Strategic response to the global financial crisis of 2008 in selected major commercial banks in Kenya
The major objective of this study is to identify the strategic responses by the selected major commercial banks in Kenya to the recent global financial crises of 2008. Many banks in other parts of the world were negatively affected and even closed down. It is therefore important to understand how the banks were able to cushion themselves against the adverse effects of the global financial crises. For this study the banks that were selected are Barclays Bank, Kenya Commercial Bank, Equity Bank and cooperative Bank of Kenya. Global financial crises of 2008 started in the USA where Banks doing mortgage faced a liquidity problem due to lending to sub-prime borrowers who could not be able to pay back loans. They would repossess the houses sold to other sub-prime borrowers. The circle continued until there were more houses repossessed than the market could absorb. The value of the property dropped and banks had a lot of worthless properties and little money to support operations. This saw some big banks close down or run bankrupt. This study has revealed the strategic responses adapted by the selected major commercial banks in Kenya to cushion them. This included prudent cost management and review of existing products and policies especially in lending. Among the fourteen respondents it was noted that all the banks strategically responded to the global financial crises in order to remain competitive. Using s five-point Likert scale with (A lot, average, less, No change and I don’t know) the study was able to reveal that more attention was focused on realigning and reviewing policies around products as well as prudent cost management. It is incumbent that upon firms keep on scanning the environment to identify any threats or opportunities so as to be able to strategically respond. From the study it is important to note that the banks responded in different ways towards the effects of Global financial crisis. While some were slowing down in expansion programs, others were accelerating in the same. Going forward it is important that Kenya Bankers Association which is a linking body and a policy custodian with all Commercial bank in collaboration with the central bank of Kenya to come up with a nerve centre for research. This would help raise a flag in case of any expected force from the environment. Banks should also invest a lot in research and development not only in products but also on matters relating to global economics.