Selected Determinants of Financial Performance of Commercial Banks Listed in Nairobi Securities Exchange, Kenya

Erickson Matundura and Oseko Deborah Kwamboka
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Erickson Matundura: University of Eldoret, Kenya
Oseko Deborah Kwamboka: University of Eldoret, Kenya

International Journal of Research and Innovation in Social Science, 2025, vol. 9, issue 1, 620-630

Abstract: The main goal of every banking institution is to operate profitably in order to maintain stability and sustainable growth. An internal economic environment is viewed as critical drivers for bank performance. According to the financial stability report released in 2020, despite the resilience across the Kenyan banks, they were still experiencing increased non-performing loans affecting their profitability. The resolve of the study is to investigate the effect of bank specific determinants on financial performance of commercial banks listed in Nairobi Securities Exchange, Kenya. The study was anchored on inverted U hypothesis. Explanatory research design approach was adopted with panel secondary data spanning from the period 2011-2020. Regression analysis established that, bank size and debt ratio had a negative and significant effect on financial performance while bank capital . had a positive and significant effect on financial performance. The study recommends that banks ought to adopt strategic asset management. Banks should prioritize efficient capital allocation and diversification. On debt ratio, the government should implement counter- cyclical policies to reduce risks during economic downturns.

Date: 2025
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