EFFECTS OF CAPITAL ADEQUACY ON FINANCIAL DISTRESS IN COMMERCIAL BANKS IN KENYA
Abstract
The study objective was to determine the effect of capital adequacy on financial distress in commercial banks in Kenya. Descriptive survey research design was used to find the link between capital adequacy and financial distress. The target population was all the 43 commercial banks licensed to operate in Kenya. A census approach was adopted where all branch operations managers, branch managers and credit managers of the 43 commercial banks making a total of 129 as target population. The data was collected and fed in statistical packages of social science (SPSS) and analyzed by use of descriptive and inferential data analysis technique. It was presented in the form of frequency tables. The study adopted primary data which was collected using a structured questionnaire. The study would help investors when making investment decisions. The findings indicated that there was weak positive and non-significant relationship between capital adequacy and financial distress. This implied that improved capital adequacy results in slight increase of financial distress.
The study hopes good relationship between management and shareholders so as to ensure institutions are run professionally and therefore perform well. The study was important for commercial banks to encourage foreign investors and institutional investors because presence of these investors improves the performance of the banks.
Key Words: Capital Adequacy, Financial Distress, Commercial Banks
CITATION: Aliela, J., & Miroga , J. (2019). Effects of capital adequacy on financial distress in commercial banks in Kenya. The Strategic Journal of Business & Change Management, 6 (2), 2128 – 2137.
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DOI: http://dx.doi.org/10.61426/sjbcm.v6i2.1244
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