CREDIT RISK MANAGEMENT PRACTICES AND FINANCIAL PERFORMANCE OF COMMERCIAL BANKS IN KENYA, A CASE OF BANKS IN VIHIGA COUNTY
Abstract
Business environment is turbulent and characterized by a number of highly mutating factors; hence, both internal and external business environment can potentially affect survival, profitability and growth of enterprises. Existence of risks inflicts the operations of businesses and therefore it is important for risks to be identified and controlled in order to eliminate them or lower their severity. Commercial banks in developing economies especially Kenya has been reporting shrinking profits and a few have been put under receivership. In realization of the fact, this study aimed at assessing risks facing commercial banks in Kenya. The objective of this study was to determine the influence of Credit Risk Management Practices on performance of commercial banks in Kenya. This study adopted a descriptive research design and a panel data analysis. The target population was commercial banks in Vihiga County that are licensed and allowed to carry out business. The study census technique was applied because the target population was small. This study used both primary data and secondary data from the financial statements of the banks. Primary data was collected through issuance of structured questionnaire. Primary data analysis was done using SPSS version 23.0 and the panel data was analyzed using STATA version 12.0. Data was presented in tables and charts. The study revealed that credit risk management practices had a positive and significant influence on financial performance of commercial banks in Vihiga County; Kenya. The study recommended that it is important for banks to have a robust framework that effectively have Credit Risk Management Practices because they affect financial performance of commercial banks.
Key words: Credit Risk Management Practices, Financial Risks, Financial Performance
CITATION: Mudanya, E., Kadima, M. J., Miroga, J. (2022). Credit risk management practices and financial performance of commercial banks in Kenya, A case of banks in Vihiga County. The Strategic Journal of Business & Change Management, 9 (2), 305 – 316.
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DOI: http://dx.doi.org/10.61426/sjbcm.v9i2.2265
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