Effect of non-interest income on profitability of commercial banks in Kenya
Abstract
Non-interest income is seen an extra source of income for commercial banks which is
essential to enhance profitability of commercial banks in Kenya. The study sought to
determine the effect of non-interest income on profitability of commercial banks in
Kenya. To achieve this objective the study used a descriptive survey. The population
of the study constituted all the 43 commercial banks in Kenya. The data was gathered
from financial statements and records. Data analysis was done using a regression
model. The study found that non-interest income was positively related to profitability
of commercial banks. Bank size and liquidity were also found to be statistically
significant since their p-values were less than 5%. The correlation results were found
there was a moderate correlation between Non-interest income and profitability of
commercial banks. The study recommends that firms should offset the risk of doing
business. The limitation of this study is that it used financial statements which do not
give a complete picture of the activities and projection of commercial banks
profitability because the financial statements are historical in nature and might not
necessary reflect the actual needs of the researcher this might have affected the
validity and reliability of data and thus impact negatively on the findings obtained.
Publisher
University of Nairobi