Bank Size and Non Performing Loans of Commercial Banks Listed at the Nairobi Securities Exchange, Kenya

Baituti Catherine Mwendwa and Dominic Ngaba
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Baituti Catherine Mwendwa: Department of Accounting and Finance, School of Business, Kenyatta University, P.O. Box 43844-00100, Nairobi, Kenya.
Dominic Ngaba: Department of Accounting and Finance, School of Business, Kenyatta University, P.O. Box 43844-00100, Nairobi, Kenya.

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Abstract: The financial services carried out by banking firms in Kenya entails financial intermediation which is the process whereby they distribute funds from surplus framework to deficit means, however, they are often challenged with the problem of loan default by customers which brought about the concept of non performing loans which has brought lots of concerns to the stakeholders. This negatively affects the asset constituent of the banks' balance sheet and the income statements. The study sought to find out on what effect bank size has on non performing loans of banks, in the Nairobi Securities Exchange. Theory of optimal bank size will be used to corroborate the study findings while causal design of research was adopted. The target population comprised of the 11 (eleven) banks listed on the Nairobi Securities Exchange, Kenya operational between 2012 and 2017 in which a census approach was adopted. Panel regression analysis was utilized to analyze the quantitative secondary data and the results were presented in tables, figure and charts. The study concluded that bank size and had insignificant effects on non performing loans of listed commercial banks in Kenya and also recommended that measures should be put in place by banks to reduce long operational procedures. In addition, an efficient operational monitoring system should be adopted to manage their growing assets.

Date: 2022-04-22
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Published in Asian Journal of Economics, Finance and Management , 2022, 4 (1), pp.324-329

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Persistent link: https://EconPapers.repec.org/RePEc:hal:journl:hal-05149820

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