Effect of Loan Portfolio Characteristics on the Level of Non-performing Loans for Savings and Credit Co-operative Societies in Kirinyaga County Kenya
James Muchiri Ndambiri,
Everlyn Ninga Munene,
Stephen Muthii Wanjohi
Issue:
Volume 3, Issue 5, October 2017
Pages:
58-69
Received:
18 April 2017
Accepted:
16 June 2017
Published:
10 November 2017
Abstract: The main source of income for Savings and Credit Co-operative Societies in Kenya is from interest received from issue of loans to its members. However the issuance of loans has been faced with a lot of challenges as a result of default on repayment of principal loan and interest when they fall due. In the event that this trend is not checked it could lead to collapse of Savings and Credit Co-operative Societies movement and hence have a negative impact on the financial sector. The main objective of the study was to determine the effect of loan portfolio characteristics on the level of Non-Performing Loans for Savings and Credit Co-operative Societies in Kirinyaga County. The study was conducted on Deposit Taking Savings and Credit Co-operative Societies in Kirinyaga County, Kenya. The researcher used both descriptive and causal research design. The Deposit Taking Savings and Credit Co-operative Societies registered by Savings and Credit Co-operative Societies Regulatory Authority for the period 2011-2014 in Kirinyaga County were six and hence a census was conducted. The researcher used secondary data which was obtained from published Savings and Credit Co-operative Societies Annual Financial Statements and Reports and from Savings and Credit Co-operative Societies Supervision Annual Reports for the period 2011-2014 with data collection checklist being used as the instrument for data collection of the models. The findings of the study would be helpful to current and potential investors, regulatory bodies and would add important information to the existing body of literature. The study recommended that Savings and Credit Co-operative Societies should diversify their loan portfolio by advancing loan of different products, consider adjusting loans repayment period appropriately, should not concentrate much on making decisions on interest rates adjustment, ensure that the ratio of Loan to Shareholder equity is high so that they can have a strong asset base thus win public confidence and should consider advancing loans of different amounts since borrowers vary in their credit worthiness.
Abstract: The main source of income for Savings and Credit Co-operative Societies in Kenya is from interest received from issue of loans to its members. However the issuance of loans has been faced with a lot of challenges as a result of default on repayment of principal loan and interest when they fall due. In the event that this trend is not checked it cou...
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The Effect of Financial Risk Management on the Financial Performance of Commercial Banks in Kenya
Stephen Muthii Wanjohi,
Joel Githinji Wanjohi,
James Muchiri Ndambiri
Issue:
Volume 3, Issue 5, October 2017
Pages:
70-81
Received:
19 April 2017
Accepted:
15 June 2017
Published:
23 November 2017
Abstract: An efficient risk management system is the need of time. Managing risk is one of the basic tasks to be done, once it has been identified and known. The risk and return are directly related to each other, which means that increasing one will subsequently increase the other and vice versa. The purpose of this study was to analyze the effect of financial risk management on the financial performance of commercial banks in Kenya. In achieving this objective, the study assessed the current risk management practices of the commercial banks and linked them with the banks’ financial performance. Return on Assets (ROA) was averaged for five years (2008-2012) to proxy the banks’ financial performance. To assess the financial risk management practices, a self- administered survey questionnaire was used across the banks. The study used multiple regression analysis in the analysis of data and the findings were presented in the form of tables and regression equations. The study found out that majority of the Kenyan banks were practicing good financial risk management and as a result the financial risk management practices mentioned herein have a positive correlation to the financial performance of commercial banks in Kenya. Although there was a general understanding about risk and its management among the banks, the study recommends that banks should devise modern risk measurement techniques such as value at risk, simulation techniques and Risk-Adjusted Return on Capital. The study also recommendsuseofderivativestomitigatefinancialriskaswellasdevelop training courses tailored to the needs of banking personnel in risk management.
Abstract: An efficient risk management system is the need of time. Managing risk is one of the basic tasks to be done, once it has been identified and known. The risk and return are directly related to each other, which means that increasing one will subsequently increase the other and vice versa. The purpose of this study was to analyze the effect of financ...
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