JOINT INFLUENCE OF CUSTOMER CREDIT CHECKS, CREDIT RISK ASSESSMENT AND CREDIT POLICY COMPLIANCE ON LOAN PERFORMANCE OF COMMERCIAL BANKS LISTED AT THE NAIROBI SECURITIES EXCHANGE, KENYA
JOINT INFLUENCE OF CUSTOMER CREDIT CHECKS, CREDIT RISK ASSESSMENT AND CREDIT POLICY COMPLIANCE ON LOAN PERFORMANCE OF COMMERCIAL BANKS LISTED AT THE NAIROBI SECURITIES EXCHANGE, KENYA
Joseph Momanyi Riro - Master of Business Administration (Finance Option), Kenyatta University, Kenya
Dr. Geoffrey Mbuva - Lecturer, School of Business, Kenyatta University, Kenya
ABSTRACT
Loan default difficulties have been seen within the commercial banking sector. The study published by the Central Bank of Kenya (CBK) has provided empirical evidence indicating deficiencies in the lending performance of commercial banks throughout the years. This research is guided by particular goals, which aim to investigate the impact of client credit risk checks, credit risk assessment, and credit policy compliance on the loan performance of commercial banks listed at the Nairobi Securities Exchange in Kenya. This research is underpinned by three suppositions: adverse selection theory and the credit risk theory. The research design used in this study was descriptive in nature. The research population included of the twelve commercial banks registered on the Nairobi Securities Exchange. The investigation moreover examined the collecting of data via the use of both primary and secondary data classifications. Consequently, the research used both a questionnaire and a data collecting sheet in a sequential manner. The research used a combination of descriptive and inferential data analysis methods for the purpose of analyzing the data. The findings of the study were presented in the form of tables, graphs, and figures. The research demonstrated ethical considerations by obtaining authorization letters from both the Kenyatta University graduate school and the National Commission for Science, Technology, and Innovation (NACOSTI), therefore ensuring the protection of the rights of all involved parties. The findings of the research indicate that the implementation of customer credit checks has a beneficial impact on the loan performance of commercial banks listed at the Nairobi Securities Exchange (NSE) in Kenya. The findings suggest that there is a positive relationship between client credit checks and loan performance among commercial banks listed at the Nairobi Securities Exchange (NSE) in Kenya, with a coefficient of 0.534. The findings of the credit risk assessment indicate a favorable influence on the loan performance of commercial banks listed at the Nairobi Securities Exchange (NSE) in Kenya. Specifically, it suggests that for every unit rise in credit risk assessment, there is a corresponding increase of 0.621 in the loan performance of these commercial banks. Additionally, it has been observed that adherence to credit policy has a favorable influence on the loan performance of commercial banks in Kenya that are listed at the Nairobi Securities Exchange (NSE). Specifically, for each unit rise in compliance to credit policy, there is a corresponding increase of 0.512 in the loan performance of these commercial banks.
