| dc.description.abstract | Over the years commercial banks in Kenya have been performing tremendously. In
Kenya, the bank lending interest rates are always charged on loans by the commercial
banks to private individual and companies. The main objective for the study was to
determine to what extent lending interest rates affect profitability of commercial banks.
The study used descriptive research design using secondary data obtained from Central
Bank of Kenya for the period of five years from 2010 to 2014 as well as published
commercial banks annual reports 2014. Data obtained was analyzed using SPSS version
2.0 and results obtained tested for significance using ANOVA. The study found that
lending interest rates have significant positive effect on financial performance of
commercial banks in Kenya at 95% confidence level. The relationship between lending
interest rates and profitability of commercial banks was also found to be linear with
increase in lending interest rates leading to higher profitability. The study also concluded
that bank size, capital adequacy, and operational costs all significantly had effect on
profitability of commercial banks. The study recommended that policies to be put in
place to shield bank lending rates and ensure monitoring the same. | en_US |
