| dc.description.abstract | Commercial banks in Kenya have had a high rate of loan default from the
borrowers which have caused significant losses to the banks. This is attributed to
existence of information asymmetry where commercial banks have varied credit
information and credit history about their borrowers. The credit seekers have
taken this shortfall to get loans from different commercial banks which increases
their rate of default because they might fail to service back all the loans. This
study determines the effect of adopting credit reference bureaus (CRBs) as a
strategic response to loan defaulting among commercial banks in Kenya. The
population of the study consisted of all the commercial banks in Kenya.
Information collected was by use of a questionnaire which made use of both open
and closed ended questions. The questionnaire used a five point Likert scale
which ranged from strongly agree to strongly disagree. Data was edited for
accuracy, uniformity, consistency and completeness and arranged to enable
coding and tabulation for final analysis. The results revealed that the credit
information sharing increase in confidence of commercial banks while giving
loans unlike before the CRB became operational. The study established that more
and more commercial banks and other lending institutions have turned to CRB for
credit information to minimize the loan defaulting. The results revealed that the
strategic response strategies increase in confidence of commercial banks while
giving loans unlike before the CRB became operational. The study recommends
that commercial banks should adopt adequate credit referencing mechanisms as
the concept has positive contribution to reduction of loan default, the banks
should establish a credit management team that would be responsible and ensure
that all customers who may seek to take up a loan with the bank are vetted and
checked against the licensed CRBs in Kenya before the approval. Further studies
can be performed on other sectors of the economy other than banking industry
and research can be done on the positive effect information gathered by CRBs
would have on credit scoring and access to credit. | en_US |
