Credit Risk Management and Profitability of Commercial Banks in Kenya

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CREDIT RISK MANAGEMENT AND PROFITABILITY OF COMMERCIAL BANKS IN KENYA

BY

ANGELA M. KITHINJI

SCHOOL OF BUSINESS, UNIVERSITY OF NAIROBI, NAIROBI – KENYA. akithinji@yahoo.com or akithinji@uonbi.ac.ke

OCTOBER, 2010

TABLE OF CONTENTS
1.0 INTRODUCTION....................................................................................................................1 1.1 Background ................................................................................................................................1 1.2 Statement of the Problem .........................................................................................................11 1.3 Objectives of the Study ............................................................................................................12 2.0 DATA ANALYS IS AND APPROACH................................................................................12 3.0 FINDINGS AND DISCUSS ION OF THE RES ULTS ........................................................12 3.1 Credit Risk Policies Adopted by Commercial Banks in Kenya..............Error! Bookmark not defined. 3.2 Amount of Credit and Level of Non-Performing Loans ..........................................................19 3.3 Profitability of the Banks .........................................................................................................21 3.4 Profitability, Level of Cedit and Non Performing Loans........ Error! Bookmark not defined. 3.5 Relationship Between Profits, Amount of Credit and Nonperforming Loans ................2Error! Bookmark not defined. 3.6 The Regression M odel .......................................................... 2Error! Bookmark not defined. 4.0 S UMMARY OF FINDINGS AND CONCLUS IONS ............ Error! Bookmark not defined. REFERENCES .............................................................................................................................27

ii

1.0 INTRODUCTION
1.1 Background The risk focused examination process



References: 27 Basle Committee on Banking Supervision (2001a), “The New Basel Accord”, The Basle Committee, January Basle Committee on Banking Supervision (2001b), “The Standard Approach to Credit Risk”, The Basle Committee, January

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