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The Effect of Interest Rate Spread on Performance of Commercial Banks in Kenya

Author

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  • George Ndiritu

    (University of Nairobi, Kenya)

  • Cyrus Iraya

    (University of Nairobi, Kenya)

  • Kennedy Okiro

    (University of Nairobi, Kenya)

  • Samuel Nyandemo

    (University of Nairobi, Kenya)

Abstract

The interest rate spread has, over a long time, generated a lot of attentiveness in the banking sector in Kenya. This has been due to the huge gap that prevailed between the deposit rate and the lending rate and its impact on the performance of the banking sector. Thus, the objective of the study is to determine the effect of interest rate spread on the performance of commercial banks in Kenya. A descriptive research design was employed, utilizing secondary data from 42 commercial banks in Kenya spanning from 2008 to 2018. A random effects model was used to assess the existence of the causal effect between the two variables. The findings revealed a positive and significant relationship between interest rate spread and the performance of the banks.

Suggested Citation

  • George Ndiritu & Cyrus Iraya & Kennedy Okiro & Samuel Nyandemo, 2024. "The Effect of Interest Rate Spread on Performance of Commercial Banks in Kenya," European Journal of Business and Management Research, European Open Science, vol. 9(3), pages 86-90, May.
    • Handle: RePEc:epw:ejbmr0:v:9:y:2024:i:3:id:52286
    DOI: 10.24018/ejbmr.2024.9.3.2286
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