The Effects of Credit Reference Bureaus on the Cost of Credit Among Commercial Banks in Kenya
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Date
2016Author
Ngaragari, Paul K
Type
ThesisLanguage
en_USMetadata
Show full item recordAbstract
Credit risk management has always been a central issue in successful commercial bank
management. Loan delinquencies arise due to debt default. The study sought to determine
effects of CRB firms on the cost of credit among commercial banks in Kenya. This study
adopted longitudinal design which is one in which multiple observations are made over
time to establish a trend. The population consisted of all the 44 lending institutions
operating in Kenya. Secondary data was used from banks‟ annual reports, the general
business publications, reports from different financial institutions and the central bank‟s
annual supervisory reports. Correlations of the independent and dependent variables will
be analyzed to identify the direction of the relationship between the variables under
study. This was followed by analysis where both descriptive and inferential statistics will
be used. The findings will be presented by means, standard deviations, tables and
figures. Statistically significant association exists between annual inflation and the cost of
borrowing among financial institutions in Kenya. Interest charged on deposits affect cost
borrowing among lending institutions in Kenya. Interests on T-bills also affect the cost of
borrowing among lending institutions in Kenya. Statistical association was established
between annual CBR and cost of borrowing among lending institutions in Kenya.
Furthermore, CRB affects the cost of borrowing among lending institutions in Kenya.
Central Bank of Kenya should put in place sound monetary and fiscal policies that
stabilize inflationary pressure within the country. This will keep the inflation rates stable
and therefore making the cost of credit affordable. The study also recommends that
lending institutions in Kenya should offer affordable interest rates on customer deposits.
There should be minimal discrepancies between interest charged on deposits and interest
on loans advanced to customers by lending institutions in Kenya. Central Bank of Kenya
should supervise and regulate the interest on T-bills charged by lending institutions on
short term credit. The study further recommends that the national treasury in connection
with the central bank should fully operationalise the credit reference bureau mechanisms.
Sound policies ought to be set in place to guide the functioning of the CRB in Kenya
Publisher
University of Nairobi
Rights
Attribution-NonCommercial-NoDerivs 3.0 United StatesUsage Rights
http://creativecommons.org/licenses/by-nc-nd/3.0/us/Collections
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