Mungiria, James and Ondabu, Ibrahim (2019): Role of Credit Reference Bureau On Financial Intermediation: Evidence from The Commercial Banks in Kenya. Forthcoming in:
PDF
MPRA_paper_95050.pdf Download (387kB) |
Abstract
This study discusses the role of the Credit Reference Bureau on financial intermediation among the commercial banks in Kenya. The study uses a descriptive survey research design. The study population consists of all the 45 commercial banks licensed by the central bank of Kenya under the banking act as at 31st May 2019. The study adopts a census population approach to study all the banks. The study uses secondary data collected from annual supervision reports of CBK, and the respective bank's audited accounts relate to the total loans, total non-performing loans, and interest earned on investments. Also, the credit reports done annually by reference bureaus were used to obtain data for the period between 2010 and 2018. Quantitative data collect was analyzed using the latest SPSS software, version 22.0. The study applies both descriptive and inferential statistics. Results generated are then presented in tables and explanations given in prose. Inferential statistics included the Pearson correlation analysis and Correlational relationships among the number of loans offered defaulted loans and the interest earnings on loans by commercial banks bank in Kenya. Linear regression analysis was conducted to establish the significance of the variables. ANOVA was used to test the relationship between independent variables and dependent variable. The Chi-Square test was also performed. Both the mean of the study and the mean before the introduction of CRB were used to check if there is a statistical difference between the means. The study establishes that credit reference bureau checks have a role in the financial intermediation (non-performing loans) in commercial banks in Kenya. Further, the study found that non-performing loans have a negative correlation with credit reference bureau checks. It can, therefore, be concluded that a relationship exists between credit reference bureau information and the level of financial intermediation as shown through non-performing loans in Kenya commercial banks.
Item Type: | MPRA Paper |
---|---|
Original Title: | Role of Credit Reference Bureau On Financial Intermediation: Evidence from The Commercial Banks in Kenya |
Language: | English |
Keywords: | Credit reference bureau, financial intermediation, commercial banks in Kenya |
Subjects: | F - International Economics > F6 - Economic Impacts of Globalization > F65 - Finance G - Financial Economics > G2 - Financial Institutions and Services G - Financial Economics > G3 - Corporate Finance and Governance > G32 - Financing Policy ; Financial Risk and Risk Management ; Capital and Ownership Structure ; Value of Firms ; Goodwill |
Item ID: | 95050 |
Depositing User: | Mr JAMES MUNGIRIA |
Date Deposited: | 13 Jul 2019 08:25 |
Last Modified: | 01 Oct 2019 17:06 |
References: | Aduda, J. & Gitonga, J. (2011). The Relationship between Credit Risk Management and Profitability among the Commercial Banks in Kenya. Journal of Modern Accounting and Auditing,7(9), 934-946. Ahmad, F. (2013). Corruption and Information Sharing as Determinants of Non-Performing Loans. Business Systems Research, 4(1), 87-9 Akerlof, G. (2007). The Market for Lemons: Quality uncertainty and the market mechanism. Journal of Economics, 110-115. Boyd, J. H., & Hakenes, H. (2013). A Theory of Creditor Rights, Information Sharing, and Bank Risk-Taking. The University of Bonn and MPI Bonn. Minnesota: Carlson School of Management. Brown, M., &Zehnder, C. (2006). Credit Reporting, Relationship Banking, and Loan Repayment. Swiss National Bank Working Paper, 2006-3. Central Bank of Kenya, (2011). Bank Supervision Annual Reports, 2008 – 2011. Central Bank of Kenya, (2012). Bank Supervision Annual Reports, 2008 –2011. Central Bank of Kenya. (2018). Bank Supervision Annual Report 2018. Nairobi, Kenya. Cooper, D.R. & Schindler, P.S. (2003). Business Research Methods (8th ed) McGraw-Hill: New York. Einav, L., & Finkelstein, A. (2011). Selection in insurance markets: Theory and empirics in pictures. The Journal of Economic Perspectives, 25(1), 115-138. Financial Sector Deepening (FSD) Kenya. (2011). Supporting the Development of Inclusive Financial Markets in Kenya. Financial Sector Deepening. Gaitho, N.W. (2013). Role of Credit Reference Bureaus on Credit Access in Kenya: Survey of Commercial Banks in Kenya. European Scientific Journal 9(13). Irum, S., Rehana, K. & Muhammad, A. (2012). Determinants of Non-Performing Loans: Case of US Banking Sector. The Romanian Economic Journal, No. 44. Jappelli, T. & Pagano, M. (2005). Role and Effects of Credit Information Sharing. Working Paper No. 136. Available at https://www.researchgate.net/publication/23573857 Koros, H.K. (2015). Effects of credit information Sharing on Credit Market Financial Performance of Commercial Banks in Kenya. Unpublished MBA Project. The University of Nairobi. Mirrlees, J. A. (1999). The theory of moral hazard and unobservable behavior: Part I. The Review of Economic Studies, 66(1), 3-21. Muthoni, J. M. (2014). Credit Information Sharing, Bank Characteristics, and Credit Market Financial Performance s in Kenya. Unpublished Ph.D. Thesis. Kenyatta University. Mwengei K. B. (2013). Assessing the Factors Contributing to Non –Performance Loans in Kenyan Banks. European Journal of Business and Management, 5(32), 155-162. Myerson, R. B. (2011). Rethinking the Principles of Bank Regulation: A Review of Admati and Hellwig's. The Bankers' New Clothes. Journal of Economic Literature, 52(1), 197-210. Turan, G. & Koskija, A. (2014). Nonperforming Loans in Albania. Academic Journal of Interdisciplinary Studies,3(3), 491 -500. Turner, M. & Varghese, R. (2007). Economic Fairness through Smarter Lending, some factors to consider on the eve of Brazilian credit reporting reform, October 2007. Warue, B. J. (2013). The Effects of Bank Specific and Macroeconomic Factors on Nonperforming Loans in Commercial Banks in Kenya: A Comparative Panel Data Analysis. Advances in Management & Applied Economics,3(2), 135-164. Yang, S. (2015). Analysis and Assessment of Credit Rating Model in P2P Lending: An Instrument to Solve Information Asymmetry Between Lenders and Borrowers. Cambridge: Massachusetts Institute of Technology. |
URI: | https://mpra.ub.uni-muenchen.de/id/eprint/95050 |