Assessing the Factors Contributing to Non –Performance Loans in Kenyan Banks

Abstract

The Banking sector is an indispensable financial service sector supporting development plans through channelizing funds for productive purpose, intermediating flow of funds from surplus to deficit units and supporting financial and economic policies of government. This paper will look at the factors contributing high rates of NPLs in Kenya despite the introduction of CBR. The other objectives are to determine the effects of Non-performing Loans in Kenyan commercial banks, to establish the trend of bad loans, before and after the introduction of CRB in Kenyan commercial banks and to determine the efforts taken to reduce the risks due to NPLs. The research covers all commercial banks in Kenya for the last ten years. The paper used secondary data and to analyse and draw conclusions and recommendations. This paper will provide an insight to the authorities manning the institutions and the government such that they find it in order to reduce the NPLs also it will provide a basis for further research.

Key words: Non-Performing Loans, Kenya, Commercial banks, Credit Reference Bureaus