Relationship between Volume of Mortgage Lending and Financial Performance of Commercial Banks Quoted in Nairobi Securities Exchange
Journal Title: International Journal of Business and Management Invention - Year 2017, Vol 6, Issue 2
Abstract
Mortgage loans have become an important aspect of loan portfolio among commercial banks in Kenya. It is observed that commercial banks’ lending criteria are pro-cyclical. As a result, they are likely to underestimate the default risk of the loans during periods of high demand, leading to price inflation which increases the banks’ credit risk exposure to mortgage product. With a sharp drop in demand for mortgage finance, commercial banks with high proportion of mortgage loans in their portfolios suddenly find themselves faced by a high exposure. This affects their financial performance significantly. However, from reviewed literature little has been covered on the relationship between mortgage financing and performance of commercial banks. The purpose of this study was to determine the relationship between mortgage financing and financial performance of commercial banks quoted in NSE. Mortgage Value Model theory guided the study. Secondary data was reviewed from CBK and NSE reports, between January 2006 and December 2014, giving 99 data points. Data obtained from audited reports were deemed reliable and valid. This study adopted correlation design. the inferential analysis indicated a significant negative correlation at 95% interval level between the financial performance variables (ROE, ROA and NIM) and the main independent variable (Mortgage volume), that is -0.326, -0.2591 and -0.208 respectively. This helped to show that there are no any serial correlations. This implied that there was a weak negative relationship between ROE, ROA and NIM and Mortgage volume. The study may help in formulation of policies related to mortgage financing and financial performance of commercial banks. Further by advancing a model that relates mortgagefinancing and financial performance
Authors and Affiliations
Daniel Odhiambo Dondi1, Johnmark Obura Ouma2
Keywords
Related Articles
- EP ID EP406435
- DOI -
- Views 120
- Downloads 0
Determination of the Relationship between Employee Exchange Influence tactics on Career Success in Nandi Hekima Sacco Limited, Kenya
The objective of the study was to determining the relationship between employee exchange influence tactics and career success. The study adopted a survey research design. Questionnaires were used to collect data and anal...
Analisis Perbandinganmodul Jembatan Rangka Batangdan Gelagar Bajavsebagai Fungsi Replacementjembatan Calender Hamilton
Bridges Calendar Hamilton built in Indonesia during the 1970s needs to be evaluated with the imposition of"Pembebanan Untuk Jembatan SNI 1725-2016”, considering the development of traffic by tonnage increased weight. If...
Analysis of Service Quality and Public Satisfaction on Local Government Agencies in Manado City
The purpose of this study are: (1) to know and analyze the picture of service quality and public satisfaction on Local Government Agencies of Manado city, (2) to know whether the variable of tangible, responsiveness, rel...
A Brief Review Of Studies On Training’s And Research In Banking Sector
Training and Development is indispensable strategic tool for enhancing employee performance and organizations keep increasing training budget on yearly basis with the belief that it will earn them competitive edge. Resea...
Testing the Multi-Dimensional Nature of Mortality Rates in Emerging Economies
With the constant changes in the demographic features in all the major countries the issue of the health outcomes is to be questioned ? A long research gap has been arrived in the literature in studying the impact of the...