INFLUENCE OF CAPITAL ADEQUACY REQUIREMENT ON FINANCIAL PERFORMANCE OF COMMERCIAL BANKS LISTED AT NAIROBI SECURITIES EXCHANGE
Abstract
In recent decades; there has been unprecedented number of disruptive banking crises. Financial performance of commercial banks have been challenged over time and this has seen some commercial banks placed under receivership. Between 2019 to 2020, return on assets and return on equity has decreased making financial performance to decline. The main objective was to determine the influence of Capital adequacy requirement on financial Performance of Commercial Banks listed at Nairobi Securities Exchange. The study adopted a descriptive survey research on a population of 12 commercial banks listed at Nairobi Securities Exchange Kenya. This study used secondary data from published Central Bank of Kenya financial reports. The study used stata software version 15 in data analysis. The study data was analyzed by both descriptive statistics and inferential statistics. Results were presented by use of tables. Panel data Pearson Correlation results capital adequacy requirement as P=0.0268 (P<0.05) hence significant. The study hence found that Capital adequacy requirement had positive and significant influence on financial performance of commercial banks listed on the Nairobi Securities Exchange. Therefore bank managers should invest in assets to improve capital base. The study concluded that Capital adequacy requirement was of value in the banking sector and policy guidelines to see them effective being vital. The study recommended that managers of listed commercial banks should find ways of minimizing non performing loans to make bank capital adequate. This study is of help to bank managers in addressing capital adequacy compliance requirement and financial performance of commercial banks.
Key words: Commercial banks, capital adequacy compliance requirement, Financial Performance
CITATION: Naliaka, M. L., Tibbs, C., & Bulla D. (2022). Influence of capital adequacy requirement on financial performance of commercial banks listed at Nairobi Securities Exchange. The Strategic Journal of Business & Change Management, 9 (4), 1252 – 1259.
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DOI: http://dx.doi.org/10.61426/sjbcm.v9i4.2491
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