Abstract
References
- • Aboagye,Q., Akoena, T., Antwi, A and Gockel A.F. (2008). Explaining Interest Rate Spreads in Ghana, African Development Review, 20( 3), 378- 399.
- • Central Bank of Kenya (2012). Bank Supervision Annual Report, CBK Chou, W. (2000),
- • Cihak , M. (2004), ‘The Determinants of Lending Rates and Domestic Spreads in Croatia’, In Republic of Croatia:
- • Gambacorta, L. (2004). How Banks Set Interest Rates? National Bureau of Economic Research Working Paper 10295, Cambridge.
- • Gardner, M., Mills, D. and Cooper Man, E. (2005). Managing Financial Institution 5th Edition. McGraw-Hill Higher Education.
- • Goldstein, M., and Turner, P., (1996) Banking Crisis in Emerging Economies: Origins and Policy Options, Bank for International Settlements (BIS) Economic Papers No. 46
- • Godlewski C. J. & Ziane, Y. (2008), “How Many Banks Does it Take to Lend? Empirical Evidence from Europe,Working Paper, Laboratoire de Recherche en Gestion & Economie
- • Fofack (2005), ‘Nonperforming loans in Sub-saharan Africa: Causal Analysis and Macroeconomic Implications. World bank policy research working paper No. 3769, SSRN
- • Margarida, A. and Mendes, V. (2000). What financial systems for the year 2000. Paperback. Principia.
- • Mugenda, O.M & mugenda, A.G (2003) Research Methods, Quantitative and Qualitative Approahes, Act press, Nairobi
- • Mutai, P. (2000). The Influence of Interest Rates on the Profitability of CBs. Unpublished MBA Project, University of Nairobi.
- • Mucugu W.J. (2012) Determinants of interest rates in micro finance Institutions in Kenya. Unpublished MBA project, University of Nairobi.
- • Oso,W.Y. and Onen,D. (2009). “Writing Research Proposal and Report: A handbook for beginning researchers“(Revised Edition). Kenya: The Jomo Kenyatta Foundation
- • Reddy, K., (2002), a comparative study on NPLs in India in the Global Context
- • Salloum, A. and Hayek, J. (2012). Analyzing the Determinants of Commercial Bank Profitability in Lebanon, International Research Journal of Finance and Economics, Issue. 93
- • Sargent, T. J., and Wallace N., (1975). “Rational Expectations, the Optimal Monetary Instrument and the Optimal Money Supply Rule” Journal of Political Economy, 83, pp 241-255.
- • Wolfson (1996) Estimation in the multipath.change point problem for correlated data, The Canadian Journal of Statistics Vol. 24 No. 1, 37-53
- • Siddiqui, M. A. (2012). Towards Determination of Interest Spread of CBs: Empirical Evidences from Pakistan, African Journal of Business Management. 6 (5), 1851 – 1862.
- • Smithin, J. (2003) Controversies in Monetary Economies- Revised Edition, Northampton Edward Elgar Publishing Ltd.
- • Tennant, D. (2006). Are Interest Rate Spreads in Jamaica too Large? Views from within the Financial Sector. Social and Economic Studies.
- • Staudinger, S. (2002). “Optimal Monetary Policy and Term Structure Of Interest Rates: A Note,” Journal of Economic Studies Vol. 29 No 2 pp. 98-108.
- • Stiglitz, J. E., and Weiss, A. (2001). Credit Rationing in Markets with Imperfect Information, American Economic Review, June, 393-410.
- • Thakor (1996), “Capital Requirements, Monetary Policy, and Aggregate Bank Lending: Theory and Empirical Evidence”, The Journal of Finance, Vol. 51, No. 1, pp. 279-324.
- • Wambua, J. (2006). The Casual Relationship between Interest Rates & Foreign
Abstract
The high interest rates charged by many commercial banks have attracted the attention of policy makers throughout the world. The commercial banks lending interest rates is a key indicator of the marginal cost of short-term and long-term external funding in an economy and provides useful information about developments in the average cost of borrowing. Various theories have been put across to address this issue. This paper examines the relationship between operational cost and lending interest rates of commercial banks (CBs) in Kenya. The study employed a descriptive research design. A study on a sample size of 34 commercial banks was undertaken. Secondary data was collected for the year 2013 from financial statements of the commercial banks and the NSE handbook. Primary data was collected by use of semi-structured questionnaires. The findings of the study indicated that the operational costs had a significant positive influence on the lending interest rates of CBs in Kenya.
References
- • Aboagye,Q., Akoena, T., Antwi, A and Gockel A.F. (2008). Explaining Interest Rate Spreads in Ghana, African Development Review, 20( 3), 378- 399.
- • Central Bank of Kenya (2012). Bank Supervision Annual Report, CBK Chou, W. (2000),
- • Cihak , M. (2004), ‘The Determinants of Lending Rates and Domestic Spreads in Croatia’, In Republic of Croatia:
- • Gambacorta, L. (2004). How Banks Set Interest Rates? National Bureau of Economic Research Working Paper 10295, Cambridge.
- • Gardner, M., Mills, D. and Cooper Man, E. (2005). Managing Financial Institution 5th Edition. McGraw-Hill Higher Education.
- • Goldstein, M., and Turner, P., (1996) Banking Crisis in Emerging Economies: Origins and Policy Options, Bank for International Settlements (BIS) Economic Papers No. 46
- • Godlewski C. J. & Ziane, Y. (2008), “How Many Banks Does it Take to Lend? Empirical Evidence from Europe,Working Paper, Laboratoire de Recherche en Gestion & Economie
- • Fofack (2005), ‘Nonperforming loans in Sub-saharan Africa: Causal Analysis and Macroeconomic Implications. World bank policy research working paper No. 3769, SSRN
- • Margarida, A. and Mendes, V. (2000). What financial systems for the year 2000. Paperback. Principia.
- • Mugenda, O.M & mugenda, A.G (2003) Research Methods, Quantitative and Qualitative Approahes, Act press, Nairobi
- • Mutai, P. (2000). The Influence of Interest Rates on the Profitability of CBs. Unpublished MBA Project, University of Nairobi.
- • Mucugu W.J. (2012) Determinants of interest rates in micro finance Institutions in Kenya. Unpublished MBA project, University of Nairobi.
- • Oso,W.Y. and Onen,D. (2009). “Writing Research Proposal and Report: A handbook for beginning researchers“(Revised Edition). Kenya: The Jomo Kenyatta Foundation
- • Reddy, K., (2002), a comparative study on NPLs in India in the Global Context
- • Salloum, A. and Hayek, J. (2012). Analyzing the Determinants of Commercial Bank Profitability in Lebanon, International Research Journal of Finance and Economics, Issue. 93
- • Sargent, T. J., and Wallace N., (1975). “Rational Expectations, the Optimal Monetary Instrument and the Optimal Money Supply Rule” Journal of Political Economy, 83, pp 241-255.
- • Wolfson (1996) Estimation in the multipath.change point problem for correlated data, The Canadian Journal of Statistics Vol. 24 No. 1, 37-53
- • Siddiqui, M. A. (2012). Towards Determination of Interest Spread of CBs: Empirical Evidences from Pakistan, African Journal of Business Management. 6 (5), 1851 – 1862.
- • Smithin, J. (2003) Controversies in Monetary Economies- Revised Edition, Northampton Edward Elgar Publishing Ltd.
- • Tennant, D. (2006). Are Interest Rate Spreads in Jamaica too Large? Views from within the Financial Sector. Social and Economic Studies.
- • Staudinger, S. (2002). “Optimal Monetary Policy and Term Structure Of Interest Rates: A Note,” Journal of Economic Studies Vol. 29 No 2 pp. 98-108.
- • Stiglitz, J. E., and Weiss, A. (2001). Credit Rationing in Markets with Imperfect Information, American Economic Review, June, 393-410.
- • Thakor (1996), “Capital Requirements, Monetary Policy, and Aggregate Bank Lending: Theory and Empirical Evidence”, The Journal of Finance, Vol. 51, No. 1, pp. 279-324.
- • Wambua, J. (2006). The Casual Relationship between Interest Rates & Foreign
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| Journal Section | Articles |
|---|---|
| Authors | |
| Publication Date | September 29, 2015 |
| Published in Issue | Year 2015 Volume: 4 Issue: 3 |
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