The aim of the research is to identify the determinants of bank profitability. Determinants of financial performance of microfinance. Review on research paper determinants of financial. Studies on moderating effect of ownership structure on bank performance are scanty. This study examined the factors affecting the accuracy of financial reports in listed banks in kenya. Determinants of commercial bank performance in transition. This was consistent with the findings of ngumi 20 who lauded that when significance level is very. The main objective of this study was to establish the determinants of financial stability of listed commercial banks in kenya. The relationship between bank performance and capital adequacy and management efficiency was found to be positive and for asset quality the relationship was negative. Determinants of the financial performance of private commercial banks in ethiopia. Analysis of determinants of profitability of commercial.
The researcher identified that internal factors are the major determinants of bank profitability. In this paper we provide some of the performance indicators. Thus, it can be concluded that the financial performance of commercial banks in kenya is driven mainly by board and management decisions, while macroeconomic factors. The effect of bank specific factors on financial performance of. This approach was used to describe variables rather than to test a predicted relationship between variables. The general objective of this study was to establish the effect of cash management in the performance of commercial banks in mogadishu, somalia. Influence of interest rates determinants on the performance. The effect of corporate social responsibility on the. Secondary data was used from nairobi securities exchange for listed banks and management of banks that are not listed. Financial intermediaries perform indirect financing, and in this context, commercial banks are very important participants. But the overall effect of macroeconomic variables was inconclusive at 5% significance level.
Determinants of financial performance of commercial banks in kenya. The findings showed that bank specific factors significantly affect the performance of commercial banks in kenya, except for liquidity variable. Microfinance provides strength to boost the economic activities of lowincome earners and thus contributes to eradication of poverty. The results indicated a positive correlation between macroeconomic stability, savings and investments, stock market liquidity and the financial performance of listed commercial banks. Abstract this working paper should not be reported as representing the views of the imf.
This study shows that bank specific factors internal factors are most significant determinants of the financial performance of commercial banks in kenya. Analysis of financial performance of selected commercial banks in india. Out of 43 commercial banks in kenya, are foreign owned while 30 are owned domestically as of 2011 central bank of kenya, 2011. The sample size for this research was the chinese banks listed in shanghai stock exchange and shenzhen stock. The role of commercial banks on financial inclusion in malawi. Pdf determinants of financial performance of micro. Factors affecting performance of commercial banks in albania. Abstractthe main purpose of this paper is to investigate the bank specific factors which can affect the financial performance of private commercial banks in ethiopia. A survey of commercial banks in nakuru town milly jepchumba tarus 1, dr. The determinants of commercial bank profitability in subsaharan africa prepared by valentina flamini, calvin mcdonald, and liliana schumacher1 january 2009.
The effect of bank specific factors on financial performance. Request pdf determinants of financial performance of commercial banks in kenya studies on moderating effect of ownership structure on. The rates of return of commercial banks are greatly and directly affected by the net interest margin, provisions for loan losses, revenues and expenses by the noninterest, taxes and the equity multiplier. The findings showed that bank specific factors significantly affect the performance of commercial banks in kenya. International journal of economics and financial issues, vol. Determinants of the financial performance of private. This study focuses on the financial performance of commercial banks in kenya. Results indicate that all the selected ratios have impact on financial performance of private commercial banks. Information about the openaccess article determinants of financial performance of commercial banks in kenya in doaj. As of 2011, 35% of banking assets in kenya are foreign held. Grigorian vlad manole at the time this research was initiated, david a. The purpose of this study was to evaluate the determinants of banks financial performance in. The specific objectives of this study were as follows.
Determinants of financial performance of commercial banks in kenya operating profit to income ratio rahman et al. This study aims to examine the impact of independent variables from camel model on bank performance in chinas banking sector. Jkuat, department of business administration abstract. The study targeted 356 employees of commercial banks under study which included both permanent and pensionable staff and employees on contract. The performance of commercial banks and the determinants. Determinants of financial performance of islamic banking. Determinants which affect liquid asset ratio of czech and slovak commercial banks. To establish how inflation rates affect the performance of commercial banks in kenya. The performance of commercial banks and the determinants of. On the other hand, the implementation mechanism of monetary policy is closely linked to the functioning of the banking system. The three banks are also ranked based on a camel rating system. This study adopted a descriptive survey research design. Determinants of financial performance of commercial banks in.
Determinants of financial performance of commercial banks. The determinants of the commercial banks profitability in. Pdf factors affecting financial performance of commercial. The study recommends that the finance managers of commercial banks maintain a balance between the level of liquid assets and long term assets to. Specifically, this study investigated the effects of capital adequacy, liquidity management. Determinants of financial performance of commercial banks in kenya abstract. The effect of corporate governance structure on financial performance of commercial banks in kenya, unpublished master. To fill this glaring gap in this vital area of study, the authors used linear multiple regression model and generalized least square on panel data to estimate the parameters. Obamuyi 20 evaluated the determinants of a banks profitability in a developing. This means portfolio diversification is a strong determinant of financial performance in commercial banks in kenya. The effect of financial distress on financial performance.
Determinants of financial performance of microfinance banks in kenya. Analysis of determinants of profitability of commercial banks. The determinants of commercial bank profitability in sub. Factors affecting financial performance of commercial banks in kenya. Following the financial crisis of the 20072009, stringent regulatory measures, such as. These independent variables from camel model include. Deposits are an indispensable tool commercial banks use to enhance its profitability through advancing deposits mobilized to its customers in form of loans which make in return interest to commercial banks. Ongore and kusa 20 conducted a research entitled determinants of financial performance of commercial banks in kenya examining the determinants of bank profitability of all commercial banks in. There are many aspects of the performance of commercial banks that can be analyzed. However, microfinance institutions face stringent competition from commercial banks. Bank specific factors are those factors within the direct control of managers and can be best explained by the camel framework. To this end, internal and external factors to the banks are regressed against the roaa of the commercial banks. This journal titled determinants of financial performance of commercial banks in kenya was done by vincent okoth ongore and gemechu berhanu kusa. The purpose of this study was to evaluate the determinants of banks financial performance in developing economies with a focus on kenyan commercial banks.
This research was conducted to investigate the determinants of the financial performance of islamic banking in malaysia. Ten years consolidated reports for 43 commercial banks in kenya was analyzed using linear multiple regression. Grigorian was with private and financial sector development unit, europe and central asia region, of the world bank. Thus, it can be concluded that the financial performance of commercial banks in kenya is driven mainly by board and management decisions, while macroeconomic factors have insignificant contribution. Thus, it can be concluded that the financial performance of commercial banks in kenya is driven mainly by board and management decisions. The moderating role of ownership identity on the financial performance of commercial banks was insignificant. Reference 26 studied the determinants of bank s profitability in developing economies. The higher the operating profits to total income revenue the more the efficient management is in terms of operational efficiency and income generation. Due to the high number of banks that have collapsed in kenya due to financial distress, there was need to establish or find out how financial distress affects the financial position of a bank. Financial performance of microfinance institutions, a comparison of performance of regional commercial banks by geographic regions. This research strived to give an understanding into the determinants of financial performance in kenya. Reference 26 studied the determinants of banks profitability in developing.
The performance of islamic bank measured based on return on asset roa, while the independent variables examined were capital adequacy ca, asset quality aq, and liquidity management lm. Commercial banks profitability is important because the soundness of an industry is closely. An application of data envelopment analysis david a. They carry out the bulk of indirect financing transactions.
Determinants of financial performance of commercial banks in kenya free download as word doc. Pdf factors affecting financial performance of commercial banks. The trade analysis showed that internet banking was recognized and accepted by the kenyan commercial banks and the kenyans as a way of transacting. A survey of the criteria used by commercial banks in kenya to determine employees to retrench. Understanding the factors that influence the performance of commercial banks is critical not only to the management of these commercial banks but also to other stakeholders and interest groups such as the countrys central bank, the government as a. Kosovos commercial banks performance is satisfactory compared with. The study adopted a descriptive design helped to establish the factors, which influence the kenya s commercial banks profitability. Request pdf determinants of financial performance of commercial banks in kenya studies on moderating effect of ownership structure on bank performance are scanty.
This shows that investments i n commercial banking in k enya are. The determinants of commercial banks profitability in zimbabwe 20092014 tough chinoda 1 banking and finance, women university in africa, zimbabwe abstract. Electronic banking was found to be positive and significantly related to the financial performance of the commercial banks in kenya. Determinants of accurate financial statements reporting in listed banks in kenya. Effect of portfolio diversification on commercial banks. The study also aimed to determine the financial strategies used to enhance financial stability of commercial banks in kenya. In this study the effect of determinants on the financial performance of banks as expressed by return on assets roa was evaluated. In most countries the dominant segment of the financial institutions are commercial banks whose main business activities include accepting.
The study was carried out to explore the key determinants of profitability of commercial banks operating in ethiopia using unbalanced panel data set of banks over the period 199900200809. Pdf determinants of financial performance of commercial banks. Pdf determinants of financial performance of commercial. Scope of further research a study can be conducted considering rural banks and unlicensed banks as well along with all the licensed bank in kenya using all the factors involved in the. To fill this glaring gap in this vital area of study, the authors.
Commercial banks are important to the financial segment, particularly in developing economies where capital markets are not well developed and strong. Request pdf determinants of financial performance of commercial banks in kenya studies on moderating effect of ownership structure on bank performance. The kenyan financial sector is generally dominated by commercial banks. Determinants of capital adequacy of commercial banks in.
Determinants of accurate financial statements reporting in. Commercial banks profitability is important because the soundness of an industry is closely connected to soundness of the whole economy. An evaluation of financial performance of commercial banks article pdf available in international journal of applied business and economic research 1522. Microfinance basically relates to all financial intermediation services such as savings, credit, funds transfers, insurance, pension and remittances among others by financial institution in both rural and urban areas to low income earners. Thus, it can be concluded that the financial performance of commercial banks in kenya. This study was designed to examine the determinants of financial performance of commercial banks in kenya. Determinants of profitability of commercial banks in kenya.
The determinants of commercial banks profitability in. Aburime 2008 observed that the importance of bank financial performance can be appraised at the micro and macro levels of the economy. The general objective was to investigate the influence of interest rates determinants on the performance of commercial banks in kenya. The study employs a set of panel secondary data from a sample of eighteen 18 commercial banks for the period 20002011 and uses camel model to investigate the financial performance. This study compares the financial performance of three major banks crdb, nbc and nmb. Determinants of financial performance of commercial banks in kenya the performance of commercial banks is not strong. Determinants of financial performance of investment banks. Wabita 20 sought to establish the determinants of financial performance of insurance companies in kenya. The study is undertaken in attempt to fill in the existing. Pdf an evaluation of financial performance of commercial. The study explored effect of the bank size, adequacy of capital, liquidity, credit risk and operational efficiency on banks profitability. The study primarily aims at determinants of profitability of commercial banks in tanzania applying camel frame work. Kosovos commercial banks performance is satisfactory compared with regional. This paper examines determinants of commercial banks profitability in tanzania with a particular focus on the internal and external factors.
782 984 1153 1103 69 1588 1249 784 1422 1485 708 848 984 487 615 848 1612 1197 655 1417 604 734 1300 1443 1376 280 1285 490 230 234 219 138 1028 32 247 550 525 212 1178 641 25 1049 769