The effect of non-performing loans the financial performance Of commercial banks in Kenya
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Date
2016Author
Kinuthia, Ann P. N
Type
ThesisLanguage
enMetadata
Show full item recordAbstract
This study was carried out with objective of finding out whether the commercial banks in Kenya
have had their profitability impacted significantly by non-performing loans. The findings were that
although banks are impacted by non-performing loans (which form part of their expenses), the
impact were not adverse enough to affect the growth of the return on assets negatively. What this
simply meant was that in Kenya, as banks continued to increase their non-performing loans, it
resulted in increase in the loan book. Simply put, it seemed that non-performing loans was an
inevitable price to pay for increase in the loan book and the returns thereof. Commercial banks in
Kenya should focus more on reducing the level of non-performing loans in their portfolio so as to
reverse the current status quo where as non-performing loans seem to be moving in the same
direction as the loan book.
The increase in the loan book for most banks and consequently the growth in profitability was
attributed to the considerable economic growth noted in the African economy which has
strengthened the development of many sectors in the economy mainly as a result of increased
investor confidence on the future of the African market.
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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