Operational Risk, Bank Size and the Financial Performance of Commercial Banks in Kenya

Jane Gathigia Muriithi and Kennedy Munyua Waweru
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Jane Gathigia Muriithi: School of Businessand Economics, Africa International University, Kenya
Kennedy Munyua Waweru: School of Business and Economics,The Co-operative University of Kenya, Kenya

International Journal of Finance & Banking Studies, 2017, vol. 6, issue 3, 39-50

Abstract: Operational risk threatens banks financial viability and long-term sustainability. The purpose of thispaperis to explorethe effect of operational risk on financial performance of commercial banks in Kenya.The qualitative research design and ordered logistic model were employed. The data was analysed with the aid of STATA software.The conclusion of the study was that there exists an inverse relationship between operational risk and financial performance.The studyalso finds that bank size moderates the effect internal and external fraud on financial performance of commercial banks in Kenya by shrinking it. Bank size moderates the effect execution, delivery and process management on financial performance of commercial banks in Kenya by enhancing it.Commercial banks’ management should adhere to the guidelines and procedures provided by the Central bank of Kenyaon operational risk management.

Keywords: Operational Risk; Bank size; FinancialPerformance; Commercial Banks (search for similar items in EconPapers)
Date: 2017
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Citations: View citations in EconPapers (3)

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