Strategic Responses to Changes in the External Environment by Pension Administrator Companies in Kenya

Abstract

Commercial banks assume a crucial part in the financial asset allotment of nations. They channel stores from contributors to financial specialists persistently. They can do as such, on the off chance that they produce vital pay to take care of their operational expense they bring about in the proper way. The managing an account part controls in Kenya by the controller, Central Bank of Kenya, have led to increased enforcement of regulations in banking including streamlining operations and reporting. Part of the focus has been related party lending, lending to employees, directors and relations of directors, and the banks’ control of their non-performing loan book. The International Standards of Accounting define a related party as person or element that is identified with the element that is setting up its money related articulations. A man or a nearby individual from that individual's family is identified with a reporting element if that individual: has control or joint control over the reporting substance, has huge impact over the reporting element; or is an individual from the key administration work force of the reporting element or of a parent of the reporting element. This study seeks to establish the relationship between related party lending and bankruptcy probability in commercial banks in Kenya. A casual plan was embraced as the examination outline real accentuation was on deciding a circumstances and end results relation among related party lending andbankruptcy probability of commercial banks in Kenya. Research populace consisted all the 43 commercial banks in Kenya. The primary data was obtained from published financial statements for a period of three fiscal periods from 2013 to 2015. The data was checked for completeness and analyzed using the statistical package for social sciences (SPSS) package. Tables were used to present the analyzed data. ix The study concludes that related party lending is a significant determinant of bank bankruptcy probability. There is a positive correlation between related party lending and bank bankruptcy probability. Related party lending is deemed to include insider and non-performing loans. Commercial banks that are keen on increasing profitability and reducing bankruptcy likelihood should focus more on the levels of insider and non-performing loans that they carry in their books.