The Relationship Between Insider Lending and Financial Risk of Commercial Banks in Kenya

Abstract

This research study was conducted to enable the researcher to determine the effect of insider lending levels on financial risk of commercial banks in Kenya. Financial risk was measured using liquidity ratio. Insider lending was the independent variable. Lending rate, exchange rate and credit risk were used as the model control variables. The study used a descriptive research design. The population of the census study comprised all the forty two commercial banks in Kenya. Secondary data was collected on the study variables from the published annual reports and financial statements of the said banks and the annual periodic reports published by the Kenya National Bureau of Statistics. Data collected was summarized and organized into form of tables and data analysis undertaken. Data analysis was undertaken using regression and correlation analyses, as well as descriptive statistics. The research study finds that insider lending has a weak effect on financial risk among commercial banks in Kenya.