IDEAS home Printed from https://ideas.repec.org/p/hal/journl/hal-05078616.html
   My bibliography  Save this paper

Determining the Effect of Prudential Regulations on Financial Performance of Commercial Banks in Kenya

Author

Listed:
  • Salome Jemutai Tenai

    (Department of Accounting and Finance, School of Business, Economics and Tourism, Kenyatta University, Kenya.)

  • Faith Nkuru

    (Department of Accounting and Finance, School of Business, Economics and Tourism, Kenyatta University, Kenya.)

Abstract

Commercial banks play a crucial role in the allocation and dissemination of a nation's economic resources. To maintain a sound banking sector, it is essential for these institutions to adhere to prudential regulations concerning liquidity, asset quality, and capital. The Kenyan banking sector has recently faced declining financial performance, prompting the need for further study on the impact of prudential regulations. This research aimed to determine the effect of these regulations on the financial performance of Kenyan commercial banks, focusing specifically on capital, credit, and liquidity regulations. The study examined all 41 Kenyan commercial banks from 2015 to 2021 to analyze the relationship between prudential regulations (capital, credit, and liquidity) and financial performance. This comprehensive coverage ensured accurate analysis, capturing the full scope of relevant data from all key players in the sector. The findings indicated that capital regulation had a positive but insignificant effect on financial performance, while credit regulation had a significant negative impact. Liquidity regulation showed an insignificant negative effect on financial performance. Moreover, interest rates were found to moderately affect the relationship between prudential regulations and financial performance, with an inverse and insignificant influence. The study recommends that commercial banks devise policies to enhance the effectiveness of capital regulations in improving financial performance.

Suggested Citation

  • Salome Jemutai Tenai & Faith Nkuru, 2024. "Determining the Effect of Prudential Regulations on Financial Performance of Commercial Banks in Kenya," Post-Print hal-05078616, HAL.
    • Handle: RePEc:hal:journl:hal-05078616
    as

    Download full text from publisher

    To our knowledge, this item is not available for download. To find whether it is available, there are three options:
    1. Check below whether another version of this item is available online.
    2. Check on the provider's web page whether it is in fact available.
    3. Perform a search for a similarly titled item that would be available.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:hal:journl:hal-05078616. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: CCSD (email available below). General contact details of provider: https://hal.archives-ouvertes.fr/ .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.