the greatest
influence on the sector's financial performance ."
Based on the ratios computed in this study, a performance predictive model for the Commercial
Banks and Non- Bank Financial Institutions was formulated using regression analysis. The model
helped to explain the effects of performance ratios (Gearing, Liquidity, Earnings and Asset Quality)
to Overall financial performance of each institution. This model can be used to signal performance
trends in the sector paving way for a further detailed financial evaluation aimed at unearthing the
financial problems in the respective institution.
The models developed for the peer groups revealed that no significant difference exists among
institutions in different peer groups. An institution in one peer group is as prone to failure as any
other in a different peer group.
The study is organised in five chapters as follows: Chapter one gives the introduction of the study by
giving the structure of the Banking system, the background information, licensing procedures,
powers of the Central Bank of Kenya, evolvement of the banking institutions in Kenya, statement of
the problem, objectives of the study and significance of the study. Chapter two deals with the
Literature Review by outlining the theoretical and structural frameworks. Research Design is
outlined in chapter three dealing with the population and sample for this study, data collection
techniques and data analysis. Chapter Four details the data analysis by discussing both trends and
statistical analysis. Finally, conclusions, summary, limitations of the study and recommendations for
further research are outlined in chapter five.
Citation
Masters of Business and Administration,university of nairobi,2000Publisher
Faculty of Commerce,