scholarly journals EFFECT OF CAPITAL ADEQUACY ON THE FINANCIAL PERFORMANCE OF SAVINGS AND CREDIT SOCIETIES IN KENYA

2017 ◽  
Vol 1 (4) ◽  
pp. 1
Author(s):  
Jane J. Barus ◽  
Dr. Willy Muturi ◽  
Dr. Patrick Kibati ◽  
Dr Joel Koima
Keyword(s):  
Risk Management ◽  
Credit Risk ◽  
Financial Performance ◽  
Reliability And Validity ◽  
Target Population ◽  
Capital Adequacy ◽  
Operating Efficiency ◽  
Linear Regression Models ◽  
Credit Risk Management ◽  
Secondary Sources

Purpose: The purpose of this study to establish the effect of capital adequacy on the financial performance of savings and credit societies in Kenya.Methodology: The study employed an explanatory research design. The target population was 83 registered deposit taking SACCO’s in Kenya that have been in operation for the last five years. The sample size for the study was all 83 SACCOs that have remained in existence since 2011-2015. Census methodology was used in the study.  Both primary and secondary sources of data were employed.  Multiple linear regression models were used to analyze the data using statistical package for the social sciences (SPSS) and STATA. A pilot study was conducted to measure the research instruments reliability and validity. Descriptive and inferential analysis was conducted to analyze the data. The data was presented using tables and graphs.Results: Based on the findings the study concluded that capital adequacy influenced the financial performance of savings and credit societies in Kenya. This can be explained by the regression results which showed that the influence was positive and also showed the magnitude by which capital adequacy influenced the financial performance of savings and credit societies.Unique contribution to theory, practice and policy: Based on the findings the study recommended for improvement of the capital requirement regulations by SASRA. The study also recommended that SACCO should improve their liquidity, profitability, operating efficiency and total assets turnover if they must remain in business and meet the capitalization threshold SASRA. Further, the study recommended that SACCO's should shift their concentration from increasing capital levels to credit risk management. Credit risk management would result to improvement in the financial performance of SACCO's.

scholarly journals EFFECT OF MANAGEMENT EFFICIENCY ON FINANCIAL PERFORMANCE OF SAVINGS AND CREDIT SOCIETIES IN KENYA

2017 ◽  
Vol 2 (1) ◽  
pp. 92
Author(s):  
Jane J. Barus ◽  
Prof. Willy Muturi ◽  
Dr. Patrick Kibati ◽  
Dr Joel Koima
Keyword(s):  
Financial Performance ◽  
Significant Influence ◽  
Reliability And Validity ◽  
Target Population ◽  
Capital Adequacy ◽  
Unique Contribution ◽  
Linear Regression Models ◽  
Secondary Sources ◽  
Management Efficiency ◽  
Asset Quality

Purpose: The purpose of this study was to evaluate the effect of management efficiency on financial performance of savings and credit societies in Kenya.Methodology: The study employed an explanatory research design. The target population was 83 registered deposit taking SACCO’s in Kenya that have been in operation for the last five years. The sample size for the study was all 83 SACCOs that have remained in existence since 2011-2015. Census methodology was used in the study.  Both primary and secondary sources of data were employed.  Multiple linear regression models were used to analyze the data using statistical package for the social sciences (SPSS) and STATA. A pilot study was conducted to measure the research instruments reliability and validity. Descriptive and inferential analysis was conducted to analyze the data. The data was presented using tables and graphs.Results: Based on the findings the study concluded that management efficiency has no significant influence on the financial performance of savings and credit societies in Kenya. The univariate regression results showed that management efficiency has no significant influence on the financial performance of savings and credit societies (p=0.173).Unique contribution to theory, practice and policy: The study recommended that with regard to credit risk management, the management should undertake measures to improve Capital adequacy, Asset quality, Management efficiency, Earnings and Liquidity. Further, the study recommended that SACCO's should train their employees as this is likely to increase their productivity.

scholarly journals Does Credit Risk Management affect the Financial Performance of Commercial Banks in Kosovo?

2018 ◽  
Vol 7 (2) ◽  
pp. 49-57
Author(s):  
Rrustem Asllanaj
Keyword(s):  
Risk Management ◽  
Credit Risk ◽  
Financial Performance ◽  
Multiple Regression ◽  
Commercial Banks ◽  
Multiple Regression Model ◽  
Capital Adequacy ◽  
Regression Equations ◽  
Credit Risk Management ◽  
The Impact

This study analyses the impact of credit risk management on financial performance of commercial banks in Kosovo, and comparing the relationship between the determinants of credit risk management and financial performance by using CAMEL indicators. Panel data of 85 observations from 2008 to 2012 of ten commercial banks was analysed using multiple regression model. Findings through multiple regression analysis are presented in forms of tables and regression equations. The study also elaborates whether capital adequacy, asset quality, management efficiency, earnings and liquidity have strong or weak relationship with financial performance of commercial banks. The study concludes that CAMEL model can be used as a system of assessment and rating of credit risk management by commercial banks in Kosovo.

scholarly journals Analysis of Credit Risk, Intellectual Capital and Financial Performance of Listed Deposit Money Banks in Nigeria

2021 ◽  
Vol 06 (12) ◽  
Author(s):  
Rislanudeen Muhammad ◽  
Keyword(s):  
Risk Management ◽  
Credit Risk ◽  
Financial Performance ◽  
Intellectual Capital ◽  
Capital Adequacy ◽  
National Bureau ◽  
Credit Risk Management ◽  
Loan Loss ◽  
Management Culture ◽  
Capital Adequacy Ratio

This paper examined the effects of credit risk, intellectual capital as well as credit risk moderated by intellectual capital on financial performance of fifteen listed deposit money banks in Nigeria (DMBs) from 2007 to 2016. Data were sourced from annual reports of banks and Nigerian National Bureau of Statistics and analysed using Generalised Method of Moments (GMM). The study finds that credit risk index by loan loss ratio negatively affects financial performance of the sampled banks; while capital employed efficiency, loan loss provision moderated by intellectual capital, capital adequacy ratio, income and diversification have positive relationship with banks’ financial performance. Thus, the study recommends that banks should strengthen their credit risk management culture to ensure prompt repayment of loans. The banks should operate within the required capital adequacy ratio to serve as buffer against loan loss provisions provided by the Central Bank of Nigeria. A strong credit risk management culture should be embedded within intellectual capital structure of banks, where all persons at all levels appreciate and understand the banks’ risk management policies as well as strategies and incorporate same into decision-making and business processes.

scholarly journals Effect of Credit Risk Management on Financial Performance Of Nepalese Commercial Banks

2022 ◽  
Vol 10 (1) ◽  
pp. 19-30
Author(s):  
Dr. Guna Raj Chhetri
Keyword(s):  
Risk Management ◽  
Credit Risk ◽  
Financial Performance ◽  
Significant Relationship ◽  
Commercial Banks ◽  
Capital Adequacy ◽  
Credit Risk Management ◽  
Negative Effects ◽  
Management Quality ◽  
Capital Adequacy Ratio

The main purpose of this study is to investigate the effect of credit risk on the financial performance of commercial banks in Nepal. The panel data of seventeen commercial banks with 85 observations for the period of 2015 to 2020 have been analyzed. The regression model revealed that non – performing loan (NPLR) has negative and statistically significant impact on financial performance (ROA).Capital adequacy ratio (CAR) and bank size (BS) have negative and statistically no significant impact on financial performance (ROA). Credit to deposit (CDR) has positive but no significant relationship with the financial performance (ROA) and the study concluded that the management quality ratio (MQR) has positive and significant relationship with the financial performance (ROA) of the commercial banks in Nepal. The study recommends that, it is fundamental for Nepalese commercial banks to practice scientific credit risk management, improve their efficacy in credit analysis and loan management to secure as much as possible their assets, and minimize the high incidence of non-performing loans and their negative effects on financial performance.

scholarly journals EFFECT OF ASSET QUALITY ON THE FINANCIAL PERFORMANCE OF SAVINGS AND CREDIT SOCIETIES IN KENYA

2017 ◽  
Vol 1 (4) ◽  
pp. 13 ◽  
Author(s):  
Jane J. Barus ◽  
Dr. Willy Muturi ◽  
Dr. Patrick Kibati ◽  
Dr Joel Koima
Keyword(s):  
Financial Performance ◽  
Reliability And Validity ◽  
Target Population ◽  
Linear Regression Models ◽  
Credit Policy ◽  
Equity Financing ◽  
Secondary Sources ◽  
The Social ◽  
Asset Quality ◽  
Credit Standards

Purpose: The purpose of this study was to establish the effect of asset quality on the financial performance of savings and credit societies in Kenya.Methodology: The study employed an explanatory research design. The target population was 83 registered deposit taking SACCO’s in Kenya that have been in operation for the last five years. The sample size for the study was all 83 SACCOs that have remained in existence since 2011-2015. Census methodology was used in the study.  Both primary and secondary sources of data were employed.  Multiple linear regression models were used to analyze the data using statistical package for the social sciences (SPSS) and STATA. A pilot study was conducted to measure the research instruments reliability and validity. Descriptive and inferential analysis was conducted to analyze the data. The data was presented using tables and graphs.Results: Based on the findings the study concluded that asset quality influenced the financial performance of savings and credit societies in Kenya. This can be explained by the regression results which showed that the influence was positive and also showed the magnitude by which asset quality influenced the financial performance of savings and credit societies. The univariate regression results showed that asset quality influenced the financial performance of savings and credit societies by 5.827units.Unique contribution to theory, practice and policy: The study recommended that management need to be cautious in setting up a credit policy that will not negatively affects profitability and also they need to know how credit policy affects the operation of their banks to ensure judicious utilization of deposits and maximization of profit. The study also recommended for credit information sharing between SACCO's. This will play a significant role in determining performance of deposit taking SACCO’s. Further, the study recommended that SACCO’s opt for equity financing instead of debt financing to improve on its leverage. SACCO’s should also avoid excessive lending, maintain high credit standards and limit lending to un-hedged borrowers.

scholarly journals EFFECT OF LIQUIDITY ON FINANCIAL PERFORMANCE OF SAVINGS AND CREDIT SOCIETIES IN KENYA

2017 ◽  
Vol 2 (7) ◽  
pp. 34
Author(s):  
Jane J. Barus ◽  
Prof. Willy Muturi ◽  
Dr. Patrick Kibati ◽  
Dr Joel Koima
Keyword(s):  
Financial Performance ◽  
Regression Models ◽  
Reliability And Validity ◽  
Target Population ◽  
Linear Regression Models ◽  
Secondary Sources ◽  
Liability Management ◽  
The Social ◽  
Inferential Analysis ◽  
Professional Guidance

Purpose: The purpose of this study was to determine the effect of liquidity on financial performance of savings and credit societies in Kenya.Methodology: The study employed an explanatory research design. The target population was 83 registered deposit taking SACCO’s in Kenya that have been in operation for the last five years. The sample size for the study was all 83 SACCOs that have remained in existence since 2011-2015. Census methodology was used in the study.  Both primary and secondary sources of data were employed.  Multiple linear regression models were used to analyze the data using statistical package for the social sciences (SPSS) and STATA. A pilot study was conducted to measure the research instruments reliability and validity. Descriptive and inferential analysis was conducted to analyze the data. The data was presented using tables and graphs.Results: Based on the findings the study concluded that liquidity influenced the financial performance of savings and credit societies in Kenya. This can be explained by the regression results which showed that the influence was positive and also showed the magnitude by which liquidity influenced the financial performance of savings and credit societies. The regression results showed that liquidity influenced the financial performance of savings and credit societies by 0.019 units.Unique contribution to theory, practice and policy: The study recommended for the deployment of efficient systems to strengthen liquidity risk control fundamentals. SACCO’s should also consider seeking professional guidance towards adopting policies on asset and liability management.

scholarly journals Effect of Credit Risk Management on Financial Performance of Nigerian Listed Deposit Money Banks

2019 ◽  
Vol 5 (6) ◽  
pp. 53 ◽  
Author(s):  
KAJOLA Sunday Olugboyega ◽  
ADEDEJI Samuel Babatunji ◽  
OLABISI Jayeola ◽  
BABATOLU Ayorinde Tobi
Keyword(s):  
Risk Management ◽  
Credit Risk ◽  
Financial Performance ◽  
Capital Adequacy ◽  
Financial Health ◽  
Credit Risk Management ◽  
Return On Equity ◽  
Risk Parameters ◽  
And Control ◽  
Risk Measurements

<p>Deposit money banks are concerned with the provision of credit facilities in form of loans and advances to customers. These loans and advances are expected to be repaid by customers in line with the agreement reached with their bankers. Customers’ default in the repayment of loans and advances at the agreed period may lead to bad and doubtful debts and this can affect the financial health, profitability and going concern status of the bank. This study empirically explored the effect of credit risk management on the financial performance of ten listed deposit money banks in Nigeria for the period, 2005-2016. Credit risk management, the independent variable, was surrogated by three parameters- Non-performing Loan to total Loan Ratio (NPLLR); Non-performing Loan to total Deposit Ratio (NPLDR) and Capital Adequacy Ratio (CAR). Return on asset (ROA) and Return on equity (ROE) was used as proxies for financial performance. Using the Random effects generalised least squares (GLS) regression as data estimation technique, the study revealed that all the three credit risk parameters have a significant relationship with ROA and ROE (p&lt; 0.05).Based on the findings, the study recommended that the management of deposit money banks should develop rigorous and robust credit policies that will enable banks to effectively assess the creditworthiness of their customers. The regulatory agencies should also come up with modern credit risk measurements, identification and control. Prompt and necessary action should also be taken against the management of any bank that flouts their credit risk guidelines in order to avoid unpleasant distress in the financial system.     </p>

scholarly journals The effect of credit risk management and bank-specific factors on the financial performance of the South Asian commercial banks

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Asima Siddique ◽  
Muhammad Asif Khan ◽  
Zeeshan Khan
Keyword(s):  
Risk Management ◽  
Credit Risk ◽  
Financial Performance ◽  
South Asian ◽  
Commercial Banks ◽  
Capital Adequacy ◽  
Credit Risk Management ◽  
Content Type ◽  
Specific Factors ◽  
Bank Specific Factors

PurposeAmong all of the world's continents, Asia is the most important continent and contributes 60% of world growth but facing the serving issue of high nonperforming loans (NPLs). Therefore, the current study aims to capture the effect of credit risk management and bank-specific factors on South Asian commercial banks' financial performance (FP). The credit risk measures used in this study were NPLs and capital adequacy ratio (CAR), while cost-efficiency ratio (CER), average lending rate (ALR) and liquidity ratio (LR) were used as bank-specific factors. On the other hand, return on equity (ROE) and return on the asset (ROA) were taken as a measure of FP.Design/methodology/approachSecondary data were collected from 19 commercial banks (10 commercial banks from Pakistan and 9 commercial banks from India) in the country for a period of 10 years from 2009 to 2018. The generalized method of moment (GMM) is used for the coefficient estimation to overcome the effects of some endogenous variables.FindingsThe results indicated that NPLs, CER and LR have significantly negatively related to FP (ROA and ROE), while CAR and ALR have significantly positively related to the FP of the Asian commercial banks.Practical implicationsThe current study result recommends that policymakers of Asian countries should create a strong financial environment by implementing that monetary policy that stimulates interest rates in this way that automatically helps to lower down the high ratio of NPLs (tied monitoring system). Liquidity position should be well maintained so that even in a high competition environment, the commercial is able to survive in that environment.Originality/valueThe present paper contributes to the prevailing literature that this is a comparison study between developed and developing countries of Asia that is a unique comparison because the study targets only one region and then on the basis of income, the results of this study are compared. Moreover, the contribution of the study is to include some accounting-based measures and market-based measures of the FP of commercial banks at a time.

scholarly journals Effect of Earnings Ability on Financial Performance of Savings and Credit Societies in Kenya

2017 ◽  
Vol 2 (5) ◽  
pp. 56
Author(s):  
Prof. Willy Muturi ◽  
Jane J. Barus ◽  
Dr. Patrick Kibati ◽  
Dr. Joel Koima
Keyword(s):  
Financial Performance ◽  
Reliability And Validity ◽  
Target Population ◽  
Legal Framework ◽  
Unique Contribution ◽  
Linear Regression Models ◽  
Secondary Sources ◽  
The Social ◽  
Institutional Capital ◽  
The Government

Purpose: The purpose of this study was to establish the effect of earnings ability on financial performance of savings and credit societies in Kenya. Methodology: The study employed an explanatory research design. The target population was 83 registered deposit taking SACCO’s in Kenya that have been in operation for the last five years. The sample size for the study was all 83 SACCOs that have remained in existence since 2011-2015. Census methodology was used in the study.  Both primary and secondary sources of data were employed.  Multiple linear regression models were used to analyze the data using statistical package for the social sciences (SPSS) and STATA. A pilot study was conducted to measure the research instruments reliability and validity. Descriptive and inferential analysis was conducted to analyze the data. The data was presented using tables and graphs. Results: Based on the findings the study concluded that earnings ability influenced the financial performance of savings and credit societies in Kenya. This can be explained by the regression results which showed that the influence was positive and also showed the magnitude by which earnings ability influenced the financial performance of savings and credit societies. The univariate regression results showed that earnings ability influenced the financial performance of savings and credit societies by 6.438units. Unique contribution to theory, practice and policy: The study recommended for continuous review of credit policies, establishment of irrecoverable loan provision policies, development of sound staff recruitment policies and the use of appropriate financing mix. Further, the Government should review legal framework to ensure that institutional capital is used to grow SACCO’s’ wealth.

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