| dc.description.abstract | Bank - Specific factors are internal factors which influence the financial performance of a
specific bank The objective of this study was to determine and evaluate the relationship
between bank-specific factors; capital adequacy, asset quality, liquidity and management
efficiency on the financial performance of Commercial Banks in Kenya. This study used
secondary data of the 43 Kenyan commercial banks from 2008 to 2012 obtained from the
CBK and Banking Survey 2012. The data was analyzed using Multiple Regressions
method.
The findings show that bank specific factors considered are significantly associated with
financial performance as indicated by the positive mean values and their respective
standard deviations. This means that bank specific factors variables considered in the
study Capital Adequacy, Liquidity, Management Efficiency and Asset Quality are very
crucial in affecting financial performance of commercial banks in Kenya. My results
show that the capital strength of a bank is of paramount importance in affecting its
profitability. A well-capitalized bank is perceived to be of lower risk and such an
advantage will be translated into higher profitability. On the other hand, the asset quality
affects the performance of banks adversely. In addition, banks with a large retail deposittaking
network do not achieve a level of profitability higher than those with a smaller
network.
Based on the findings the study recommends policies that would encourage revenue
diversification, reduce operational costs, minimize credit risk and encourage banks to
minimize their liquidity holdings. Based on the findings the study recommends that these
factors should be taken in to account by the management to avoid financial distress that
may result due to poor management of the same. Further research on the said factors
could add value to the financial performance of Commercial Banks and academic
literature. | |
