Determinants of Non-performing Loans in Commercial Banks in Kenya | Chapter 4 | An Overview on Business, Management and Economics Research Vol. 5

 This division focuses on assessment of cause of non-performing loans (NPLs) in commercial banks in Kenya. A loan is top-secret as nonperforming loan when the borrower forsakes to make due payments of principal or interest for a period of 90 to 180 days. In Kenya, the flow of NPLs increased during the whole of the 1990s and prior age, causing many banks to fail and so forth to be established under statutory project. The survivor banks and those founded afterward discovered that incompetent loan management was a big cause of the severe blow. While the borrowers are to blame, the administration of the collapsed organizations must share the blame for adopting poor loaning policies, as several needed smart new techniques of directing NPLs. However, improved credit risk administration has reversed the trend of NPLs. Nonetheless, the percentages of gross NPLs to gross loans wait high, conceivably leading to the collapse of more banks. The study's aims search out determine whether risk appraisal methods, the level of borrowers' lack of knowledge of items being provided, risk management methods, business-related conditions, and mechanics obsolescence all influence NPLs. To achieve these goals, basic data was assembled by distributing questionnaires to credit separation staff at chosen banks. The news was examined and presented in tables using the mathematical method of spearman's correlation cooperative. The findings disclosed that, of the five components judged, risk assessment methods had the maximal correlation cooperative, making them the basic contributor to NPLs, followed by borrowers' lack of knowledge of the products being presented, while risk management plans had the smallest contribution. The judgments will give bank administration increased information on credit risk exposure and NPL control, developing in increased appropriateness.

Author(s) Details:

Irene Njeri Esther,
Department of Business and Management Science, Taita Taveta University, P.O. Box 635-80300, VOI, Kenya.

Please see the link here: https://stm.bookpi.org/AOBMER-V5/article/view/12425