EFFECTS OF CREDIT INFORMATION SHARING AND NON-PERFORMING LOANS IN COMMERCIAL BANKS IN KENYA: A CASE OF BARCLAYS BANK (KENYA)
Mwihaki Mary - Masters Student, Jomo Kenyatta University of Agriculture and Technology, Kenya
Dr. Muoni Gekara - Jomo Kenyatta University of Agriculture and Technology, Kenya
ABSTRACT
In spite of the launch of credit information sharing mechanism in 2007 in Kenya some banks are still negatively affected by non -performing loans due to the fact that these banks have not fully embraced the use of information sharing mechanism. The research examined the effects of credit information sharing and non-performing loans in Barclays Bank (Kenya). It focused on the influence of banks’ knowledge of borrowers’ credit history, informational rents, borrowers’ credit discipline and borrowers’ over-indebtedness on non-performing loans in Barclays Bank (Kenya). Descriptive research design was used in collecting data from the respondents. Target population was drawn from Barclays Bank (Kenya) branches and the head office located in Nairobi County and consisted of six (6) credit managers, thirty seven (37) credit staff. The study undertook census survey to obtain the study sample. Data obtained using questionnaires was analyzed using descriptive and inferential statistics with the aid of Package for Social Sciences (SPSS17.0). This study established that banks knowledge of borrowers characteristics enable the bank to project more accurately borrowers’ loan repayment probability and decrease of interest rates by banks. Banks information on the credit worthiness of their borrowers is improved thus reducing incidences of defaults.Further, credit information sharing compels some banks to price their loans more competitively and enable them to deny credit to over-indebted borrowers unless they offer appropriate collateral for the loan; all these incidents can be avoided through information sharing.
