EFFECT OF MITIGATING CREDIT RISK ON PERFORMANCE OF COMMERCIAL BANKS IN KENYA: A CASE OF CHUKA TOWN
Journal Title: European Journal of Business and Social Sciences - Year 2015, Vol 4, Issue 7
Abstract
This paper aimed at investigating the effect of mitigating credit risk to the performance of commercial banks currently operating in Chuka Town in Tharaka Nithi County. The study was descriptive in nature. The study opted for both primary and secondary forms of data. The secondary data was collected from the documentations obtainable from the banks and the primary data from various banks using questionnaires. The collected data was examined to make inferences through a series of operations. Data was analyzed using descriptive statistics involving percentages. The study found out that the banks had policies and strategies of mitigating credit risk which has direct impact on their performance with the credit section being recognized as the most important sector in the banking section. This is due to the fact that credit is the major investment that is being undertaken by commercial banks. Although all this are known by commercial banks still emphasis need to be put up for all credit risk policies to be observed carefully as still commercial banks experience risks that lead to heavy losses. Also it was found that there was a significant relationship between bank performance (in terms of return on asset) and credit risk management (in terms of risk identification, monitoring and credit sanctions. Better credit risk management results in better bank performance. Thus, it is of crucial importance that banks practice prudent credit risk management and safeguarding the assets of the banks and protect the investors' interests.
Authors and Affiliations
JOHN MUTISYA MUTUA| Department of Business Administration, Chuka University,Chuka-KENYA Correspondence Email: johnmutua@gmail.com
Keywords
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- EP ID EP10649
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