Books & eBooks on plagrave.com ORM, O'Reilly, Logo, Friends

MICRO-PRUDENTIAL REGULATORY VARIABLES AND STABILITY OF COMMERCIAL BANKS IN KENYA

Peninah Wanjiru Itibi - Commerce and Economic Studies Department, Jomo Kenyatta University of Science and Technology, Kenya

Fredrick Olanga Wafula - Department of Accounting and Finance, Bomet University College, Kenya

Peter Wang’ombe Kariuki - Department of Business Studies, University of Embu, Kenya

ABSTRACT

The study determines the effect of micro-prudential regulatory variables on the stability of commercial banks. The study uses balanced panel data from 32 banks in Kenya for the period 2010-2020 derived from published financial statements. The study used Feasible Generalized Least Squares (FGLS) due to heteroscedasticity and autocorrelation in the data. The study finds that capital adequacy, management quality, and earning ability positively affect bank stability. On the other hand, asset quality and liquidity were found to have a nonsignificant effect on commercial banks' stability in Kenya. Therefore, the study recommends continuing capital requirement enhancement to signal further bank consolidation. Secondly, the study calls for a concerted effort among bank managers to continually monitor and contain costs. Thirdly, the study recommends furtherance of the traditional view of performance from an earning point of view even as new frontiers in performance are explored. Lastly, arising from the significance of the overall model, the study recommends the heightened use of the CAMEL model in the monitoring of banks by the regulator.


Full Length Research (PDF Format)