The Effect of Credit Reference Bureaus on the Financial Performance of Commercial Banks in Kenya

Abstract

The study examined the relevance of credit reference bureaus and its effects on the financial performance of banks in Kenya. The specific objective of the study was; to establish the effect of credit reference bureaus on the financial performance of banks in Kenya. The study adopted a descriptive design and used secondary data in analysis. The target population consisted of 44 banks. The research findings showed that before commissioning of credit reference bureaus the semi-annual financial performance of banks was fairly constant. However the financial performance increased slightly with commencement of credit reference bureaus. The findings also established that consumers and lenders find the credit reference bureaus useful in the financial industry in Kenya which will lead to a bigger credit market, lower default and interest rates, improved profitability for the financial institutions, increase price competitiveness of credit facilities, instill good credit behavior among lenders, improve pool of borrowers, expansion of lending and help improve access to credit in Kenya.