EFFECT OF INTEREST CAPPING ON FINANCIAL PERFORMANCE IN COMMERCIAL BANKS IN KERICHO COUNTY, KENYA
Abstract
The general objective of this study was to establish the effects of interest capping on financial performance of commercial banks in Kericho County, Kenya. This research adopted a quantitative cross-sectional survey research design aimed at collecting large number of qualitative and quantitative data at a point in time to address the formulated hypotheses. Stratified sampling technique was used to select sample size of 70 respondents from the target population of 86 respondents in commercial banks in Kericho County, Kenya. Primary data was collected by use of self-administered structured questionnaires which was distributed through the drop and pick method. The secondary data collected was used to cross validate the primary data results. The collected data was analyzed quantitatively and qualitatively. Descriptive and inferential statistics was done using Statistical Package for Social Sciences (SPSS) version 24 and specifically multiple regression model was used for hypotheses testing. Set of data was described using percentage, mean standard deviation and coefficient of variation and presented using tables, charts and graphs. The study revealed that interest capping had a statistically significant effect on financial performance of commercial banks in Kericho County. Short Loan Interest Capping had a statistically significant effect on financial performance of commercial banks in Kericho County. Mortgage Interest Capping had a statistically significant effect on financial performance of commercial banks in Kericho County. Deposit interest rate capping had a statistically significant effect financial performance of commercial banks in Kericho County. Fixed deposit interest capping had a statistically significant effect on financial performance of commercial banks in Kericho County. The study recommended that the regulator should be cautious on setting capping rates as it affects financial performance of banks.
Key terms: Central Bank Base Lending Rate, Commercial Banks, Inflation Rates Interest Rate Capping
CITATION: Musyimi, C. N., & Kising’u, T. M. (2019). Effect of interest capping on financial performance in commercial banks in Kericho County, Kenya. The Strategic Journal of Business & Change Management, 6 (2), 1130 –1149.
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DOI: http://dx.doi.org/10.61426/sjbcm.v6i2.1176
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