dc.description.abstract | Risk management is an integral part of good management practice. Poor credit risk
management practices leads to rising non-performing loans which compresses profit
margins, of commercial banks hence bringing about more challenging environment for
banks. Lending has been and still is the mainstay of financial institutions and this is
more true to emerging economies of developing countries where capital markets are not
yet well developed. To most of the transition economies, lending activities has been a
controversial and difficult matter. This study sought to determine the effects of credit
risk management practices on non-performing loans in commercial banks in Kenya.
The study used descriptive research design and the target population for this study was
44 banking institutions transacting business in Kenya as at December 2012 whereby the
study carried out census. the study used both primary and secondary data whereby the
dat was analyzed using Statistical Package for Social Sciences (SPSS). Data
presentation was done by the use Frequency tables and graphs and percentages.
The study findings established that Risk identification affected the level of
nonperforming loans in their banks to a great extent and that risk rating and collateral,
credit scoring, credit worthiness analysis affects the the level of nonperforming loans'
the banks to a great extent. The study findings established that risk analysis and
appraisal affected the level of nonperforming loans their bank to a great extent and that
measurement, risk estimation and determining risk reduction measures affect the
performance of the bank to a great extent. This study recommends that clear established
process for approving new credits and extending the existing credits need to established
in banks as it is very important while managing credit risks in banks. the study further
recommends that credits to related parties should be closely analyzed and monitored so
that no senior individual in the institution is able to override the established credit
granting process and that monitoring of borrowers should be keenly executed by banks | en_US |