FINANCIAL RISK AND FINANCIAL PERFORMANCE OF COMMERCIAL BANKS LISTED IN THE NAIROBI SECURITIES EXCHANGE IN KENYA

Winnie Wambui Mwangi (), Dr Joshua Bosire Ong'era () and Dr Joshua Matanda ()

International Journal of Finance and Accounting, 2022, vol. 7, issue 4, 1 - 17

Abstract: Purpose: The objective was to determine the relationship between financial risk and financial performance of listed commercial banks in Kenya. Methodology: Descriptive research design was adopted in the study. The target population of the study was formed by all the twelve listed commercial banks as at December 2021. Secondary data was utilized in the study. This secondary data was acquired from published financial statements of the listed commercial banks in Kenya for the period 2015 - 2020. Data obtained was analysed using descriptive and inferential statistics. Further, data analysis was conducted using STATA software. The results obtained were then summarized using tables and charts. Findings: The study found that credit risk, liquidity risk, market risk and operational risk explain 31.42% of financial performance of the listed commercial banks. Credit risk has a positive significant effect on financial performance of the listed commercial banks, while market risk and operation risk have negative and significant effect on financial performance of the listed commercial banks. Liquidity risk was found have positive insignificant effect on financial performance of the listed commercial banks. Unique contribution to Theory, Practice and Policy: The study recommends that the banks should increase their secured loans portfolio, manage the liabilities of the company and ensure sustainable growth of the company assets and finally, the listed commercial banks should manage their expenses to a level that is sustainable. The credit risk theory and liquidity preference theory may be used to anchor future studies in the listed commercial banks.

Keywords: Financial Risk; Financial Performance; Listed Commercial Banks (search for similar items in EconPapers)
Date: 2022
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