INFLUENCE OF INTEREST RATE ON THE FINANCIAL PERFORMANCE OF SELECTED BANKS IN NAIROBI COUNTY
Abstract
This study mainly purposed to determine the influence that interest rate had on the level of performance of the commercial banks of Nairobi County. Questionnaire and data collection sheets were used to collect primary and secondary data respectively. Descriptive statistics were computed, while linear and multiple regression analysis were calculated to determine the association of variables. A total of 100 questionnaires were distributed amongst the pre-identified respondents, 95 were returned dully signed. The results were analyzed through descriptive and inferential statistics was indicative that the independent variable had an effect on the performance of banks under investigation. The results showed that interest rate significantly impacted the levels of performance exhibited by the commercial banks under study. The study settled that interest rates has a significant impact on performance levels exhibited by the commercial banks under study, thus setting effective and favorable interest rates can improve the profits margins of such banks, thereby leading to improved financial performance. The study further reiterated that commercial banks should ensure their interest rates are favorable and attractive to the borrowers. Good interest rates ensure maximum returns and good profitable customer base. A further study can be replicated by use of panel study and time series data in the study model.
Key Words: Interest Rates, Financial Performance, Banks in Nairobi County
CITATION: Waweru, M. W., & Miroga, J. (2019). Influence of interest rate on the financial performance of selected banks in Nairobi County. The Strategic Journal of Business & Change Management, 6 (2), 2118 – 2127.
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DOI: http://dx.doi.org/10.61426/sjbcm.v6i2.1243
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